What is Demat Account: How does it work? You might have seen many articles on the internet about Demat account but you might not have got good information on any website. Through this post, we will make you aware of what is Demat account and its benefits.
People can buy or sell shares in the stock market only through Demat Account. To open this account in the Indian stock market, it is very important for you to have PAN card, bank account and Aadhar card. Without these documents you will not be able to open a demat account.
If you do not have a demat account. If you want to know everything about demat account, then you are at the right place. Because we will tell you both its advantages and disadvantages in this article.
What is Demat Account
Demat Account is used by investors to buy or sell the stock of any company in the stock market.
Just as people keep their money in bank accounts, similarly people working in the stock market keep their stocks in demat accounts.
Demat account is so important in the stock market that just as a person should have some important documents to open a bank account, similarly if you want to work in the stock market then you cannot do anything without a demat account.
In the stock market, stocks are kept electronically in the demat account. The full name of Demat is “Dematerialize”.
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Demat account history
About 10-15 years ago, whenever someone bought shares of a company, that company used to send you some papers related to those shares.
Those papers used to be the proof that you have invested in that company and have bought shares in that company, but in today’s digital era, after the advent of Demat Account, everything has changed and now all the work has become paper less. it has taken
Definition of Demat Account
Just as money remains in the bank account, similarly the shares purchased by us remain in the demat account. There is never any kind of fraud or loss in the demat account.
Any person above 18 years of age can open a Demat account in the stock market. He can open his demat account. Now let us tell you where and how to open a demat account.
At present, there are two depositories to keep the stocks bought by you in the stock market safe
- NSDL (National Securities Depository Limited)
- CSDL (Central Securities Depository Limited)
In India, there are many brokers associated with these two depositories through which we can open a demat account and keep our stocks safe here.
Opening a Demat account is very easy, you can open it easily through your mobile while sitting at home. To open a demat account, you first need a broker. We have told you about the major brokers in India below.
- Angle one
- Alice Blue
- 5 Paisa
- Motilal Oswal
How much does it cost to open a demat account?
There are many types of brokers to open Demat account in the stock market, some of them are discount brokers or some are full service brokers.
Now if you are new then you should go to a discount broker. In today’s time, there are many discount brokers in the market. Yes, they open your demat account absolutely free but most of the brokers working for free are not able to provide good service, so overall to open a demat account you need to spend maximum ₹ 200 to ₹ 300.
Just as any company charges for providing any kind of service, similarly for running a demat account, you have to pay some money to your broker in the form of DP charges every year, mostly this charge is ₹ 280 per year.
This fee may vary from broker to broker, but we tell you an inside story that the brokers who open your demat account for free, take many types of charges from you in the form of hidden charges.
The charge taken by your broker on the demat account is called Annual Management Fee. Many companies take this fee at the beginning of the year, while some companies take it little by little in every quarter from the beginning of the financial year.
Benefits of demat account
There are many benefits of demat account, let us know.
- The stocks purchased in the stock market through Demat account are kept absolutely safe by CDSL and NSDL because all the shares with these depositories are in electronic i.e. digital medium. Due to which no person can access the demat account to any unknown person.
- Many years ago, it used to take a lot of time for a person working in the stock market to transfer shares. Sometimes it took even months. But in today’s time this is not the case at all, in today’s time you can immediately transfer your stocks through demat account.
- Many years ago, it used to take several days to sell the stocks lying in the demat account, but in today’s time, you can easily sell them within a short time and you can also sell one or Can sell more shares than that
Document to open demat account
Below you will find information about the documents required to open a Demat and trading account.
- PAN card
- Aadhar card
- Passport size photo
- 6 month bank account statement
- Bank verified passbook
- Government recognized identity proof
How to open demat account in Zerodha?
Opening a demat account in Zerodha is very easy, we have told you some steps below, by following which you can easily open your demat account in Zerodha through mobile sitting at home.
- Step 1:- First of all you have to go to Zerodha website and click on Open an Account.
- Step 2 :- After filling some important details, fill up everything like your name, mobile number and email ID and click on ‘Call me’.
- Step 3:- Now you have to wait. You will be contacted by the Zerodha team within a few hours or a day or two, after that you have to give them all the information about whatever legal documents they ask for, after that you just have to sign some documents online and give them the necessary details. And in this way you can easily open your demat account
- Step 4:- If you are an educated or intelligent person then you can easily open a demat account in Zerodha by filling all your documents on Zerodha website by watching a video on YouTube.
Demat Account Meaning FaQ
Like a bank account, you can keep more than one demat account. But you can open only a maximum of three accounts with one broker.
Any person living in India can open a demat account, he/she must be 18 years of age or above.
There are two major institutions for opening Demat account in India namely NSDL (National Securities Depository Limited) and CDSL (central securities depository limited).
To open a demat account, it is very important for you to have documents like Aadhar card, PAN card and bank account.
Yes, just as the money you keep in any bank remains safe, in the same way both your money and the stocks you buy remain safe in the demat account.
Demat account is created for trading and investing in the stock market. Only through demat account you can buy or sell the stock of any company.
Many banks in India provide you the facility to open demat account such as SBI (State Bank of India), HDFC Bank and ICICI Bank as well as many big banks like Kotak Mahindra provide you the facility to open demat account.
There are many brokers in India who allow you to open a Demat account for free. The most popular broker among these brokers is Angel One. Along with this, many other brokers also allow you to open a Demat account for free.
There are three types of Demat Account (1) Regular Demat Account (2) Repatriable Demat Account (3) Non-Repatriable Demat Account.
Yes, you can open demat account in Indian stock market even without income certificate.
Demat Account Meaning Conclusion
We hope that you would have liked the article on how to open a demat account. In today’s article, we have tried to give you complete information about demat account and we have also tried to understand it in easy language so that you can open a demat account. You do not have to face any trouble in knowing the demat account definition and Demat Account meaning.
If you have any kind of question or suggestion related to the article on how to open a demat account, then you can share with us in the comment box, we will be waiting for your comment.