What Do You Need To Know About Demat Account Today?
Everyone has a bank account today that helps in safekeeping the money and use it whenever necessary. Some people have multiple bank accounts that allow them to distribute their funds properly. Currency is not the only financial security that needs an account, if you deal with shares, equities, and debts, you need an exclusive account, i.e., Demat account. It is similar to a bank account, but instead of money, this account is used to hold shares, bonds, debentures, etc. Today, if you want to buy any securities in the share market, the first and foremost requirement is to have a Demat account. In this article, we will discuss more the Demat account and its relevance in the financial world.
What is A Demat Account And Why You Need One?
A Demat or Dematerialized account is meant for storing securities. It is an electronic account that helps in converting paper share certificates into electronic format. According to Indian Stock Market guidelines, anyone who wishes to buy or sell securities in the stock market must possess a Demat account along with a Depository Participant.
What Are Depositors Participants?
Basically, these depositories or depository participants are the organizations that possess the securities electronically and facilitate their transactions. In India, there are two significant depositories with SEBI: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
What Are The Advantages of Having a Demat Account?
Demat account is an electronically formed account that helps in safekeeping shares and securities. So, evidently, it is an essential account that everyone dealing in stocks and securities must have. There are plenty of benefits of holding a Demat account, here are a few perks that enhance the relevance of the account-:
- Safely hold your securities and shares
- Reduced transaction cost compared to the physical method as the stamp duty is exempted
- Fast and convenient electronic management
- Lesser paperwork as everything is handled electronically
- Elimination of factors related to physical certificates including non-delivery, thefts, fake practices, etc
- Share as many shares as you want, even one.
- Allow to invest online conveniently and safely
What Are The Fees for Opening A Demat Account?
When it comes to Demat account charges, a majority of Depository Participants do not charge a fee, while some provide offer refundable fees facilities, and others have a fixed charge. Many DPs charge a transaction fee, maintenance fee, and conversion charges while dealing with the Demat account. It is essential to contact the concerned Depository and ascertain the charges criterion to get a clear idea regarding the fee for opening a Demat account.
The Bottom Line
It is vital to hold your financial securities safely and manage them in a reformed way. A Demat account is an electronic form of handling and maintaining your shares, equities, debts, and other securities. There are plenty of benefits of having a Demat account. Anyone who is dealing in financial securities must have a Demat account today. The above mentioned were some of the critical information regarding the Demat account that will tell you the significance of this electronic account.