A Demat account is required to carry out trading in the stock market. The Securities and Exchange Board of India (SEBI) have made it compulsory for traders to have a Demat account to trade in the equity segment. The easy access to trading due to the Internet and the abundance of brokers has led to an increase in Demat accounts and Demat account holders. To understand the whole process of opening a Demat account, one must first know more about the Demat account and its importance. A Demat account allows you to invest in and store various securities, such as
- Equity
- Debentures
- Sovereign Gold Bonds
- Exchange Traded Funds (ETFs)
- Government Bonds
- Mutual Funds
- Tax-free Bonds
- Certificates of Deposits
Table of Contents
Importance of Demat account
The Demat account has revolutionised trading since its usage began in 1996. It has multiple positive effects and benefits for traders. Demat accounts are easy to access and manage a portfolio, making it convenient for traders to track all trading activities and carry out new ones as well. Storing shares in electronic form has made it comfortable for traders to transfer them quickly as well. A depository is responsible for storing and managing Demat accounts. There are two depositories in India:
- National Securities Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
Through their help, traders can trade hassle-free in the stock market.
Advantages of Having a Demat Account
A Demat account has multiple advantages associated with it. Some of these are:
Everything in One
One can store multiple securities under one roof. It’s the perfect place to have all the securities, as you can check and manage them easily. If you plan on investing in multiple types of assets, it could be difficult and confusing to manage them all. A Demat account solves this problem, giving you an all-in-one solution to investing.
Security
The Demat account provides a safe and secure place to store all securities. As it is in the electronic format, everything is stored in one place. There are multiple regulations set by SEBI that depositories must fulfil to ensure maximum security. These regulations have led to multiple layers of security, making the Demat account a safe storage for various securities. The transfer of securities occurs electronically as well, eliminating the chances of theft or damage of shares during the postal process.
Flexible Trading
In the past, trading physical securities required traders to be present at the exchange. But with the help of the Demat account and trading apps, one can conveniently trade from the comfort of their home. The share market is available at the fingertips of all traders. Trading can be done from any device and platform of your choice. There is no limit or minimum requirement to buy shares. Simply put, one can purchase as many shares as they want, which also includes a single share. This is extremely beneficial for small traders looking to invest small amounts of money.
Settlement Period
The settlement period has drastically reduced with time. Previously, it was T+14 working days, which meant that after buying or selling the shares, a trader would receive the shares or money respectively for it within the next 14 days. This has been brought down to 2 days. So, the new settlement period is T+2 days.
Reduced Charges
Physical shares had multiple charges associated with them, such as handling charges, postal charges, stamp charges, etc. These charges have been reduced with the onset of Demat accounts and electronic trading. Along with this, there is no infrastructure required to store the securities as depositories manage them. The depository charges for this are extremely low and are recurring charges called Annual Maintenance Charges or AMC.
How to Open a Demat Account
There are a few simple steps involved in opening a Demat account in India. The primary step is to choose a depository participant (DP). A Demat account can not be directly opened with a depository, and DP plays a crucial role in this process. DP can be any organisation that has a membership with the depository. A DP can be:
- Bank
- Stockbroker
- Non-Banking Financial Company (NBFC)
The choice is entirely dependent on the trader of which DP to go with. For an active trader or a novice trader, a stockbroker is a perfect option. Choosing the right stockbroker is a crucial step, as they provide additional services which are extremely helpful when it comes to trading. There are multiple stockbrokers in India who provide Demat account and trading services.
Share India is a great choice for opening a Demat account. They have been the pioneers in algo-trading and aim to help every Indian household to have access to it. Share India provides an array of services for retail investors, with the primary focus being that of a Demat account. They have minimal charges and an easy-to-use interface, helping traders to invest and trade in different market segments like equity, derivatives, intraday trading, Initial Public Offering (IPO), etc.
How to Open a Demat Account Online with Share India
Share India provides an easy and hassle-free account opening process. They provide a 2-1 account feature, helping you open a trading account and a Demat account in one go. Share India has four easy steps to open a Demat account.
- Step 1: Registration
Start by registering with Share India. Visit the website “www.shareindia.com” and click on the ‘Open Demat Account’ option. After doing so, register with the help of your mobile number and email ID.
- Step 2: Verification
After sharing your details with Share India, complete the Know Your Customer (KYC) process. This is done completely online in a short amount of time.
- Step 3: Upload
Scan and upload various documents like Aadhaar card, PAN card, etc.
- Step 4: Confirmation
Complete the E-sign Aadhaar procedure through an OTP and make sure to add nominee details.
Once you have completed these steps, you can open a Demat account with Share India and start your trading journey today.
Conclusion
Knowing the benefits and advantages of a Demat account and its uses can be extremely helpful. Learn how to open a Demat account with Share India and start your investment journey as you generate, and we multiply.
