Demat account: Everything you need to know

No matter if you are a novice investor or an experienced trader, you will come across the term Demat account at some point during your trading journey. If you want to have a smooth buying and trading experience, a Demat account will be essential.

What is a Demat account?

Demat, which means Dematerialisation, is the process of converting your share certificates into electronic balances. You can hold shares and other financial securities electronically in a Demat account. You can also trade on the stock market at your convenience.

Before we dive into the details of a Demat Account, let's first understand how it works.

What is a Demat account?

Demat accounts work just like other bank accounts. They convert your physical shares into electronic format, which makes them much easier to store and accessible from anywhere around the globe. To get started in the stock market world, you should open a Demat Account with a Depository Participant.

There are primarily two Demat service providers in India: the Central Depository Service Limited, (CDSL), and the National Securities Depository Services Limited, (NSDL).

After your share is cleared for transfer to either the BSE or the National Stock Exchange , the share will be credited to your Demat account.

Demat Account

1. Secure Transfers - Shares had to be sent to the company, or to the registrar in order to be transferred in the investor’s name. It took months to complete the deal. Demat accounts allow you to transfer shares instantly without waiting.
2. Faster conversions - Since the creation of a Demat account, the process of converting physical shares into electronic form is now much faster and easier. Electronic securities can be converted to physical form if necessary in no time.
3. Speed E-Facility – As per National Securities Depository Limited, (NSDL), it is possible to send instructions slips electronically rather than having to submit slips in person to the DP. This reduces waiting time and speeds up the entire process.
4. All profits from investments made in a Demat account are automatically deposited to your Demat account. These benefits are available to Demat account holders if the company you invested in offers dividends, returns, or interest to investors.

The Benefits of a Demat account

1. Low risk - By removing the need to have physical certificates and saving all shares in electronic form, you reduce the chance of theft, loss, or damage.
2. Accessible and easy to use - One Demat account allows you to buy and sell shares in the stock exchane without any hassle, delay or inconvenience. You can also access the account from anywhere around the globe because it is digital.
3. You can lower stamp duty, registration and handling costs by removing physical certificates from the photograph.
4. Instant transactions - Shares bought and sold in physical form can take days. The process is much faster with a Demat account. You only need to open a Demat Account to start your transactions.
5. One account for all - A Demat account allows you to easily track all of your investments from one account. You can also track your portfolio anytime quickly so that you can make the right decisions for your risk profile and profit expectations. Investors can make intelligent decisions about buying and selling with demat accounts.

The Documents required to open a Demat account

Next, we will discuss the requirements to open a Demat account.

1. Acceptable documents as proof of identity
2. PAN Card with valid photograph
3. UID - Unique Identification Number (Passport, Aadhar, Voter ID, Driving license)
4. Any ID card that has a valid photo and is issued by a government agency or regulatory authority.
5. Acceptable documents as proof of address

Send in any of the following as proof

1. Passport/Voter ID/Ration card/Registered lease or sale agreement of residence/Driving license/Flat maintenance bill/Insurance copy
2. Utility bills - This includes landline, electricity and gas bills that are less than three months old.
3. Bank Passbook no older than 3 months
4. Judges of the Supreme Court or High Court will give you the opportunity to self-declare your new address.
5. Address proof issued by bank mangers, gazetted officers and public notaries.
6. A certified authority issues an identity card that includes your address.
7. Address proof must be given in the spouse's name
8. Acceptable documents as proof of income

Send in any of these

1. Photocopy of the acknowledgment slip from your income tax return.
2. Your C.A. will verify your net worth and annual account statements.
3. Recent Salary Slip and Form 16.
4. A statement of Demat Account holdings for an eligible Depository Participant.
5. The most recent bank statement reveals six-month income history.
6. Documents that can be used to prove ownership through self-declaration.

Open a Demat Account?

You now know what a Demat Account is and can open one with us in just a few steps. Follow these steps to open your Angel One Demat account.

First, select a Depository Participant. The depository will open a beneficial owner (BO) account.

Second step: Fill out an account opening form. You must submit all details, along with supporting documentation copies such as proof of address, proofs of identity, and proof of income. To open a Demat account, you must have a PAN card.

You will be sent a copy the rules and regulations along with the charges that you will need to pay the DP. To verify the authenticity of the documents and details provided by the investor, a representative of the DP will visit you.

Step4 Once your documents have been approved, your Demat account will be operational. This account allows you to trade immediately

Angel One makes it easy to open a Demat account online in just a few clicks. It is easy and quick.

Demat account Opening fees

Important to remember that opening a Demat Account comes with its fair share costs such as an annual maintenance fee, transaction fees or commissions for each transaction performed by the DP. A fee may also be required if you want to dematerialize your shares. Here is a list of all charges associated with your Demat account.

1. Opening Demat accounts requires an account opening fee. DPs will charge a small fee. Angel One does not charge any account opening fees if you open a Demat Account. Stamp duty, GST, and other statutory levies by SEBI will all be added to your account.
2. Annual maintenance fees - It depends on the brokerage firm that you opened your Demat account, so you may have to contribute some money towards maintaining it.
3. Transaction Fees – Transaction fees, or brokerage charges, are charged to the Demat account holder on every transaction that is completed by the DP. Broking firms might charge a percentage of transaction value, while others may charge a flat fee for each transaction.

You must factor in all charges to your Demat account before you choose the DP.

Demat accounts make it easier than ever to trade in the share market. Now is the right time to open a Demat account if you have ever considered it but aren't yet. Angel One is the place to go to learn a new way of trading, buying and selling.