The excitement seen in the stock market these days, seemed to have bitten my friends as well. Getting a bit exasperated I said, \u201cWill you guys ask one question at a time? I am not running away somewhere!\u201d<\/p>\n
Everyone sniggered. Rachita started off, \u201cSo Surbhi, what exactly is a demat account?<\/strong>\u201d She seemed quite clueless about the concept.<\/p>\n \u201cWell, Rachita, very simply put a demat account is like a bank savings account. Just as you keep your money in a savings account, you keep the shares that you own in a demat account. When you buy or sell shares they are reflected electronically in your demat account just as a cash transaction would reflect in your bank account. \u201d<\/p>\n \u201cSo, how do you get this demat account?<\/strong>\u201d asked Rachita again.<\/p>\n \u201cRachita, there are two central Depositories in India \u2013 the National Securities Depositories Limited (NSDL) and the Central Depository Services Limited (CDSL). These depositories are like central warehouses and clearing houses where the stocks of all publicly listed companies are stored. To get a demat account, you need to approach an agent of these central depositories, called a depository participant. The depository participant could be either a bank or a broking firm. \u201cAnkur, think of DPs as the intermediaries between the depository and the investors. So, if you want to open a demat account, you have to approach a DP which will open it for you. So, you may have opened your account through any one of the authorized DPs, but your account eventually is with either of NSDL or CDSL. The depository participant will also provide you with periodic statements of holdings and transactions, similar to your bank passbook or statement. Got it?\u201d<\/p>\n \u201cYup\u201d.<\/p>\n \u201cSo, what are the steps to open a demat account?<\/strong>\u201d enquired Prashant<\/p>\n This question seemed to have a precursor in the question \u201cwhat is the minimum requirement to open a demat account?<\/strong>\u201d<\/p>\n \u201cFirstly, you must be at least 18 years of age which is questionable considering the jokes you crack! Next, you need to choose a depository participant based on your convenience and the DPs charges. You have many options here like HDFC Bank, ICICI Bank, Motilal Oswal etc. Typically, a DP will charge anything between 0 to Rs. 750 as account opening charges depending on the kind of account. There might also be an annual account maintenance fee ranging from Rs. 400 to Rs. 800 from the second year onwards. The next step is to submit few documents which include correctly filled account opening form, pan card photocopy, proof of identity & residence proof. After you do this, you will be required to sign an agreement on a stamp paper (including rights & obligations of both parties). Then, a unique Beneficial Owner Identification Number (BO ID) will be allotted to you by the DP. And then, voila, a demat account is created and a unique demat account number is allotted to you by NSDL\/CDSL.<\/p>\n Megha, who had previously seen her dad deal in physical share certificates, was the next in line to ask her question, \u201cIf I am not wrong, demat has replaced physical share certificates of the past. So, what are the benefits of holding shares in a demat account?<\/strong>“<\/p>\n I responded with a smile: Amit, quite convinced about demat by now, asked, \u201cSo, once I have opened it, how do I go ahead and buy\/sell stocks<\/strong>?\u201d<\/p>\n \u201cAmit\u201d, I said, \u201cUsually you open an online trading account along with a demat account, that enables you to buy and sell securities, to and from your demat account. Consider it like a debit or credit card, which is necessary to transact on your online banking account.\u201d<\/p>\n \u201cWhen you buy shares, your DP will credit your demat account with the shares and these will be reflected in your statement of holdings. If you are trading through an internet based platform, you can view your holdings online. Typically the DP credits the shares on T+2 basis, that is trading day + 2 days after that.\u201d<\/p>\n Amit immediately asked another questions, \u201cOh! Tell me more about this online trading account? How does it work?<\/p>\n By now, Nikita, my dear friend had had enough \u2018gyaan\u2019 on investing for the day.<\/p>\n She blurted, \u201cPlease Amit, now you better save your questions for the next time we catch hold of Surbhi. For now, I really need to grab a bite, and rush home. My dad has been calling me up for long now.\u201d<\/p>\n Amit frowned.<\/p>\n Nikita\u2019s request ended our session on demat accounts. But I knew that another session about online trading accounts was in the offering when we met next time.<\/p>\n So, we’ll see you next week with our article on online trading accounts.<\/p>\n If you liked what you read and would like to put it in to practice Register at MoneyWorks4me.com<\/a>. You will get amazing FREE features that will enable you to invest in Stocks and Mutual Funds the right way.<\/p>\n Need help on Investing? And more<\/b>\u2026.<\/b>Puchho<\/b> Befikar<\/b><\/span><\/p>\n Kyunki<\/i><\/b> yeh<\/i><\/b> paise<\/i><\/b> ka<\/i><\/b> mamala<\/i><\/b> hai Are you one of those who wonder how do people invest in stocks? Don\u2019t know what are the formalities involved? Have heard of demat accounts and online trading accounts but don\u2019t know what they are?<\/p>\n So, let\u2019s chat over a cup of coffee to learn all about demat accounts!<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1154,1151],"tags":[432,747,745,735,737,738,740,741,742,421,36,748,288,48,49,120,743,746,720,739,744,81,209,83,1142,305,84,85,736,90],"modified_by":"MoneyWorks4me","_links":{"self":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts\/7181"}],"collection":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/comments?post=7181"}],"version-history":[{"count":1,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts\/7181\/revisions"}],"predecessor-version":[{"id":21336,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/posts\/7181\/revisions\/21336"}],"wp:attachment":[{"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/media?parent=7181"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/categories?post=7181"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-json\/wp\/v2\/tags?post=7181"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\u201cWait, I am a bit confused. Could you tell me more about these depository participants?<\/strong>\u201d interrupted Ankur.<\/p>\n
\n\u201cMegha, first let me tell you about the risks that this demat system reduces, over the earlier paper-based system<\/strong> that your dad used.
\n\u2022\u00a0\u00a0\u00a0 There is no confusion in ownership title of securities.
\n\u2022\u00a0\u00a0\u00a0 It eliminates the risk of forgery & counterfeiting
\n\u2022\u00a0\u00a0\u00a0 There is no fear of loss due to fire, theft or mutilation
\n\u2022\u00a0\u00a0\u00a0 There is no risk of signature mismatch, postal delays and loss of certificates in transit, and,
\n\u2022\u00a0\u00a0\u00a0 There is no odd-lots problem. Even 1 share can be bought or sold.\u201d<\/p>\n![\"Benefits](\"https:\/\/www.moneyworks4me.com\/investmentshastra\/wp-content\/uploads\/2012\/10\/About-Demat-over-a-cup-of-coffee-1.png\" "\\"Demat-account-benefits\\"")
\u201cIt also has other benefits<\/strong> like safe, secure and quick transacting, no stamp duty or transfer deed in case of transfer of securities, lower transaction cost, and many more\u2026..\u201d<\/p>\n
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