What is Demat Account / Meaning ?
- A Safe Locker ?? Everything You Must Know!

Demat Meaning

If you are in any way acquainted with Stock Markets, you might have come across the word Demat Account at least once, if not more number of times.
What is it? How does it help you? Why is it needed? All these questions will be answered in this article.
Let’s get started!

Content

Demat Meaning

The full form of Demat is Dematerialized Account. This account allows you to store financial products like Shares, Debentures, Bonds, ETFs bought in the stock market electronically. Simply put, a Demat Account acts like a Bank Locker that stores your shares safely.

So Who provides a Demat Account?
NSDL and CDSL are the SEBI Registered entities that provide Demat Services to the Stock Brokers. Stock Brokers then provide investors the access to demat account.

NSDL and CDSL are technically known as depositories and they not just help in storing the Shares in Dematerialized Form but also other financial instruments such as:

  • Debentures
  • Bonds
  • Exchange-traded Funds (ETFs)
  • Mutual Funds
  • Government Securities (GSecs)
  • Treasury Bills (T-bills) etc.

History of Demat Account

Back in the day, before the introduction of the Demat Account in 1996, if you bought shares in the stock market, physical share certificates would be delivered to your house. So if anybody in your family holds physical shares, and wishes to sell the shares, they need to first dematerialize the shares.

How to Dematerialize the Shares?

You need to follow the below steps to convert your shares into the electronic form:

  • First, you need to open an account with Aliceblue.
  • Ask for Dematerialisation Request Form, fill it and submit it along with the share certificates.
  • Aliceblue will send the dematerialization request form to the CDSL (depository) and submit the share certificates to the registrar of the issuer company.
  • The registrar of the issuer company will validate the share certificates. Once approved, the registrar will inform the depository to credit the securities in your Demat Account. This whole process will take approximately 15-30 days
  • Okay, so what is the use of the Demat Account? Why was it introduced? Read on….

Benefits of Demat Account

  • Shares will be easily delivered to your Demat account in just 2 days after you buy them.
  • All the risks associated with physical shares like loss of certificates, fake certificates, etc. are eliminated.
  • Physical share certificates attracted stamp duty, etc. which increased the transaction cost. But with the Demat account, complete paperwork has been eliminated.
  • Shares can be easily transferred with minimal effort.
  • You can access your Demat account anytime from anywhere with your Laptop, PC, or Mobile Phone.
  • In a Demat Account, you can store Shares, Debentures, Bonds, Exchange-traded Funds (ETFs), Mutual Funds, etc.

Now that you know everything about Demat Account, you should get acquainted with the types of Demat Account.

Types of Demat Account

There are 4 types of Demat Accounts in India, that can be chosen depending on your residential status, type, and volume of transactions.

  1. Regular Demat Account: As the name suggests, it is an account that can be opened by any Indian resident who wants to deal in Equity, Mutual Funds, Bonds, ETFs, etc.
  2. Basic Service Demat Account: It is a Demat Account that is specifically designed for small investors who do not invest regularly in Stocks, Bonds, etc. A large number of investors in India do not invest regularly and end up paying maintenance fees, to avoid such fees, BSDA was introduced.
  3. The maintenance charges of BSDA depends on the holding value of the investor:

    Holding Value Annual Maintenance Charges
    Up to ₹ 50,000 No AMC
    ₹ 50,000 to ₹ 200,000 ₹ 100
    Over ₹ 200,000 ₹ 400+ GST
  4. Repatriable Demat Account: This Demat Account is for NRIs who wish to transfer the earnings from the Indian Stock Market to their abroad bank account. Here, the Demat Account is linked with the NRE Bank Account to easily transfer funds abroad.
  5. Non - Repatriable Demat Account: This Demat Account is for NRIs who do not wish to transfer the earnings from the Indian Stock Market to their abroad bank account. Here, the Demat Account is linked with an NRO Bank Account.

Demat Account Opening Procedure

If your Mobile no is linked with Aadhar, you can open the Trading & Demat Account online.
Follow the simple process given below:

  • First, visit our website and click on Open an Account.
  • Fill in your Name, Email, Mobile Number, and State and click on Open an Account.
  • Upload account opening documents.
  • Provide an IPV (In-person verification) by showing your PAN towards the camera along with your face.
  • E-sign the documents by verifying your Aadhaar with Mobile Number.
  • Your account will be activated within 24 hours.

Documents required to open an account:

  • Identity Proof (PAN Card Mandatory)
  • Address Proof (Aadhar, Voter ID, Passport, etc)
  • Passport Size Photo.
  • Income Proof (Latest six month's bank statement, Latest ITR copy, Three month's salary slip)
  • Bank Proof (Cancelled Cheque, Passbook Copy or Bank Statement with visible Bank Account Number, MICR, and IFSC code)
  • Scanned copy of the signature (only in case of online account opening).

Once you open your account, we will provide you a Trading Platform. Using this trading platform, you can buy and sell shares.

Open your account in 15 minutes now!

Why should you open an account with Aliceblue?

There are two types of brokers, a discount broker, and a full-service broker.
A discount broker provides you trading and investing services at the lowest possible cost and a full-service broker provides full-blown services like investing tips, hand-holding, trading reports, etc. but all these services come with a higher cost.
Well, Aliceblue is an exception! We provide the services of a full-service broker but at a cost of a discount broker. Meaning, we charge the lowest brokerage yet provide full-blown services like a full-service broker.
What are those services? How is Aliceblue the best choice you can make? Check out here.