What is Demat Account And How it Works in Share Market

 

Today we will know what is demat account and how it works in share market and today we are going to read very important information related to demat account in this blog, so read all this information carefully and your knowledge Let us thoroughly improvise what is a demat account.

What is Demat Account?

As per SEBI regulations, if you want to buy or sell stocks from the stock market, then you must have a demat account. Shares cannot be sold or bought in any form other than Demat.

This means that it is mandatory to have a demat account if you want to buy or sell shares from the stock market in India. Because this is the first step in the stock market, without climbing which you cannot move forward.

Apart from this, it is very important to have a demat account even if you want to apply your shares in an Initial Public Offering (IPO). Demat account works like a normal bank account. Here too your bank balance can be entered in the passbook, but you cannot keep it in physical form, it is also secured electronically, and the process of debit and credit is completed like any other bank account. She goes.

In simple words, demat account is an account where you can keep your shares and where those shares are secured electronically, it is called demat account.

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Demat Account Introduction

At the time of opening a demat account, the in-person verification (IPV) of the applicant by the dept is valid. The DP's employee has to establish the identity of the applicant (anyone else if he is a minor) by verifying the photograph affixed in the account opening form as well as the proof of identity of the person concerned. In case of a joint account, there is a rule to do IPV for all the holders of the account.

Apart from demat account meaning, it is important to know that in today's time demat services are being offered by broking houses as well as many other financial and banking institutions. Institutions providing depository services are known as Depository Partners. The Depository Partner, by definition, acts as an intermediary between NSDL and/or CSDL, and the investor.

To open this account the investor needs to open a demat account with a SEBI registered Depository Participant (DP). To open a demat account, the investor has to submit the SEBI approved documents along with filling the account opening form, proof of identity, proof of address. While opening the account, the original PAN card and all the applicants are also required to bring the original documents for verification.

The investors also get a copy of the contract and a schedule of charges from the DP. After processing the account opening documents, the DP provides the account number (client ID) to the applicant. Once the applicant's account is opened from the DP, the applicant becomes a client who is also known as BO (Beneficiary Honor) and the account number allotted to him is called BO-ID (Beneficiary Owner Identification Number).

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Along with understanding what is this demat account (in Hindi), also know that like any financial service, there are many types of charges associated with demat account. In this, special attention should be paid in choosing a broker. Apart from account opening fees and broking charges, transaction charges should also be taken into consideration.

What are the demat account charges

You have to pay a certain fee to open a demat account. This fee is mainly divided into three parts.

• Annual maintenance fee (includes maintenance throughout the year)
• Guardian fee (this fee is charged to protect your account)
• Transaction fee (a type of tex on earning money)

Annual Maintenance Fee This fee is charged for maintaining the account.

Custodian Fee This fee is charged to protect the shareholders from illegal activities happening in the market.

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Transaction Fee:

This demat account fee is charged to the debt securities and the account on a monthly basis. While some DPs charge an explicit fee per transaction, others add a fee to the transaction value, subject to a minimum amount. Fees also vary depending on the type of transaction (buying or selling). In addition, the DP also levies a fee for converting the shares into physical form electronically or vice versa. The charges may vary for both Demat and Remat requests. Some DPs charge a one-time fee for demat with variable fee per certificate, while others charge only variable fee

What documents are required for paper and identity proof to be used while opening a demat account?

While opening the account, these important documents are mentioned, from which you can easily open your demat account.

• Pan Card
• voter id card
• Passport
• driver Licence
• bank verification
• IT Returns
• Electricity/Landline Phone Bill
• I card with photograph of the applicant, issued by
• Central/State Government and its Departments
• Constitutional/Regulatory Authority
• public sector undertakings
• scheduled commercial bank
• public financial institutions
• College affiliated to the University (It will be considered valid only as long as the applicant is a student)

Professional bodies such as ICAI, ICWAI, ICSI, Bar Council etc., require only copies of documents for submission to their members, but original documents are required for verification. The applicant is also required to submit a passport size photograph along with the account opening form.

How shares are traded

Apart from demat account meaning, also know that there are two depositories in our country – National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), through which trading of shares is conducted by various depository participants.

What are the benefits of Demat account

You can also sell at least one share

Earlier it was difficult to sell shares, you had to sell shares in a group only. Also you could not sell the shares in odd numbers like 27 etc.; But now it is not so. You can easily sell even 1 share through a demat account.

Shares can be transferred immediately. Earlier, shares were sent to the company or the registrar for transfer, which took months and often disappeared. But now it is not so, you can transfer them immediately.

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No Stamp Duty on Transfer of Securities Once the Security Transaction Tax or Securities Exchange Tax has been paid, the Share Transfer Stamp is no longer required to be purchased physically nor affixed at the bottom of the certificate as before Does matter. This process was mandatory when there were no demat accounts. But now you can avoid these troubles by opening a demat account.

There is no possibility of theft or dacoity after buying shares through demat account. There is absolutely no chance of them getting stolen or robbed because all the shares are in electronic form. Since there is no such danger, they are safe and you can access them from anywhere.

Operate with a single account

You do not need to open a separate account to buy loans like bonds, NCDs, tax free bonds etc.

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Bonus and Right Shares

Soon Bonus Shares can be credited and Right Shares can also be credited. There is no need to wait for the certificate.

Many types of small savings can be made by opening a savings demat account. For example - in registration, in practical reconciliation etc. Thus opening a demat account is now easy. Many agents open your account sitting at home, just be careful and open it only after getting complete information.

Now you can also nominate

You can nominate personally when you open a demat account. This was not possible earlier when there were share certificates. These are some of the advantages of demat account.

what did we go today

Today we have come to know about the demat account and its types and benefits. If you have any doubt related to this, then you can ask us in the comment. How did you like this post, do tell us in the comments.