What is need and importance of Demat Account in India?

Short Answer

The stock market has seen significant changes since the introduction of demat accounts. Demat refers to “Dematerialization” of shares. Know the meaning, need and importance of Demat Account in India. Simply speaking, Demat account allows you to store securities in electronic form.

Detailed Answer

You might have heard of Demat account in India. When we talk of stock investing or stock trading, we often listen about "Demat account". So, I thought to express some useful info on the need and importance of demat account in India.

Gone are the days, when people used to store physical share certificates. So much hassle to secure these important pieces of paper and avoid them getting stolen or lost. This is when demat account comes to our rescue. No worries to carry this exhausting task of storing paper shares when you have the facility to store them in electronic form. Did you get my point?

So, Demat account allows you to store your shares in electronic form rather than holding them in physical form. Demat simply refers to "Dematerialization" of shares. Just as you have a bank account and carry online transactions. Similarly, Demat account helps you to keep your investments safely.

Need and Importance of Demat account in India:

  1. Acts as a safe repository for your different investments.
  1. Ensures security of your transactions.
  1. Paperless process of investing and trading.
  1. Demat account is a pre-requisite for trading in stocks.
  1. Invest and store a variety of investments like stocks, mutual funds, ETFs etc. at one place.
  1. A quick and convenient way to carry on your trading activities.
  1. Reduced cost of operations due to less paperwork to be done.
  1. User-friendly interface on various online trading portals make it a pleasant experience for investors.
  1. A simple and faster Demat account opening process is to be followed. You can easily get started!

To enjoy a seamless access to different services on your trading and investing path, you need to have a Demat account.

What do you think? Are you interested in long term investing or day trading? Do you have a Demat account? What are your opinions on the same? Any points to share.

Tagged With: demat accountdemat account importancedemat account needdemat account india
Categories: Stock Market
Ask your query and our expert community would be happy to help
Discussion (2)

    It's a safe heaven for storing shares that you might have purchased. It's required for any person looking to trade in the stock market.

    The importance of demat account can't be ignored in this digital era. We have entered the digital age where everything is getting online. Just few clicks & you can do different transactions. So, investing & trading in stocks is no exception. Opening a Demat account simplifies the entire investment process. These days 3-in-1 Demat-Trading-Bank accounts or 2-in-1 Demat-Trading Account options are easily available with different stock brokers in India. The Demat account opening process has also become simple involving less paperwork & documentation. It's high time we realise the importance of demat account in India.

Related FAQs

Can I have two Demat accounts in India? 2 or multiple accounts

Yes, you can have multiple demat accounts with different stock brokers in India. But, what's the need to have 2 demat accounts? Just have a single demat account with a good popular broker. That's it!

What are documents required for Demat account opening online in India?

To open a demat account, users will require a filled applciation, Aadhar card, PAN card, address proof, photographs, bank statement, and income proof.

Can we open demat and trading account without Aadhaar card in India?

Yes, you can open a trading and Demat account without an Aadhaar card but it's not possible to do that in the online method. To open your account without an Aadhaar card, you will have to visit the broker's branch and complete the process there.

Is opening a demat account free in India?

Yes opening a Demat account in India might be free with some brokers but not all. Apart from the opening charges, a Demat account is not completely free. You will have to pay an Annual Maintenance charge or Demat fee, every year.

How much money is required to open a Demat account in India?

Many Indian brokers allow you to open your Demat account for free, whereas some charge a nominal fee of Rs 200 to Rs 500. Although there are some recurring charges that you have to bear such as annual maintenance charges, Demat charges, etc.

What do you need to open a savings bank account in India?

To open a savings bank account in your chosen bank, you will need identity proof, address proof, and a recent photograph. Documents like PAN Card, Aadhaar Card, Passport among others will be needed in the account opening process.

How much money do you need to open a savings bank account in India?

To open a savings bank account in a private bank, you will have to make an initial deposit of around Rs 5,000 to Rs 10,000. However, there are some public-sector banks and other online banks where you can open your account without any deposit and get all the banking facilities.

Can someone else operate my Demat account on my behalf on the basis of Power of Attorney?

Yes, you can give power of attorney (POA) to someone to operate your demat account on your behalf. For details let's explore more.

Can I transfer shares from CDSL Demat account to NSDL Demat account?

Shares can transferred from CDSL demat account to NSDL demat account by using the Inter-Depository option as the transfer mode.

What is the difference between Demat account and trading account?

Trading Account is used for buying and selling securities while Demat Account is for holding various securities in electronic format.