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Demat Account: Meaning, Benefits & How to open a Demat Account

  • Highlights

  • Eliminates the risk of paper based share certificates

  • Convenient share storage and transfer

  • Stores various investments

  • Easily accessible online

What is Demat Account

Demat Account stores the shares you buy online, in a digital format. A Demat Account is also called a Dematerialized Account. Conversion of physical share certificates into digital form is called Dematerialization. It eliminates paperwork and makes it convenient for investors to hold and transfer shares electronically.
 

Benefits of Demat Account

  • Eliminates the risk of paper-based share certificates: Before the advent of Demat Account, the shares existed as physical paper certificates. If you held shares of a company, you had to safe keep a dozen of paper certificates. These were vulnerable to tampering, theft, loss and forgery. Moreover, the transfer of shares involved lengthy paperwork that was prone to error and delays. With Demat Account, all these shares can now be stored electronically in a safe and secure digital repository.

  • Convenient share storage and transfer: Also, it allows you to store any number of shares, so you can trade in volumes and monitor the details of all the shares you are holding in a Demat Account. It further facilitates the swift transfer of shares while trading online.

  • Bonus, Stock-splits get automatically updated: If the company whose shares you are holding, takes an initiative that brings in a change to its stocks such as bonus issue, stock split, etc., it will be automatically get updated in your Demat Account.

  • Stores various investments: Besides the shares, Demat Account can also hold your multiple investments, like bonds, mutual funds, Exchange Traded Funds, Government Securities, etc.

  • Easy Access Online: You can access your Demat Account anytime, anywhere through your smartphone or laptop.

  • Nomination: Demat Account also provides the facility of nomination as per the process described by the depository. In case of investor’s demise, the shareholding in the Demat Account can be transferred to the appointed nominee.

How to open Demat Account

To open a Demat Account, you start with reaching out to a stockbroker, like Bajaj Financial Securities Limited (BFSL). You have to complete an online account opening form, which is 100% paperless and can be completed in less than 15 minutes. Below are the steps to open Demat and Trading Account with BFSL:

  • Open the account opening form

  • Enter your details like name, email id, phone number, address, etc. and your PAN number.

  • Add your bank details

  • Upload the necessary KYC documents for address and identity proof

  • Perform an in-person verification by recording a short clip of yourself

  • E-sign the form through Aadhar linked mobile number

After submitting the application, you will receive a confirmation regarding your account getting opened along with your login credentials.

How to use a Demat Account?

Using a Demat Account is simple. Your Demat Account is linked with your trading account, which in turn is linked with your bank account. To begin trading, you need to transfer funds from your bank to the trading account.
After adding funds, you can place an order to buy shares using your trading account. Once the order is executed, the shares will get transferred to your Demat Account by the end of T+2 days, where T is the day the order got executed. Since both Demat and Trading Account is closely integrated, all these actions happen swiftly and seamlessly.
Similarly, you can sell a share in your Demat Account by placing a sell order in the stock exchange using your Trading Account.

Disclaimer: Investments in securities market are subject to market risk, read all the related documents carefully before investing. Visit our website for other Terms & Conditions.

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