What is Demat Account?

Here we Learn about What is Demat Account – Meaning, Use, Types, How to Open a Demat Account for Share Trading in Stock Market?

What is Demat Account?

Demat refers to a Dematerialised A/C. It is needed for share trading (buy and sell shares / stock).

Most banks and some share trading brokers and financial institutions help to open Demat A/C for share trading.

All such Accounts are linked with a bank account for financial transactions (Buying and Selling). It holds possession of shares electronically in your A/C.

All online trading and transactions that take place through demat account is handled by depository participant (DP). All share brokers / stock brokers, brokerage companies and R&T agents registered under the SEBI act can handle share trading transaction.

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• What Is Dematerialization in Share Trading?
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Video: Introduction to Demat A/C

Different Types of Demat Account in India

There are three different types of such Accounts in India:

1. Regular Demat A/C

This Type is Most Common and Popular in India. It makes share trading (Buying, Holding and Selling) easier and simpler. All transactions are done electronically thus eliminating time-consuming paperwork. Transactions are closed in just few hours instead of weeks and months.

2. Repatriable Demat A/C

It is generally used by NRI Investors who want to invest in the Indian Share Market. They can Buy, Hold and Sell Stocks of Listed Indian Companies from anywhere in the world.

This type of Demat A/C help NRIs to easily transfer their funds to foreign countries. It has to be Linked with a NRI bank account.

3. Non-Repatriable Demat A/C

It is similar to a Repatriable Demat A/C, but is also for non-resident Indians.

However, with this type of account, NRIs do not have the right to transfer the funds to foreign countries and it must be linked with NRO bank account.

Also Read:

• How to Open Demat A/C in India?
• Where to Open Demat A/C Online in India?
• What is Equity Investment?

Uses of a Demat A/C

A Demat A/C allows you to Buy, Hold and Sell Investments Like – Bonds, Equity Shares, Mutual Funds, Government Securities and ETF (Exchange Traded Funds).

Like a Normal Savings Bank A/C, a Demat A/C is also either credited or debited every time you buy or sell shares of a company.

It eliminates all kinds of time-consuming and tedious paperwork and simplifies the process of share trading.

All Demat A/Cs in India are maintained by 2 depositories –

1. National Securities Depository Limited (NSDL); and
2. Central Depository Services Limited (CDSL).

Also Read:

• How Stock Market Works?

Video: Where to Open Demat A/C in India?

Learn where to Open Demat A/C and Trading A/C in India for Online Share Trading and Buying Mutual Fund Online. Best Broking Companies in India with Lowest Brokerage Charges, Account Opening Charges and Annual Maintenance Charges.

Demat Vs Trading A/C – What is the Difference?

FAQ on Demat Account

Conclusion

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