Demat refers to a De-materialised account for individual Indian citizens to trade in listed stocks. And keeping the shares electronically instead of the physical certificate.
As we keep our money in the Bank’s account like same demat account is for keeping our shares. so demat account is just like a bank account where actual money is replaced by the shares. Let say you are having Rs 50000/- in your bank account. In the case of demat account your portfolio of shares is: 250 of Bharti Airtel , 200 of NTPC , 150 of HCL and 100 of RELIANCE POWER . All these will show in your demat account.
Benefit of Demat Account:
- Holding investments in equity and debt instruments in a single account.
- Immediate transfer of securities
- It’s a safe and convenient way to hold securities
- There is no stamp duty on transfer of securities
- Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.
- Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.
- There is a major reduction in paperwork involved in transfer of securities,reduction in transaction cost etc.
How One can Open a DEMAT Account ?
- You approach DP participate either NSDL or CDSL and fill demat account opening form.
- You can also open demat Account With the Help of Your stock brokers. You don’t have to take the same DP as your broker takes. You can choose your own.
- You can also approach Banks because some of the selected branch of Bank having facility of the opening Demat account.
Cost and other Charges:
Cost of opening and having a demat account having mainly four types of the fee: Account opening fee, Annual maintenance charge, custodian charge and transaction charge . All the charges vary from DP to DP.