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Questions (FAQs) on
What is a demat account ?
The word demat is an abridged version of the word Dematerialization. Material means something that you can touch so demat means something that you cannot touch, which means kind of electronic. A Demat account is an account only where you shares & investment papers can be kept in electronic form, no physical papers would be required.
A Demat Account with a Depository is an analogy to the Bank account with a Bank. The way you keep money in your bank account, similarly you keep shares in your demat account.
How & where can I open a Demat Account ?
You can open a Demat Account with any Depository Participant (DP). A depository participant is an organization which has been licensed by NSDL or CDSL (the 2 depositories in India) to oversee and regulate the demat account operations. DPs are Either a bank or a share broker and you can open your Demat account with them. For opening a demat account, you will need to have a valid PAN Card & AADHAR card. Your investment advisor may assist you doing the documentation for opening of demat account.
Is demat mandatory for Share Trading ?
Yes, Demat account is mandatory for investing in stock markets or for doing share trading. Buying or selling of shares in India happen only in electronic mode and no physical exchange takes place. When you buy shares, money goes from your bank account and shares come to your demat; on the contrary when you sell shares, stocks go from your demat account and money comes to your bank account. Without holding both bank account & a demat account you cannot trade in stocks. Your financial advisor or the Shares & Demat advisor may guide you the nitty gritty of operating a demat account.
How does a Shares & Demat Advisor help ?
Your demat account broker or advisor plays multiple role to make things easier for you. Right from doorstep account opening, converting your old physical share certificates to demat, your shares & demat advisor guides you on all operational things. Even when you wish to buy new shares, your shares & demat advisor can help you picking the right stocks so that your investments grow faster.