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Here’s All You Need To Know About A Demat Account
"It is difficult to hold shares in physical form as it involves a ton of paperwork, a lengthy process and the risk of fake shares. To simplify this process of trading and investing, a Demat and trading account is essential as the stocks in this account remain in a dematerialised form. For this, a Demat account number is required as it functions like a bank account where all the money is held, and entries are made in the bank passbook as these securities are held in electronic form. The Demat account opening can be done with no balance of shares in it and with zero balance.
It is essential for those who invest in shares and keep up with the stock market to have a Demat account as this account holds all the financial instruments like shares, bonds, mutual funds, etc.
To open a Demat account in any bank, the documents required are as follows:
- ID proof
- PAN card
- Proof of residence (ration card/phone bill/electricity bill)
- Bank details (a cancelled cheque will do)
- Two passport size photographs
In the form given by the bank, fill up all the details in the appropriate space provided and attach your documents at the end of the form. You will need to carry your original PAN card for verification purposes, along with a copy. Depending on which bank you open the account in, a basic fee is required to open the account. The fees differ with every provider, with some opening the Demat and trading account without charging any fee.
Some of the benefits of opening a Demat account are:
- All your investments can be held in a single account as this account is not just for shares but debt instrument like bonds, too.
- The problem of shares being transacted in lots of single or odd numbers no longer exists. Now, with the help of the Demat and trading account, this problem no longer exists.
- Similarly, earlier, when securities had to be transferred one would incur extra costs due to stamp duty. This is not a problem anymore as the Demat account is all electronic.
- After the Demat account opening, the risk of theft, fake shares, wrong deliveries, etc. have reduced due to the reduction in paperwork. Time taken for delivery has also decreased considerably. Once the account has been approved, the securities and company-related activities like stock bonuses and stock splits are automatically credited to your account.
- Paper made storing things more vulnerable as it was prone to wear and tear and damage. The demat and trading account makes these securities more convenient to hold and more straightforward to transfer with a nomination facility, in the unfortunate event of death.
Author Bio:- Neha Sharma is a finance student who loves to write in her free time. She has spent considerable time researching about demat and trading accounts. Through her work, she provides information on everything you need to know about demat accounts.
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