Demat Account is very much similar to a bank account which hold securities (shares) instead of money. However, unlike a bank account, your Demat Account need not have a ‘minimum balance’ of any sort. You might have heard the word `Demat Account’ atleast once in lifetime. Demat Account beomes necessary when you start trading and investing in share market online. Hence, it becomes very important for a trader and investor to know best demat account available in India. Today, in this blog we try to cover everything you need to know about Demat Account. As of now you might have many questions in your mind releated to demat account like :
- What is demat account?
- Why Demat Account Introduced?
- Who are Depository participants (DP) in Share Market?
- What is the use of demat account?
- Is demat account mandatory?
- Types of Demat Accounts?
- Benefits of Demat Account?
- Difference between trading account & demat account?
- How to open an (FREE) demat account?
- Documents required to open demat account?
- Which demat account is best?
We will learn all you require to know about the process, basics, usage, reason etc on demat. Before choosing the best demat account in India, you should first know basics of demat account.
What is Demat Account?
Demat Account is used to hold shares and securities in dematerialised or electronic format. Dematerialisation simply means converting hard paper in digital format. Hence when you buy shares or any other securities, instead of giving you the papers or certificates in physical form it is converted to electronic form so as to increase their accessibility. Demat Account is used for the process of holding investments like shares, bonds, government securities, Mutual Funds, Insurance and(Exchange Traded Fund) ETFs.
It’s hasle-free paperless way of handling and maintaining paper shares and related documents. DA are easily accessible with a laptop, computer or a smart phone and Internet. Loging in does requires you to have unique login ID and password to access it. This Login id and password provided to you by your broker.
Why Demat Account Introduced?
In earlier times, After buying any securities or shares, physical shares certificates from the exchange would get issued with your name on it. This required tonnes of paperwork. Each time a share was bought and sold, a certificate had to be created. Moreover, it used to be sent through post to owner of the shares. This indeed involved lot of time and energy and money. To do away with this paperwork, India introduced the Demat Account system in 1996 for trades on NSE. Since demat accounts got introduced in India, it has become possible for a shareholder to sell even one share too from his holding if he wants to.
Suppose you buy a piece of land as a property for your future however after sometime someone tried to acquire your land now to claim that its your property you should have proper documentation of papers to show.
Similarly if you buy a share today the only way to know that you own it is by showing the share certificate. As share is a part of ownership in a company hence if you own certain no. of shares and you have a certificate you can claim this whenever required.
Before 1996 the share certificate was in paper format however post 1996, the share certificates were converted to digital form. This is called de-materialization often known as DEMAT . Now to store this digital certificate you would require a demat account. Hence a Depository is a financial intermediary which offers the service of Demat account.
Now that you know that a broker helps you in trading account & DA which are interlinked .
There are two depositories offering you DEMAT account & there is no difference in terms of operation .
- National Securities Depository Limited (NSDL)
- Central Depository Services (India) Limited (CDSL)
They are working under strict guidelines of SEBI . In India SEBI (Securities and Exchange Board of India) is a Market Regulator . That is to say SEBI (Securities and Exchange Board of India)primary objective is to protect the interests of people in the stock market and provide a wholesome environment for market participants. To Know more about who is SEBI Click here.
What is the use of Demat Account?
To know demat account usage, as an illustration suppose you buy a share of Infosys ltd. from your trading account through call to your broker or by using a terminal. Once bought and the transaction is completed the work of trading account is finished. This shares you bought will require a place to get stored, now this shares will get stored in your DA . When you purchase or sell shares, it will be credited or debited to/from your Demat Account
So whenever you want to sell your shares, you can easily sell those from your trading account and it gets debited from your DA. To open a DEMAT ACCOUNT you need to communicate with depository participants (DP) . Stockbrokers and financial institutions are DP’s. As a matter of fact, nowadays you do not need to do anything just contact or choose the best broker like asthatrade and they will help you in opening of your trading plus demat account online.
Is Demat Account mandatory?
Incase, if you want to take delivery of stocks, then Yes it is compulsory. However, if you want to trade with leverage or using margin trading facility like Intraday trading, futures and options trading, then No. A demat account is only useful if you’re going to take delivery of stocks.
In person, I would recommend you open one as you will need it at some point even if you’re only an F&O trader or day trader. As in FNO sometime you have to take delivery of stock in physical settlement upon expiry. It is best to have a demat account prior you start your journey in trading and investment online. Your Demat Account number is compulsory for electronic settlements of the trades and transactions you do.
Types of Demat Accounts?
There are mainly three types:
- Regular Demat Account: This is for Indian citizens who reside in the country.
- Repatriable Demat Account: This kind of Demat Account is for non-resident Indians (NRIs), which enables money to be transferred abroad. However, this type of Demat Account needs to be linked to a NRE bank account.
- Non-Repatriable Demat Account: This again is for the NRIs, but with this type of Demat Account, fund transfer abroad is not possible. Also, it has to be linked to an NRO bank account.
Benefits of Best Demat Account?
- Demat accounts are completely online, hence easily accessible from anywhere at any time. It also smoother easy monitoring of your portfolio holdings.
- You can opt for a two-factor authentication (2FA) method, making them much safer as compared to physical shareholding which includes the risk of theft, loss or damage.
- All your investments, securities and shares remain at one place.
- Whenever a company issues, Bonus, right shares, or stock split, it automatically get updated in the demat accounts. Moreover dividends, refunds, or interest are also directly get credited to the demat account holder.
- Since all procedures are electronic, they are less time-consuming and more convenient. One can easily buy, sell and transfer funds and securities with just a few clicks.
- Note that you may have more than one Demat Account, but not with the same DP.
- One PAN card can be linked to multiple Demat and Trading Accounts.
Difference between Trading Account and Demat Account?
What is a Trading Account?
Trading account is nothing but simple account like any other, from where you can place trades in share market. Trading account gives you access to stock market. Once you open trading account you can conduct trades. Earlier to buy and sell stocks you need to visit your stock broker’s office. After that people started call and trade. Now with the current revolution happened in telecom industry, thanks to Reliance Jio anyone can trade sitting from their home ,office or while shopping.
Online trading is all about buying and selling shares on the internet sitting in the comfort of your office or your home. You just need to log into your trading account and you can buy and sell shares. Offline trading is trading by visiting your broker’s office or by calling your broker. You can get such an account by registering with a firm or a stock broker like Asthatrade. Just keep one thing in mind about trading account- To purchase and sell shares, you need to open a Trading Account.
We already know what is demat account, so let move to the difference:
- A trading account is used for the buying and selling of the securities by means of it getting debited from your demat account and sold in the market.
- Buying of shares would take place with the help of trading account however, further be stored in the Demat account.
- On the other hand, demat account allows investors to keep their financial instruments in an electronic format.
- As an investor, you buy the shares of any company, you use the trading account to do so. The money is debited from your bank account and the shares are reflected in your demat account where they are also credited.
- When you sell your shares through your trading account, the same gets debited from your demat account and are then sold in the market. The proceeds of this sale is credited back to your bank account.
- Thus, in order to trade in the stock markets, it is mandatory to have both a demat as well as a trading account.
Opening a demat account is as easy as opening a bank account. Even opening a bank account requires you to be physically present, but demat account are opened online and in paper-less enviorment. In India, Demat account service is provided by depositories such as NSDL and CDSL through intermediaries aka Depository Participant (DP). DP’s are nothing but stock broker or broking firms.
Asthatrade demat account is registered with the well-known depository NSDL(National Securities Depository Limited). So, directly you will be part of NSDL depository once you open an account with us. Any stockbroker or DP has to become a member of the above depositories to be able to allow their clients to open demat accounts.
The process of opening best trading and demat account is very smooth & simple. You just need to log on to our website Asthatrade.com.
- Click on open an account
- Enter your email address and phone number
- Confirm OTP
- Select Segment like Equity & FNO or Commodity or select both.
- Make Payment through Net banking or Debi/credit card details etc (for trading a/c only, no charges for demat account).
- Upload Your documents Like Income proof, In-person verification Known as IPV, your Signature .
- An In-Person Verification is done to ensure that the information/data given to you in the form is correct and actual.
- When your application is processed, you will get a Beneficiary Owner Identity (BOID), that is an unique account number which can be taken into use while doing future transactions and to operate your account.
- That’s it our sales team will reach you in case you need any help further.
This conclude the process of opening a top trading and demat account in India.
Keep the following documents handy for a Quick and hasle-free account opening.
- PAN No.
- Aadhar Card
- Cancelled Cheque (For offline)
- Income Proof (for Derivatives)
KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker,DP,Mutual Fund etc.). You need not undergo the same process again when you approach another intermediary. If your KYC is not completed than process will be done offline once.
You can reach our sales team @ 0755-4268500, 0755-6693399, 8435001551
As Demat account eases your way of trading and investing experience online, you need to open a best Demat account in India to experience the overwhelming trade experience. At asthatrade demat account opening is completely free of cost. There is no AMC charges if you open demat account with astha.
I would personally advise you to avoid opening it with bank brokers as their charges are very high if you compare with discount brokers like asthatrade. The services offerred are pretty much the same as we are both agents of the same depositories either (NSDL / CDSL). So functions of both CDSL and NSDL are the same. Hence, the basic services of a demat account is more or less the same with any broker in India. Only the charges and service quality differ, which is best at asthatrade brokers. Opening Demat Account with asthatrade is free of cost with no AMC. Not only this at asthatrade we offer Best margin in intraday trading, future trading, option trading, commodity(MCX) trading in India.
Demat and Trading Account Opening Charges At Asthatrade:
Trading Account: Equity, F&O
Fee : Rs.500/- (inclusive of Service Tax)
Demat Account charges: Free Demat Account with no AMC(Annual Maintenance Charges).
Trading Account : Commodity
Fee : Rs.500/- (inclusive of Service Tax)
Annual Maintenance Charges (AMC) – Annual Maintenance Charge is the fee collected by the online brokers to keep the share of the investors for the future trading. These charges vary broker to broker.