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What Is Demat Account

By Author: Rakesh Sharma
Total Articles: 5

Share market is an ultimate platform to grow and to build wealth over time and unlimited profits. But to trade and invest in share market, the investor must have a basic knowledge and understanding about the stock market i.e. what is stock market, what are the parties involved, what is traded in the stock market, how to trade, what is the right time to trade, etc.
Before indulging in learning about the techniques and theories of the market. Let us learn what is demat account in this article.
Prior your investment or trade in the market, demat account has to be opened with a Depository participant which can be a bank, a broker or a financial institution. Once the demat account is opened by any of the parties a demat account number is generated and provided to you. All the securities you buy or sell in the stock market directly reflect in this account.
You can open an account as per your requirement:

Single holder
Joint holder
Multiple holders

In case, the account is opened for a minor who is not 18 years old, then it is important to appoint a guardian to handle and look over all the transactions.
How does demat account work?
There are two depositories in India through which the shares are held by various depository participants:

National Securities Depositories Limited(NSDL)
Central Depository Services Limited(CDSL)

Buying of shares: The broker credits the shares to your demat account and these get reflected in your holding statement. Even the investor can view their holdings online if he/she uses an online trading platform. Basically, the shares get credited by the broker on T+2 that is trading day+ 2 days after that.
Selling of shares: While selling of shares, you need to share a Delivery Instruction Slip(DIS) to the broker wherein the various details of the stock sold are to be filled. The shares are debited from the account and the amount is credited to your account. In case you are trading online the account will automatically reflect your holdings.
Benefits of holding a demat account:

No worries in keeping physical shares, as demat accounts hold your shares in electronic form
No odd lot issues, minimum one share can also be purchased and sold
No transfer deed required

Open a demat account and experience the path of wealth creation.

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