Having a demat account allows you to buy, hold, and sell shares and other assets. It’s a digital wallet where you may store stocks, mutual funds, bonds, ETFs, and other dematerialized investments.
Let’s go down the main advantages to open demat account.
One, there is less chance of important papers being lost.
Physical bonds and shares are more susceptible to document loss. If a natural calamity forces you to relocate, the shares may also be lost in the transition. For this reason, keeping your shares in a digital format that you can access online is the most secure and reliable solution.
2 – Staying away from fakes
Shares and bonds that exist only in tangible form are more vulnerable to forgery. However, while managing a paperless demat account, you won’t have to worry about forgery or impersonation since you’ll have all the necessary information and genuine documents on file.
Lending Capacity (3) –
The assets held in a demat account may be used as collateral for a variety of bank loans in addition to serving as a safe place to store your funds. Securities may be pledged as collateral for a bank loan.
4. Economical –
Online shopping clearly has the advantage of lowering transaction prices. Similarly, if you want to purchase bonds in paper form, a Demat account opened online might save you money on stamp duty and other handling fees. In contrast, a Demat account solely incurs brokerage fees. You may save more money, though, if you use discount brokers.
Quicker Workflow –
If you have a Demat account, buying and selling shares will take very little time. Therefore, share liquidity is improved. The procedure of transferring actual shares, on the other hand, was time-consuming and cumbersome. Dematerialized securities allow for instant processing of online trades.
Simple Monitoring Sixth
While opening a Demat account, you may also take advantage of the fact that you won’t need any physical documentation. The time spent keeping tabs on each one is inevitably cut down as a result. As a result, keeping a manual record is unnecessary. A complete record of your transactions and other important papers will be kept in a secure location.
Different Kinds of Depository Trust and Clearing Corporation Accounts
You may open one of three distinct Demat Accounts:
A Normal Bank Account –
Customers in India, or those who regularly do business there, are the primary target audience for this account.
Account That Can Be Taken Back Home
This account is used by those who are not Indian citizens to send money overseas. Connecting the NRE bank account to the Repatriable account is mandatory.
Account That Cannot Be Returned
This account type is similar to the Repatriable Account but is used mostly by Non-Resident Indians. An NRO bank account is required for this account to work properly, and money cannot be moved out of the country.
The necessary information to open trading account:
Some information is required for verification reasons while establishing a Demat Account. In order to open a Demat account, you will need the following items:
Display of Identities (E.g., Passport, Aadhaar, Voter ID Card, PAN, Driving License)
Verification of Residence (E.g., Passport, Voter ID Card, Ration Card, Insurance Copy, Utility Bills)
Verification of Earnings (E.g., Copy of Income Tax Return Acknowledgement, Salary Slip, Current bank account statement for the past 6 months, Statement of Demat Account holding)
Financial Documentation (E.g., Cancelled Cheque, Photocopy of Passbook)
Proof of permanent identification and account number (PAN) card
Recently taken pictures in the size required by the passport
