The Demat account, also called a Dematerialised account, is a type of electronic account used to hold stocks, bonds, mutual funds, and other financial instruments digitally. With it, you can hold, trade, and manage investments without having to hold physical documents or certificates. Due to their numerous advantages over traditional paper-based systems, these accounts have become increasingly popular. By using them, investors can manage their investments more efficiently, reduce transaction costs, and protect their certificates from physical damage or loss. This article explores the future of trading and key aspects of Demat accounts, such as the growth of Demat accounts in India, how to open Demat account online, and more.
History of Demat Accounts in India
In the Indian financial sector, Dematerialisation marked a significant milestone. Prior to its implementation, investors had to hold physical certificates for their securities, which was time-consuming and risky. However, the Demat account removed the need for physical certificates and simplified the process of buying, selling, and holding securities. Further, they have grown rapidly in India since their introduction.
There are several factors contributing to the growth of Demat accounts, including online trading, technological advancements, and retail investors. These accounts provide a safe and efficient way to manage investments online, and online trading has made it easier for investors to access financial markets. With technological advancements such as online account opening, mobile applications, and real-time trading updates, accounts are also becoming more accessible and user-friendly. Additionally, as more people invest in financial markets, trading accounts have grown due to the growth of retail investors.
How to Open a Demat Account Online?
Here is the guide to opening a Demat account online in India:
Step 1: To open a Demat account online, you need to approach the Depository Participant and fill out an application. You can find a list of valid DPs on the official websites of CDSL and NSDL.
Step 2: Upon completing the Demat account opening form, you need to enclose photocopies of the necessary documents, such as identity and address proof.
Step 3: A contract containing all of the details about the trader’s and DP’s duties needs to be signed after that. With the agreement, you also receive the details of the charges. In the future, these documents may be needed for reference. Thus, you should preserve it.
Step 4: After the DP opens the Demat account, you receive a unique Demat account number. Also known as the BO ID, this number identifies the beneficial owner. In the Demat account, all of your investments are credited. A debit is made to the Demat account if you sell the securities.
You can also open trading account using the eKYC procedure, which takes less than five minutes. To apply online, simply fill out the application form and upload the required documents. Within minutes of completing the process, you can begin trading.
Benefits of Opening a Demat Account
There are several advantages to opening a Demat account online. Such as:
With the Demat account, you can complete a transaction in a very short span of time. By reducing the time, you can make additional purchases and sell securities more efficiently and in a shorter period of time. Also, for all users entering the stock market today, a Demat account has become an essential requirement.
The Ease of Carrying out Transactions
Shares can be bought and sold without visiting a company’s physical office. Using a Demat account, your transactions can be processed with a single click. After placing an order, you will be able to view shares in your Demat account within two business days.
Physical certificates used to come with several additional costs, such as handling charges, stamp duty, and others. By using a Demat account, an individual does not have to incur any additional expenses. As a result, company shares become more affordable for investors.
Physical share certificates were always at risk of loss, theft, forgery, or mutilation. Since the introduction of the Demat account, all of these risks have been eliminated for users.
Stock market transactions used to take several days to settle before Demat accounts were introduced. Using a Demat account, you can buy and sell every day, and the transactions are settled instantly after the trading day ends.
The future of trading is undeniably digital, with Demat accounts playing a major role in transforming portfolio management. Factors such as online trading, technological advancements, and increasing participation of retail investors have fueled the growth of Demat accounts in India. This has improved the accessibility, efficiency, and security of the financial industry. A Demat account can now be opened online within minutes, thanks to the convenience of e-KYC procedures. However, it is crucial to choose the right platform for online trading. As one of the best stock market app, Kotak Securities stands out for its user-friendly interface, robust features, and reliable services. With Kotak Securities’ seamless and comprehensive services, you can leverage the benefits of Demat accounts in the ever-evolving share market.