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Answers To Some Of The Most Common Faqs About Demat Accounts
People interested in share trading need to open a demat account. A demat account is essentially an online account in which you can dematerialise or convert your physical share certificates into electronic format. The account works just like your savings bank account in that, it allows you to hold, withdraw and deposit your share market instruments in it, with ease. It also facilitates electronic trades. These accounts are offered by depository participants who may be banks as well as finance companies. Since these account are necessary for investment trades, we decided to compile the most common demat accounts FAQs.
Here are some of the most common demat trading FAQs
FAQ: What kind of securities can I hold in my demat account
Answer: You can hold a wide range of equity market securities in your demat account. These include you shares, mutual funds, government bonds, exchange traded funds, money market instruments and other such securities.
FAQ: What is the benefit of holding a demat account?
Answer: There are several benefits of holding a demat account but the most important one is that you can transfer your physical share certificates into electronic ones. This way, you do not have to worry about losing your physical documents. Moreover, a demat trading account facilitates electronic settlement of all your trades.
FAQ: What is a depository and how is it different from depository partner?
Answer: A depository is like a bank. It holds your securities in the electronic format. The depository participant on the other hand, serves as an agent of the depository. The two main depositories in India are National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL) while companies like Angel Broking, Karvy, India Nivesh etc. are good examples of depository participants. Such firms offer both, demat and trading accounts.
FAQ: Is it possible to open the demat account directly with the depository?
Answer: No, it is not. NSDL and CDSL do not provide demat or trading account services. You can only open the account through a depository participant.
FAQ: How can I open my demat account?
There are two ways to open your demat account. The first is by visiting the office of your chosen DP and submitting necessary documents such as PAN Card and Address and ID proof documents. You can also open the account online by filling a form and submitting scanned copies of documents listed.
FAQ: Can I open a joint demat account?
Yes, you can open a joint demat account but the DP decides the number of account holders per account. Typically, you can have one primary account holder, with two joint holders.
FAQ: Can I assign a nominee to my demat account
Answer: Yes you can. In fact, SEBI guidelines dictate that filing nomination is mandatory for all demat account holders. If you choose not to assign a nominee, you need to provide a signed declaration stating the same.
FAQ: Can I open more than 1 demat account?
Answer: Yes, you can open more than one demat account. Multiple accounts can be opened with the same DP as well as with different DPs but you need to furnish separate documents and complete e-KYC compliance for every demat account you open.
You need to pay account opening as well as annual account maintenance fees. These fees are charges in lieu of the trading facilities offered and differ from one DP to the other. You can find the charges levied on the website of the DP.
Maithili Pawar is a financial expert with 5 years of experience in investment banking field. In her free time, she writes on trading topics. In this, she has written on demat account faq. She has answered the common questions concerning Demat Account
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