Demat Account – Find Meaning, Account Opening Process, Charges, Features, Benefits & more

Demat Account has made the life of investors easy and smoother, as trading using Demat Account is completely an electronic process.

It is mandatory to Open Demat Account to trade and invest in shares and other financial instruments. For trading in the money and financial markets, you would need Demat, trading and Bank account.

In this article, you will read about the various aspects of a Demat account in detail. We will give the intricate details about the account, its benefits, and its features.

We will also cover types of account, the process of opening account, documents required for opening an account. It will also include things you need to check before choosing an account for yourself.

We will also cover the details about the working process of the account and along with that, there will be other details for you as well related to transfer and dematerialization of shares from the physical format and others.

In short, this article will give you all the information that you may want to know about opening an account and start trading using the same. So, let us start with the basic details of the account.

Open Demat Account - Offers


What is Demat Account?

If you want to trade shares you need to open Demat Account as it is necessary. Demat account is an account that holds your shares in electronic format.

Demat Account Meaning is derived from the word Dematerialisation. This account holds your shares like a bank account and you can use the shares for trading anytime.

A demat account helps the traders to exchange shares anytime without any physical exchange of the shares. You can buy and sell shares from this account and also let the shares sit in your account as well for any period you want.

The account is not only for shares as we all know, but it is also actually for any kind of investment certificates which are in electronic format be it GOI bonds, mutual funds, ETFs or government securities and others.

More About Demat Account

So, you can keep any type of investment certificate that you have in this account. Your shares will be safe in this account. In India, accounts are linked to two Depository houses.  Central Depository Services Limited (CDSL) and National Securities Depositories Limited (NSDL) are those two Depositories.

Both of these two depositories are government organization which makes the account safer and reliable. You need to open the account via a Depository Participant (DP) which are the brokers and the brokerage houses.

Investing in physical shares earlier used to took a long time like earlier banks used to have such a long queue. With the advent of technology now neither banks are having such long queues nor do you need to trade physical shares when there is an account.

With account, share trading and making any investment for that matter has become streamlined and smooth. Bank accounts and trading account is integrated with your account for this smooth trading experience.

You have the shares in your account, you trade from the trading account and money is transferred to your bank account (when you sell shares), so the whole process is interlinked and there is no manual intervention required.


Open Demat Account Now! – Get upto 90% discount on Brokerage

Fill Your Details Here
  1. Open Demat Account

How to Open a Demat Account?

There are two ways t open demat account. There is a traditional method or offline method & Online process which is a quick process. Check understand both the process here in detail –

Open Demat Account Online – A Detailed Process

To Open Demat Account online you need to –

  • First, select a brokerage house. There are hundreds of brokerage houses in the country. You have to choose one of them as per your requirements. We will also discuss the things you need to check before choosing your brokerage house.
  • Once you select the brokerage house, you can go to their site and click on the account opening section. You will see a form opening on your screen.
  • You need to fill the form with the correct details.
  • Once the form is filled, you need to submit the form. Check twice all the details before clicking on the submit button.
  • Now, you need to upload the documents for verification purposes. There are certain documents like PAN, AADHAAR, and others which you need to upload in the scanned format on this page.
  • Once your documents are uploaded, You need to Esign documents via Aadhaar.
  • Now you have to select the brokerage plan and pay the amount according to that.
  • Once your payment is received by the firm, and your documents are verified, your account will be opened.
  • You will receive the login details in your email id which you have registered with the brokerage house while filling up the form.

Offline Demat Account Opening Process

Though in today’s time, the online account opening is an easy process but for many who do not have the proper knowledge or access to internet Opening a Demat Account offline option is also there.

The broker you choose must be having many branches, franchise offices or sub-broker’s offices in different locations. Your offline account opening process will start from –

  • Finding the nearest branch, franchise office or sub-broker’s office of the brokerage house you have selected.
  • Once you find that, go there and ask for a Demat account opening. The executives will happily entertain you as you are going to invest via them and also in their company.
  • You need to fill the application form they give you. Check all the details rightly mentioned.
  • Now they will ask you for your KYC documents. You need to provide the photocopy of PAN, AADHAAR and other documents for KYC verification. The documents will be attached to the form and then you need to submit the same to the executive who is attending you.
  • After a few days, you will know whether your application is accepted or rejected based on your documents verification result.
  • You will receive a letter and email at the same time with the login ID and password if your application for the account is accepted.

Whether you opt for Online Demat Account Opening or offline, you need to provide some of the crucial documents for verification purpose and that we will discuss in the next section of this article.


Open Demat Account with these Top Stock Brokers

Angel Broking Demat AccountKotak Securities Demat AccountZerodha Demat Account
5Paisa Demat AccountMotilal Oswal Demat AccountAditya Birla Demat Account
Alice Blue Demat AccountReliance Demat AccountSMC Demat Account
Axis Bank Demat AccountReligare Demat AccountKarvy Demat Account
Edelweiss Demat AccountSAMCO Demat AccountBonanza Demat Account
Geojit Demat AccountTradebulls Demat AccountCanara Bank Demat Account
HDFC Demat AccountUpstox Demat AccountFyers Demat Account
ICICI Demat AccountVentura Demat AccountIDBI Demat Account
IIFL Demat AccountYes Bank Demat AccountMastertrust Demat Account
SAS Online Demat AccountSharekhan Demat AccountNJ Wealth Demat Account
SBI Demat AccountStandard Chartered Demat AccountPaytm Demat Account
Anand Rathi Demat AccountIndiabulls Demat AccountProfitmart Demat Account

Documents Required to Open a Demat Account

If you want to open a Demat account at one go then you have to fill your application with these Demat Account Documents for verification purpose –

  • One proof of identity can be your driving license or any other documents as mentioned in the account application form.
  • One address proof – You can submit passport, voter id or electricity bill here
  • Income proof – Bank account statement of 6 months, photocopy of Income Tax return acknowledgment. It is required for the trading in the F&O segment and other derivatives.
  • You also need to provide a Cancelled Cheque as proof of Bank Account.
  • PAN Card is mandatory
  • AADHAAR Card as well
  • Passport-sized photographs of the applicant

Demat Account Charges

While choosing your brokerage house (DP) you need to consider the Demat Account Charges which they charge for providing you with the service.

First and foremost, you need to choose a brokerage house who is an authorized DP. You need to see, with which depository, the DP is associated and whether it is registered with SEBI or not.

The account charges are the accumulation of certain charges which are discussed below.

Demat Account opening charges

The primary charge you need to pay for opening the Demat account is known as the account opening charge. The charge varies from one brokerage house to another and it can be free as well.

There are many brokerage houses that do not charge a penny for opening accounts with them. You need to see what kind of account they have.

You can open a three-in-one account or two-in-one account. The former is having a bank account along with the Demat and trading account and the latter is having no bank account attached.

Generally, the financial institution that is having banking division provides three-in-one accounts.

Demat Account AMC or Account maintenance fees

The brokerage house and the depository maintains your account with them and provides you with the service you require. They charge a yearly charge for the same.

Annual maintenance charge or AMC is this yearly charge referred above. DPs and especially the private brokerage houses mostly waive off for the trading account annual maintenance charges but not for the Demat account.

There are certain private brokerage houses who waive off the account maintenance charges as well. There are various offers which if availed, then AMC is reduced or waived off.

SEBI has started a new service which is known as Basic Services Demat Account – BSDA which has no annual maintenance fee requirement. It has been started from 1st June 2019.

Though there is a condition as well if your account is having debt securities up to Rs. One lakh, then there is no AMC. As it crosses the Rs. 1 lakh bar, you need to pay a maximum of Rs. 100 AMC up till Rs. Two lakh of debt securities in your account.

Custodian Charges

The Depositories CDSL and NSDL charges a custodian fee which is a one-time fee. The DP or the brokerage house charges the same from the customer and pays it to the Depository. However, you would hardly find any brokerage houses charging this fee.

Brokerage Charges and Transaction Charges

The brokerage charges are charged as per the plan selected and the Transaction charges are also levied on the transactional amount by the DP. It is because they are processing your transaction so they charge a transaction charge.


Open Demat Account Now! – Get upto 90% discount on Brokerage

Fill Your Details Here
  1. Open Demat Account

Features of Demat Account

So, you are thinking about opening an account and want the features it must have. An ideal Demat Account Features would include –

Share Transfer

With Demat Account Online, your share transfer process will be smooth. You need not have any interference in the process as it is completely electronic.

You will get a Receipt Instruction Slip or Delivery Instruction Slip online when you sell and buy shares using the account.

Dematerialization of Shares

Demat account’s main purpose or feature is to dematerialize shares. The physical format shares are dematerialized using the account into an electronic format.

The DP or the Depository Participant helps in this process of dematerialization. You can also convert the electronic shares into a physical format. It is known as Rematerialization.

Loans against Shares in Demat account

Whether your main job is of a trader or you are a full-time investor, you can use your shares lying in the account for availing a loan.

Yes, the shares you hold in your account can work as collateral for availing a loan. You can pledge the shares and get a loan against the same.

Pausing Demat Accounts

If you are not in the mood for trading or investing for some time, you can free or pause your account. Yes, it is possible to do that.

You can free your account when you want to prevent any kind of unexpected debit or credit into your account.

Various Options for Accessing Your Account

There are different ways of accessing your account. You can use the multiple trading platforms – trading terminal, the mobile application for trading or the online browser-based application as well.

Speedy and Reliable

If you have the Demat account with NSDL then you get the Instruction slips online as well. This consumes really less time and it makes your trading much smoother.

With this account, you can also speed up your trading as there is no physical transfer of shares or money. Electronically the whole process is way faster than before.

Corporate Benefits and Actions

The companies whose shares you hold, provide a dividend, bonus shares, and other corporate benefits from time to time. These benefits directly get credited to the account holder’s account.

Whether the benefits include right shares, bonus shares, stock split, everything gets directly reflected in the Demat holder’s account.


Benefits of Demat Account

There are several benefits of using the Demat account. The Demat Account Benefits are mentioned below –

Risk is decreased

Trading is a risky affair and when it was with physical shares, it was way riskier. With the electronic format shares in the account, there is no risk of theft, damage, and loss of the shares. There is also no risk of bad securities being delivered or fake securities.

Easy transfer of shares and holding

The shares are held in the account safely and there is much ease in transferring shares from this account. There is no need to manually calculate how many shares or investment certificates you have.

The account shows all those details. With the electronic format, it is easy to transfer the shares while trading. You do not need to physically deliver the shares after trading.

Trading Odd Lots

Earlier, there was an issue with the physical shares. You couldn’t buy single shares or odd lots. With the advent of this account and electronic transaction, now traders can trade one single share at a time as well. You can buy and sell odd lots any time without any hassle.

Costs are reduced

The cost of trading generally reduces with the Demat account because you do not have to print the physical share certificates and maintain is safe.

The costs reduced also because of the elimination of the handling charges for the physical shares, and other expenses. This in-turn increased the profit margin for the traders.

Time Efficient

With electronic share transfer, your time is also saved like your hard-earned money. You do not have to go and transfer the shares and you save time.

You also do not have to go to the bank to take your money for selling shares or depositing the money for buying shares and others.

Time is saved for another crucial reason. There is now no paperwork involved. This is why the process has been simplified and the time required is less.

Demat account actually changed the way shares are traded. Earlier, the scenario was completely different, where time was consumed a lot, there were chances of damage to the share certificates and many other issues.

All these issues are solved by a single process and account that is an electronic share trading process using the account.


What is Free Demat Account?

A Free Demat Account is nothing but where there is no account opening charges and annual maintenance charges of the account.

The Demat Account Free can be availed mainly with the private brokerage houses where they offer various discounts. These discounts can be used to waive off the account opening and maintenance charges.

Generally, the private brokerage houses hardly charge any fee for opening accounts. But those accounts won’t be termed as free Demat accounts.

As they are not completely free. When there is no account opening charges as well as no maintenance charges every year, then only the account is Free.

Free Demat account obviously reduces the cost of trading of the traders. There are no annual fees that you need to pay for using the account for trading.


Things to check before Opening a Demat Account

There are five crucial things that you need to check before opening a Demat account.

Broker’s Type

The most important factor to check before opening a Demat account is the type of brokerage house. There are discount brokers and full-time brokers.

The charges of the account and the brokerage charges vary according to the type and the brokerage house. The full-time brokers offer a wide range of services.

The services of the full-service brokerage houses include research analysis services, IPOs investment. There are many other services apart from the Demat and trading facilities.

The discount brokers on the other hand only provide Demat and trading services basically. So, while choosing the account you need to consider the type of brokerage house primarily.

Charges and fees

The next important thing that you need to check is the charges of the DP you have shortlisted. The charges as mentioned in the earlier point as well differ from a brokerage house to another.

It also depends on the type of broker. You must choose DP, whose charges for maintenance of account are lower. You should also check which brokerage house provides the best offers.

This would help you to waive off these maintenance charges and account opening charges. You also need to check the brokerage charges so that you can save more on your trades.

Nomination Facility

Just like in life insurance, accounts can also have nominees. Though not all brokerage houses provide this facility you must find one that does.

The nomination facility will help you to transfer the shares to the nominee’s account on the event of your death. This will help your family to get the benefit of your investment.

Support provided by the Broker

While choosing the account, make sure you go through all kinds of support they provide for trading. This must include their trading platforms, customer support, and fund transfer facility and others.

These are crucial as these will help you in trading with ease. Demat charges need to be compared alongside the support you get from the brokerage house.

Online Access

Talking about the trading platforms, you must check whether the brokerage house is offering advanced technology-based trading platforms or not.

You must also check whether there is online access for everything related to trading or not. There must be an online chat support facility, online fund transfer facility. You must check whether there is an online browser-based platform available or not.

Trading Software

The trading terminal software needs to be checked as well before opening the Demat account. Whether the software has all the required features or not. You must use the software from other’s devices to see whether you are comfortable with it or not.

All these points need to be considered while you are thinking about opening the account. These things matter a lot when it comes to hassle-free trading.


Open Demat Account Now! – Get upto 90% discount on Brokerage

Fill Your Details Here
  1. Open Demat Account

How to choose the Best Demat account?

To Choose Best Demat Account you need to first check the above-mentioned points (refer to the previous section). Once you check those points you must consider these points –

  • First, you need to see whether your Depository Participant is versatile or not. It is a crucial point to keep in mind while choosing the best Demat account. The assistance provided by them needs to cover various areas of trading.
  • The DP must be having quick services to facilitate your trading process. However, the services should be delivered efficiently as well. You need to compare various brokerage houses (DP) and check their reviews from other clients to see which ones provide the best services.
  • The next thing you must check for choosing the best DP and account is whether they provide a one-stop online solution for all your investment need or not. Whether they are well-equipped with online trading platforms, support or not.
  • Then you need to check whether their trading platforms have all real-time updates or not. It is mandatory for trading to get real-time updates on the market.
  • Then you must check whether the DP provides research services and analytical tools for self-research or not.
  • Hygiene factors matter a lot while choosing a good DP. These are factors like how efficiently the DP carries out your transaction. Then whether you get the best possible share prices using their services or not.
  • Fund transfer and bank account linking must be smooth and the DP must be having provision for different bank accounts to be linked to the Demat and trading account.
  • The brokerage charges need to be lower and economical as well to help the traders make a profit out of their trading.

How to use a Demat Account?

The process of using this account is very simple. It is straightforward and there is no hassle in it. To start using this account you need Demat Account Login. To get the log in you need to open the account. The process of opening the account is mentioned in the above section.

You need an internet connection for using the account and to trade. The account is opened with a brokerage house, either directly from the broker or via sub-broker or franchises. You can open the account online as well.

The Demat Account Uses includes holding shares that you trade from your trading account. As per the regulations of SEBI, now it is mandatory to use the account for trading shares.

The account keeps the shares in an electronic format. It is a cost-effective way of holding the shares, safely without any damage or chance of losing the shares.

Demat account is not mandatory for trading ETFs, commodities, currencies, and derivatives as of now as per the regulation of SEBI. These types of investment options do not need any stocks to be held in the account or cash settlement.

Share allocation is another most important feature of this account which links the Demat to the trading account. For using the Demat account for share allocation, you need to –

  • Open the Demat account
  • Log in into your Demat and trading account
  • Buy or sell shares from the trading account
  • The shares get allocated from the Demat account
  • You can check the balance in your Demat account and check the money present in the trading account as the margin

Demat Account Processes

The Demat Account Process is mentioned below –

  • The account holder needs to submit the form to the brokerage house. It needs to be completely filled and information needs to be proper.
  • The corporate accounts can be closed or transferred only by an institution’s authorized signatory.
  • The holders of the account need to sign the form in the presence of DP’s official
  • The joint holders of the account need to sign the form in the presence of the bank officials
  • Crystal report or the report of the client master needs to be stamped duly and signed. It needs to be done in the central depository where the new account is transferred and proposed and it needs to be submitted
  • The unused instruction sheets need to be returned and canceled duly
  • Bank official needs to submit the self-attested identity proof copy for verification and it is mandatory
  • The details including the name of the account holder must be the same in the new and the previous account

Demat Account Concepts

The various concepts of Demat Account is listed below –

Depository

It is a location centrally selected by the authorities. All the shares are held in the electronic format at this place. It is like a bank, where all the money of the customers (account holders) are kept.

In India, there are two depositories, one is CDSL – Central Depository Services Limited and another one is National Securities Depositories Limited. As per the Depositories Act, you can avail of the Demat facility via Depository Participant.

Securities Dematerialisation

It is the process of converting the physical share certificates into electronic format. The investors are required to follow the same as the regulations and all transactions are now electronically processed and maintained.

Dematerialization Procedure

The process of dematerialization takes around thirty days. In these 30 days, the DP verifies the details submitted to it as the certificate and Demat Request Form or DRF. Then it forwards the same to the Company or the Registrar.

Dematerialization Credit

The Registrar or the Company process the request once they receive the forms/certificates. You need to submit the form to the DP and they will verify the same and then submit to the Registrar.

After the process is completed successfully, an equal number of shares in electronic format is credited to the Demat account of the holder. The holder needs to resubmit the DRF in case of rejection of the request and seek assistance from the DP.

Transmission cum Demat

You need to submit the Transmission cum Demat form to the Depository Participant along with the Death Certificate in case of a deceased investor when the account is on a Join basis.

If you are the surviving partner holder of the account, you need to do the same. There can be multiple surviving holders, all their names need to be there and it must match the earlier details.

Transposition cum Demat

In case of the names in the physical shares certificates not matching with the Demat account form submitted, then you need to submit this form to the DP.

Rematerialization

There is a form called Remat Request Form or RRF which needs to be filled in case of reconversion of the shares from electronic to physical format.

The holder/s of account need to sign the form and submit to the DP. The DP will verify the details and then submit the same to the Registrar of Company.

Freezing of Demat account

The freezing of the account means pausing the use of the Demat account for a while. You have to submit a request for the same to the DP.

De-freezing of Demat account

When you want to restart the use of the account after freezing it for a while, you need to again submit a request in due format to start the service. You need to submit the request to the DP itself.

Closure of Demat account

In case you want to close the Demat account, you need to submit a request signed by all the holders of the account if any. The shareholdings in the account need to be transferred to another account before closing the account.

For the Corporate Actions Demat account, closure is not possible and that also goes for pending requests for the Dematerialisation of shares if any.


What is Dematerialization & its Benefits?

The process of Dematerialization means the conversion of shares which are in physical format to electronic format. Demat Account holders convert their share certificates from physical share certificates to electronic ones using this process . You need to open the Demat account for the same.

The Depository is the institution that is responsible for the Dematerialization process. It takes care of the process initiated by the Depository participant on request from the account holder.

The DP is like an agent of the Depository who provide depository and trading services to the account holders. The DP needs to register with the Depositories and SEBI for the same.

Dematerialization of shares reduces the paperwork involved in handling physical shares certificates. The physical shares also lead to different issues like damage to the share certificates, errors and other issues in the certificates.

Keeping records of these certificates are also hectic whereas the dematerialization of shares makes it easier. Dematerialization is a completely electronic process. All the records are electronically generated and maintained.

The Dematerialisation process also helps the officials involved in this job to manage the records and details properly as there is no headache of paperwork. It, in turn, helps in keeping the system running properly.

The benefits of Dematerialization are –

  • You can transact your shares from anywhere using the internet and trading account
  • Lessor no paperwork
  • Holding charges of the shares in Demat account is reasonable and it also reduced another cost of handling paper share certificates
  • Due to less paperwork, time is efficiently used.

Various Types of Demat Account

There are three different Demat Account Types as mentioned below –

Regular Demat Account

This is the basic Demat account which is for the residents of India. They can use this account for trading and holding shares.

Repatriable or NRI Demat Account

This account is for the NRI or Non-Resident Indians. NRI Demat account allows you to transfer funds from the banking institution abroad. This account is linked to NRE Bank accounts.

Non-Repatriable Demat Account

Though this account type is also for the NRI investors here one cannot transfer funds from the foreign banks. The investors need to link this account with an NRO bank account.

Apart from these three as we all know there are two types of account you can open. Three-in-one Demat account which includes the bank account along with the Demat and Trading account. The other one is a Two-in-one bank account which includes only Demat and trading account.


How to find your Demat Account Number?

You get a Demat account number and there is a DP ID. DP ID is the Depository Participant Identification number. You get the Demat account number when you open an account with a DP.

The investors have to check the letter that they get from the Depository to Find Demat Account Number. You receive the letter or mail on your registered mail id or address.

NSDL and CDSL send a letter of confirmation of your account with them and in that letter, you will find the Demat Account Number.

It is a 16-digit number. In the case of NSDL, it starts with ‘IN’ followed by 14 digits and if it is from CDSL then it is a complete numeric account number.

The DP ID is different from the Demat account number. Depository Participants get the DP ID. The latter is provided to the account holder only.


How to Transfer Shares from One Demat Account to Another?

You can opt for either online transfer of shares of manual transfers of shares from one account to another.

Online Demat Account Transfer

If you want to transfer shares online from one account to another, you need to fill the form of CDSL for the same purpose. CDSL only allows the online transfer of shares within two accounts.

You need to submit the request form to the DP you have registered with and it will forward the request. On approval of the request, you can transfer shares from one account to another.

The steps of doing the same are as follows –

  • Register online on the CDSL website
  • Fill the form with all the details for transfer of shares
  • After filling the form, print it and submit the same to the DP
  • The DP will verify the details and then it will generate a password for the account holder who wants to transfer shares to another account
  • You can then use the password you have received and start transferring shares to another account from yours.

Manual Transfer of Shares

In case you want to transfer shares manually, you need to follow these steps –

  • Firstly you need to record the names of the stocks that you want to transfer. The ISIN is important and you need to record it carefully. You need to put it for making the transfer.
  • The Target Client ID is a Sixteen-digit character code. You need to record it carefully. It includes the client ID and also the DP ID.
  • Now you have to select the mode of transfer. If you have to do the INTER-Depository Transfer then select the column for the same and if you need INTRA-Depository transfer then select the column “Off Market Transfer”.
  • You need to fill the DIS slip and submit it to the existing broker of yours.
  • Then the broker will give you a receipt for the DIS slip as acknowledgement
  • After 3-5 days, the existing broker will transfer the shares to the new account of the new broker and the latter might put some charges for the same.

Open Demat Account Now! – Get upto 90% discount on Brokerage

Fill Your Details Here
  1. Open Demat Account

How to link your Aadhaar Number with Demat Account?

To Link Aadhaar with Demat Account you need to follow these steps –

  • First, you need to visit the NSDL Site
  • Click on the option that says “Click here to Link AADHAAR Number to Demat Account”
  • Fill the details – DP ID, Depository Participant name, your Client ID and the PAN Details
  • The NSDL site will send OTP to your mobile number and email ID registered with NSDL
  • Enter the OTP and Click on Proceed button
  • Now enter the AADHAAR Details and all the other details required
  • The site will generate another OTP and send to your mobile number registered with AADHAAR
  • Enter the OTP and proceed
  • AADHAAR and Demat account are now linked.

How to convert physical shares to Demat?

There were lot of hassles in trading physical shares. It was very easy to fake those certificates, they were prone to damage and theft and other mishaps.

Physical Shares to Demat in electronic format then started to eradicate these issues. To convert the physical shares to Dematerialized shares you need to follows these steps –

First, you need to open Demat account with a DP

  • For the same, you need to visit the DP office or sub-brokers office and make an application for opening accounts.
  • You can also go for online account opening
  • Submit the required documents for KYC
  • Once your documents will be verified, you will receive a login id and password for the account and then you can transfer convert your shares which will discuss in the next step.

Conversion Process

  • To convert the shares you need to contact your DP with whom you have your account.
  • Fill the DRF form and submit the same to the DP along with the shares certificates that you have in physical format
  • Then the DP will convert the same after verification of your application and documents. It takes around 2-3 weeks.
  • After you get the shares in electronic format, you can dispose of the physical share certificates as they will be no longer valid.

What is Minor Demat Account?

Minor Demat Account is a Demat Account for Minors. It means the account holder is under the age of eighteen years old. Guardian of the minor can open the account on the minor’s name.

A guardian, in this case, can only be the parents of the minor account holder or a court-appointed local guardian. Parents and court-appointed guardian can only carry on the operation in this account.

The benefits of opening a minor Demat account is that the transfer of shares from another account to this account takes less time. it also provides a great platform for the child’s financial planning.

It can help the child in the future with higher studies and other financial aspirations of the child and the parents. In this account, the parent can invest for long term to achieve the financial goals they have for their child.

There are some restrictions for the person who operates this account of a minor. The parent or the local guardian cannot trade in other segments like in intraday or F&O, derivatives. Parents cannot make minor as a joint account holder.

The parents or the local guardian can only invest in shares on a delivery basis. No linking is possible in between Minor Demat account and trading account as per SEBI’s regulations.


What is Joint Demat Account?

A Joint Demat Account is similar to a joint bank account where there is more than one holder of the same account. Two or more people can open a single Demat account on their name.

The benefit of having Joint Demat account is that if you and your family member or partner trade on a daily basis or invest in financial market then you do not have to pay maintenance charges for multiple accounts. You can open one single account and operate and invest together.

The process of opening a Joint Demat account is similar to a regular account opening. Every holder of the Joint account needs to submit the documents for verification and KYC purpose.

All the holders are required to sign the form and fill their details for the opening of the account. They also need to sign the form for closing the account as well.


How Demat Account Works?

Demat Account works in a very simple manner. It includes Depositories, Depository Participants, Clearing Houses, and Stock Exchanges.

There are two Depositories in the country as we all know by now. They are CDSL and NSDL. The keep your shares safe and sound.

The next are the DPs which can be an Authorised Broking Firm, Banks offering broking services, and financial institution other than the above two who offers investment services. They help you use the services of the Depositories using the account.

The next comes to the Clearing Houses. They help in debiting and crediting of the securities/shares. There are two clearing houses in the country as well. One is National Securities Clearing Corporation Ltd. (NSCCL) which is under NSE. The other one is Indian Clearing Corporation Ltd. (ICCL).

Then comes the stock exchanges which are NSE and BSE mainly. Broker of the purchaser of the shares credits the same to the account of the purchaser and it is reflected in the account holding statement. If the trade is made online it takes T+2 days to reflect the same on the account.

Selling shares online debits equal number of shares in the Demat account of the investor. Equal and corresponding amount of money is credited to the investor’s trading account.

Manual sale of shares require the Delivery instruction note with all the details of the sale process.Broker receives the Delivery instruction slip. Then he will debit the shares from the investor’s account and then the investor will get the money.


Demat Account – Conclusion

Demat Account is mandatory for trading in today’s time as per SEBI’s regulations. It is really easy to open a Demat Account and operate the same.

There are several benefits of using this account for share trading as well have discussed in the article above and it completely solves the problems of using the physical share certificates.

So, if you are thinking about starting trading and investment, the first search for the best account as per your requirement, check the charges and other details and open Demat account to start investment soon.


Demat Account Glossary

Dematerialization

Dematerialisation is the process of converting the physical share certificates to electronic shares. It is a process that involves the Demat account, Depositories and DPs. It is a completely electronic process.

Electronic Certificate

It is the share certificate in electronic format. The bank account, trading, and Demat account are three necessary participants in the process of generating electronic certificates when you purchase shares. You get the ownership of the shares in an electronic format.

Central Depository

This is an institution which is known as the central agency for all dematerialization processes taking place in the country. It keeps records of all those transactions and information of the account and its holdings. The two Central Depositories of India are NSDL and CDSL.

Depository Participants

Depository Participants or DPs have authorised brokerage houses, banks and financial institutions that provide services of Dematerialization of shares and trading facilities. They are the intermediaries between the Depository and the investor/holder of the account.

Transaction Identification

The trading account is necessary for making any trades. There is a unique identification number of each trading account. When you want to place orders, you need to mention the unique identification number of the trading account. It is this number that helps in the identification of the transactions made by different traders.

Portfolio Holding

The Demat account holds all your shares and other investment options. Portfolio Holding is nothing but the shareholdings in your account. There can be shares – equities, ETFs, mutual funds and other investment options in the account.  When the investor sells something, it is debited from the account and credited when shares are purchased.


Open Demat Account Now! – Get upto 90% discount on Brokerage

Fill Your Details Here
  1. Open Demat Account

Most Read Articles

Full Service Brokers in IndiaMobile Trading Apps in India
Discount Brokers in IndiaBrokerage & Other Charges
Sub Brokers in IndiaExclusive Offers by Stock Brokers
Best PMS in IndiaTop Investors Portfolio
Upcoming IPOsBuyback of Shares
Brokerage CalculatorBroker Complaints & Ratings
Margin CalculatorPlatforms Login
Broker ComparisonStock Broker Customer Care
Trading Platforms in IndiaTop 10 Stock Brokers in India

 

One thought on “Demat Account – Find Meaning, Account Opening Process, Charges, Features, Benefits & more

  • July 5, 2020 at 12:04
    Permalink

    As u mentioned 5 things to chek before opening new demat a/c. But most of the things can be checked or realised or suffered or cross checked only after practically opening the a/c & then after come across with many hurdles, may be manual or digital.
    The software in use nowadays for total demat or trading a/c operation or transaction process through small & little tiny app which is not fully problem proof. Even after frequently updating the trading etc is never smooth & ultimately financial loss & mental stress.
    So what & how do first ???
    I hv opened the ac with a broking co. & facing many problems frequently, if anything go wrong during trading & transaction or emergency, no one receives your calls to escape you.
    Need guidance, guidelines for all. During lockdown 12 – 15 lacs new a/c added.
    Who are the gainers or beneficiaries??
    & Who are the loosers ??
    Best way is to buy & get delivery of shares using own amount only & sell, like king.
    Because customer is king.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Get 90% Discount on Brokerage Now! Open Demat Account
×

Share your details & Become Sub Broker Now!

  1. Become Sub Broker

Offer valid for limited time.

×

Share your details & Open Demat A/C Now!

  1. Open Demat Account

Offer valid for limited time.

×

Share your details & Get IPO Allotment Now!

  1. Invest in IPO

Offer valid for limited time.

×

Share your details & Invest in PMS Now!

  1. Invest in PMS / PCG

Offer valid for limited time.