Demat accounts are trading accounts used for buying and selling stocks and other commodity market activities. It is an electronic medium that allows you to keep track of all of your investments, such as bonds, shares, and mutual funds, while also providing a secure and convenient platform.
Previously, trading was done in the form of physical share certificates. Physical shares are now obsolete. Demat is an abbreviation for dematerialized, which means to dematerialize physical shares. As a result, a Demat account is simply an account in which your shares are kept in digital form.
The Importance of a Demat Account
- It is a time-saving trading strategy. Traders can transfer, buy, and sell shares using their Demat account in a fraction of a second, saving them time.
- All mutual funds, equities, shares, and bonds can be held in a single account. There is no need for a separate account for each type of security. Traders can also check the status of various securities in one place. They do not need to visit multiple accounts to do so.
- The likelihood of physical certificates being lost due to robbery or theft is reduced. And traders no longer have to be concerned about the security of shares that they previously held in physical form.
- All orders are safely delivered to the depository participant. As a result, traders do not have to visit different companies whose shares they own on a regular basis.
- With a Demat account, traders can trade in any number of shares, even one, which was not possible previously when shares were physically held by traders in the form of certificates. Traders can make decisions solely on the basis of their investment objectives, without regard for any other constraints.
- The cost of printing and distributing physical copies of shares is completely eliminated. However, if a trader wishes to have a physical copy of his or her shares, he or she may do so. He or she only needs to make a request and pay the fee.
Types of Demat Account
There are three main types of Demat Accounts from which investors can choose:
- Regular Demat Account: This is only available to Indian citizens who live in the country.
- Repatriable Demat Account: This type of account is available to non-resident Indians (NRIs) and allows for international money transfers. This Demat Account must be linked to an NRE bank account.
- Non-Repatriable Demat Account: Again, for NRIs, but international fund transfers are not possible with this type of Demat Account. This Demat account must be linked to a non-resident Indian bank account.
Benefits of Demat account:
There are numerous features and benefits to opening a Demat account. Let’s go over a few:
- Simple share transfer Quick dematerialisation and rematerialisation of securities: Physical share certificates can be converted into electronic form and vice versa.
- Freezing Demat Accounts: Demat accounts can be frozen for a set period of time if necessary.
- Collateral for loan: Several securities are used as collateral by account holders to obtain loans.
- Multiple access methods: Demat accounts can be accessed through a variety of channels.
- Convenient and quick E-Facility: NSDL users can send instruction slips electronically rather than physically submitting the slip to the DP.
- Corporate benefits and actions: If a company pays dividends, refunds, or interest to its shareholders, these benefits are automatically extended to Demat account holders.
Setting up a Demat account:
When you open a Demat account with Clicqndtrade, the process is simple and can be completed entirely online. All you need is your Aadhar number and PAN, and your account will be open in less than 5 minutes. You also don’t have to pay anything to open a Demat account with Cliqndtrade because we do it for free.