Demat account: Know what is demat account, how it is different from bank account

There are many advantages of Demat account especially when with the changing times common investors are also turning to the stock market and e-commerce is slowly becoming the preferred option.

Demat account helps you take advantage of an online trading platform where you hold your financial security on a standardized electronic system. With the changing times, now common investors are also turning to the stock market and e-commerce is gradually becoming the preferred option. The same is true for the stock market.

A major change took place in the direction of making investment in the market easy and convenient through the Depositories Act 1996. This allowed the convenience of keeping the physical copy of shares or other securities in a demat account in digital form.

Whenever we withdraw money from our bank account, we get it in physical form. But as long as it is in the bank, it is a digital currency. Whenever we make payment from debit card anywhere, we also use a form of Digital Payment i.e. Electronic Money Transfer. Similarly, when we have shares in Demat account, we can digitally transfer them to other person’s Demat account. In such a situation, we do not need to keep the shares in physical form.

In other words, the facility of holding shares digitally i.e. electronically is called demat. The full name of Demat is ” Dematerialize “. The process of converting securities i.e. shares etc. into physical form is called dematerialization.

As mention earlier that whenever you used to buy a share in the olden times, the company used to send you the documents related to that share. That was proof that you have invested in the stock. But whenever you sold that share, first of all that document would go to the company’s office. There it was seen by the company that when you sold the shares, what was its value and accordingly you used to get money. This process was time consuming as well as complicated. That’s why most people used to avoid investing in stocks.

But in today’s time, the world has made a lot of progress. As soon as you buy the shares, it will come in your account shortly after. And if you sell a share, then its money will be given to you in a short time. Nowadays you do not even need a computer to buy or sell shares, you can do all this from your mobile itself.

How to open your Demat and Trading account?

Documents required to open a demat and trading account in.

Documents that are needed:

Below you will get information about the documents required to open a Demat and Trading account. Before applying or applying for Demat Account , I should keep the photocopy or e-copy of all these documents ready:

Pan Card
Aadhar Card
Passport size photograph
Cancelled Cheque / savings bank account passbook (Savings PassBook)

Advantages of Demat Account

Although there are many benefits of demat account, but let us know some of the major advantages of demat account:

1. After buying shares through demat account, the chances of their theft or fraud are negligible because all the shares are held electronically i.e. in digital medium. Due to the low risk in this, they are safe.

2. Earlier it used to take a long time to transfer the shares. Sometimes it used to take months. But now it is not so, you can transfer them from demat accounts immediately. And shortly after sending it starts appearing in the account of whose demat account it has been sent.

3. Earlier selling shares used to be a very difficult task, you had to sell shares only in a group. With this you could not sell an odd number of shares but now it is not so. You can also buy and sell 1 single share through Demat account.

4. Now you can nominate the account personally if you open a demat account. This was not the case earlier, there used to be certificates for shares.