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demat account

An account that is used to hold shares and securities in electronic format is called a Demat account. The full form of Demat account is a dematerialised account. During online trading, the purpose of a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users.

In India, Demat account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant / Stock Broker such as Angel Broking. The charges of demat account vary as per the volume held in the account, type subscribed, and the terms and conditions laid by the depository and the stock broker.

what is demat account?

Demat Account or dematerialised account provides the facility of holding shares and securities in electronic format. During online trading, shares are bought and held in a demat account, thus facilitating easy trade for the users. A Demat Account holds all the investments an individual makes in shares, government securities, exchange traded funds, bonds and mutual funds in one place.

what is dematerialisation?

Dematerialisation is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.

Demat Account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant / Stock Broker such as Angel Broking. The charges of demat account vary as per the volume held in the account, type subscribed and the terms and conditions laid by the depository and the Stock Broker.

A demat account is used for holding securities in the electronic format, after they are purchased or dematerialised. It is provided by two depositories – NSDL and CDSL respectively. Read more about the working, functions, and use of demat account here:

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DEMAT ACCOUNT GLOSSARY

ELECTRONIC CERTIFICATE

Bank account, trading account, and Demat account are the three essential necessities while dealing with investments. When you purchase a company’s shares, your ownership is marked with a certificate. This certificate is now available in electronic format and is known as Demat credit.

CENTRAL DEPOSITORY (CD)

Central depository is basically a central agency that maintains all the relevant information pertaining to Demat accounts that are opened with DPs throughout the country. India’s central depository agencies include National Services Depository Limited (NSDL) and Central Depository Services Limited (CDSL)..

DEPOSITORY PARTICIPANTS (DP)

The DPs or Depository Participants are fundamental intermediaries between the account holders and the Central Depository. DP’s include several banks, brokerage firms, and other financial institutions that offer investors with Ddemat accounts.

TRANSACTION IDENTIFICATION

Tn order to buy and sell electronic securities, every investor needs a trading account, which is as important as a demat account. Every trading account is given a unique identification number that has to be used for all the transactions of an investor.

PORTFOLIO HOLDING

The demat account of an investor keeps all his investment holdings of investors including: equity holdings, exchange-traded funds, mutual funds, government securities and bonds. All the holdings together are referred to as the investors’s portfolio holding, which theyhe can access through their demat account. All their purchases are reflected as Ddemat credits while all their his sale transactions are debited from thehis Ddemat account.

We hope that the information above clarifies how useful demat accounts are. So, get started with opening a demat account and enjoy its benefits.

MORE INFORMATION ON DEMAT ACCOUNT

What are the charges of demat account?

The charges of demat account vary as per the volume held in the account, type of account subscribed, and the terms and conditions laid by the depository and the stockbroker. While there are no Demat account opening charges, every stockbroker charges transaction/operation fees including the Annual Maintenance Charge (AMC). Failure to pay these fees may result in the freezing of the account. Angel Broking announced the lifetime free Demat account and free trading apps. A 20% discount is offered on online trades with leverage up to 40 times

How to open a demat account?

In India, Demat account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant (DP) / stockbrokers such as Angel Broking. To open a Demat account, you need to contact the DP and fill out the account opening form. Once completed, you need to submit the form along with Proof of Identity and Proof of Address documents. The documents required to open a Demat account are identity proof like PAN card, copy of valid residence proof, existing financial balance sheets and recent photographs. Once the applicant’s details are verified, the application is processed. The broker then dispatches a welcome kit with details of the applicant’s User ID and password. One can access their demat account using these details and begin trading in the stock market. It is essential that you open a Demat account with a reputed stock broking company like Angel Broking.

How long does it take to open a demat account?

Usually, it takes about a week or two to open a Demat account. However, the period may extend to 15-20 days if the processing time is longer.

I have submitted my application. what happens next?

After submitting your application, the DP carries out a verification of the details provided on the Account Opening form. On completion of the verification, your application is processed and a welcome kit is dispatched. The welcome kit contains your user ID and password. You can then log into your account using these details and begin trading online. Your user ID and password are completely safe. Angel Broking does not dispatch the welcome kit containing the user ID and password to anyone except the client, as it contains confidential information. Once you receive your account details, it is advisable to login and change your password for security reasons

Whats is joint demat account?

A Demat account can be held by a single as well as in a joint ownership. A joint Demat account can have a maximum of three account holders, which includes the main holder plus two joint holders. In effect, the joint holders acquire rights to the shares held in the joint Demat account.

Can i link demat & trading account?

A trading account is different from a Demat account. While the latter only retains shares and securities, the former facilitates their sale and purchase. Shares purchased through a trading account may be deposited into the Demat account. Existing shares may also be withdrawn from a Demat account and sold through a trading account. The purpose of linking your trading account to your Demat account is to avoid the process of verification each time. This may also simplify trading. After the order has been sanctioned, shares are either removed from or deposited to your Demat account. When linking the Demat and trading accounts, it is also understand the difference between 2-in-1 accounts and 3-in-1 trading accounts. The 2-in-1 trading account basically integrates the trading account and the Demat account.The 3-in-1 account is offered by brokers that have banking operations within the group. Thus, ICICI Securities, HDFC Securities, Axis Securities and Kotak Securities are all able to offer 3-in-1 accounts due to their banking interface. While 2-in-1 accounts are a must to ensure seamless relationship between trading and demat, the 3-in-1 is not a major advantage as most broking platforms will allow you to transfer funds almost seamlessly into your trading account.

Can i have two demat accounts?

A trader may open multiple Demat accounts, however they can open only one trading account with a broker. Investors would want to have more than one Demat account if they are active traders and use each Demat account for a different trading strategy. However, they should also keep in mind the transaction and operation (AMC) fees associated with each account

FAQ

Things You May Also Like to Know

Are there any demat account opening charges?

No, there are no demat account opening charges. You can open either a trading account or a demat account free of charge. However, every share broker charges transaction/operation fees. Failure to pay these fees may result in the freezing of the account. Angel Broking announced the lifetime free demat account and free trading apps. A 20% discount is offered on online trades with leverage up to 40 times. You can open demat account and trading account for trading securities, stock, gold, ETF’s, currencies, etc. Angel Broking offers the following products for trade—online Forex Trading account, Online Commodities Trading account, Online Currency Trading account, Online Equity Trading account and Online Derivatives Trading account. Through these accounts, you can trade online without having to depend on a stockbroker.

How long does it take to open a demat account?

Usually, it takes about a week or two to open demat account. However, the period may extend to 15-20 days if the processing time is longer. The documents required to open a demat account are identity proof like PAN card, copy of valid residence proof, existing financial balance sheets and recent photographs. Once the applicant’s details are verified, the application is processed. The broker then dispatches a welcome kit with details of the applicant’s User ID and password. One can access their demat account using these details and begin trading in the stock market. It is essential that you open a demat account with a reputed stock broking company like Angel Broking.

If you already have a demat account with a particular depository and wish to change to another, you can do so. You have to fill the Delivery Instruction Slip (DIS) book and submit it to your broker. Fill the relevant details like your securities information, ISIN number, and the new depository participant’s ID (An ISIN number is a unique 12 digit alpha-numeric identification number allotted for a security). Your broker will then send your request to the Depository Participants (DP). The Depository Participants (DP) will then transfer the shares to your new demat account. If the DIS form is duly filled, the transfer takes place within 24 hours or the next business day. Brokers charge a price for the transfer of a demat account. Charges differ from broker to broker.

I have submitted my application. What happens next?

Once you have submitted your application for an account, you will have to wait for its processing. It usually takes a week or two for the completion of the verification process.

After submitting your application, the DP carries out verification of the details provided on the Account Opening form. On completion of the verification, your application is processed and a welcome kit is dispatched. The welcome kit contains your user ID and password. You can then log into your account using these details and begin trading online. It is advisable to change your password for security reasons.

How do I get my user ID and password?

After submitting your application, the DP carries out a verification of the details provided on the Account Opening form. On completion of the verification, your application is processed and a welcome kit is dispatched. The welcome kit contains your user ID and password. You can then log into your account using these details and begin trading online.

Your user ID and password are completely safe. Angel Broking does not dispatch the welcome kit containing the user ID and password to anyone except the client, as it contains confidential information. Once you receive your account details, it is advisable to login and change your password for security reasons.

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