DEMAT ACCOUNT

DEMAT ACCOUNT

In this article, you will know about the following

• Demat Account
• Types of Demat Account
• How it works?

Demat Account is short for the dematerialization account.

A Demat account allows investors to hold their shares in an electronic form. A Demat Account is a bit like a bank account for your share certificates and other securities that are held in an electronic format.

It is a replacement for holding and trading in physical share certificates, which involved a lot of paperwork. As most of the transactions are now online, an investor can trade conveniently with the Demat account. 

Stocks in Demat account remains in dematerialized form, where all your stocks are converted from physical to electronic form to increase accessibility. Apart from shares, the Demat account can also hold bonds, ETFs, mutual funds, gold bonds, and other similar assets with a unique ISIN number.

Benefits:-

• Less Paperwork
• Safe and Secure
• Reduces Cost
• Instant Transactions  

 Types of Demat Accounts:-

There are mainly three types:

• Regular Demat Account: This is for Indian citizens who reside in the country.
• Repatriable Demat Account: This kind of Demat Account is for non-resident Indians (NRIs), which enables money to be transferred abroad. However, this type of Demat Account needs to be linked to an NRE bank account.
• Non-Repatriable Demat Account: This again is for the NRIs, but with this type of Demat Account, fund transfer abroad is not possible. Also, it has to be linked to an NRO bank account.

How it works?

When you want to buy shares, the Depository Participant credits your online Demat account with the shares and these are reflected in your statement of holdings. If you are trading through an internet-based platform, you can view your holdings online.

When you want to sell the shares, you are required to give your broker an instruction. Your account is debited with the shares and you are then paid the money for the shares sold. If you are trading through the internet, the account will automatically reflect a debit of the shares while the amount is credited to your bank account.

There are two Depositories in India – the National Securities Depositories Limited (NSDL) and the Central Depository Services Limited (CDSL), through whom the shares are held by the various depository participants.

THANKS! 

HRIDYANSH DAVE