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7 things to know about a demat account

  1.  What is a demat account and how does one open a demat account?

    A demat account, or ‘dematerialised account’ is an electronic or digital form of holding your securities. In India, it is mandatory to have such an account for buying or selling stocks or other financial instruments. Only then can you trade in stocks, equity, ETF, IPOs and certain debt instruments. You can open a demat account with any stockbroker including banks and other financial institutions registered as a Depository Participant with either or both of the two central depositories –National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL)
  2. Is a demat account all that I need to start trading?

    To trade on the stock market in India, you need three accounts. Apart from your demat account, which essentially is a repository of all the stocks and shares that you own, you need a bank account (even your personal savings bank will work), and a trading account, which is where you buy and sell stocks online
  3. Are demat accounts safe?

    Demat accounts are like bank accounts in many ways. Your stocks are safe, provided you take certain precautions to ensure that other people do not get the credentials to access your account. It is therefore essential that you do not share the credentials (user identification and password) of your demat and trading account with anyone, and keep changing your password regularly
  4. Do I have to pay to open a demat account?

    Most banks and financial institutions offer free demat accounts. However, they do charge an annual maintenance fee, which varies depending on the services provided, and a transaction charge for each debit transaction that you make
  5. What other charges can I expect?

    You will also be charged for each paper share that you ‘dematerialise,” or convert into a digital format, or vice versa. Then there are taxes and cess like GST which is imposed on each transaction. In case you pledge a security to take a loan you may also be charged a pledging fee
  6. How does Demat account work?

    Once you have a demat account, you can start trading by placing an order through your trading account. This is processed by the specific exchange like the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE), before the shares are reflected in your demat account. When you sell, the shares are debited from your demat account and the money is credited to your trading account and then to your bank account
  7. What are the types of demat accounts?

    There are essentially three types of demat account. One is the regular demat account, for use by traders living in India. Then there is a repatriable demat account, meant for non-resident Indians who want to transfer their funds abroad. And the third, also for NRIs, is the non repatriable demat account, which does not allow such transfers

 

Disclaimer: The contents herein mentioned are solely for informational purpose and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. 

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