Hello friends, in this post we will talk about what is Demat account? and how does a Demat account work? Along with this, we will also know how to open a Demat account and some important things related to the Demat a/c that you have to take care of.
Friends, many of you must have known about the Demat a/c. So this post is especially for those people who are new to the share market and they do not know anything about Demat a/c. So let us know without delay that what is Demat account?
What is the Demat Account?
Friends Demat means dematerialized. Friends can open Demat account in the same way as you open an account in the bank. Just like you send money to someone or they send money to your bank account, you need a bank account, in the same way, if you buy or sell shares in the share market then a Demat account is required.
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If you have to work in the share market, then it is necessary to open a Demat a/ct. In the share market, if you buy shares from a company, then those shares are deposited in your Demat account. It is impossible to buy a stock without a Demat A/C in the stock market. dematerialized Account is a bank account in a way, it takes the place of money in shares.
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How To Open Demat account
You can open a Demat account in any government and private bank. Or you can also open a Demat a/ct by going to any stockbroker or sub-broker registered by SEBI.To open a Demat a/c, you have to contact the depository participant of DP.DP is like a branch of a bank, just as we get a passbook statement in the bank, in the same way, a statement of share is received in DP as well. You can open your Demat A/C by going to all these places.
To open a Demat a/c you have to fill a form. After opening the account you are given a client id which you can also consider as the account number.
What is required to open a Demat A/C
To open a Demat account, you must have a savings account. Because your savings account is linked to your Demat a/c. Through which you can transfer money from your Demat a/c to your savings account whenever you want.
When you are going to open a dematerialized account, you will need some important documents. Such as Bank Passbook, PAN card, Aadhar card Xerox copy of all these documents will be required and cancel Cheque. The original document is also needed for verification. Along with this, a passport size photo will also be needed.
Why Demat A/C is So important
Now we know why a Demat account is so important, when a few years ago when shares were bought in the stock market, we were given some documents in the form of shares. After the 192 stock market scam, the government searched for a stock market business and found a way to regulate it and keep it in mind, the government stopped physical exchanges of stock documents and decided to adopt the Depositary system.
There are mainly two depositories in India, first NSDL National Security Depository Limited and second CDSL Central Depository (India) Service Limited. Both these depositories across India monitor all Demat A/C through their depository participants. Depository Participants are called DP. The DP’s work is done by the bank stockbroker, you have to contact the same DP to open your Demat account.
DP works to open Demat a/c of companies investing in the stock market from big to the small investing company. Apart from this, there are also many governments and private banks where you can open your Demat a/c.BSE i.e. Depository CDSL and NSDL promoted by Bombay Stock Exchange is the first depository in India. It is a depository created by NSE i.e. National Stock Exchange.
Benefits of Demat Account
Friends, if somebody bought shares before a few years ago, he would get a share certificate form together. Now after the Demat account arrives, the shares are stored in electronic form in your Demat a/c and you can also know the balance of your Demat a/c at all times. Now after purchasing the shares, the delivery comes immediately to your Demat a/c. There is no fear of getting fake certificates by having a Demat a/c. You do not have to worry that the share certificates will not be lost anywhere. Shares are transferred immediately due to the Demat a/c, so there is no need to look at selling shares for a long time. You can sell your stock instantly whenever you want.
I hope that you liked this information and you must have understood what is Demat account. If you like this information then do not forget to share this post on social media.