A Demat account in 2024 is a must for all novice investors who want to invest in the stock
market. Whether you are into mutual funds or engage in intraday trading, having a Demat
account is legally mandatory.
Read on to learn more about Demat account opening, and understand its meaning and its
significance.
What is a Demat Account?
A Dematerialised Account, commonly called a Demat Account works as a safe box for
investors’ funds and securities. Securities and Exchange Board of India (SEBI) made it
mandatory for every investor, whether Indian or Non-Resident Indian, to have a Demat account
to trade in the stock market.
Process of Demat Account Opening:
- Start by finding a depository participant.
- Fill up the form on the trading platform and enter your PAN card and UID details as it is
mandatory for KYC. - Add your bank account details.
- Upload the mentioned documents to prove your identity. Online verification can be done
by uploading a video of yourself repeating the information. - Upload your e-signature by signing digitally using Aadhaar linked mobile number and
submit your form. Login details will be mailed to you shortly after submission of the form
and you can start trading via your Demat account.
Importance of Demat Account
Here are 4 factors that explain the importance of having a Demat account.
1. Convenient Settlement:
Having a Demat account enables fast and seamless settlement of trades in the stock market. All
the transactions are settled electronically and there is no paperwork to be done. Whether you
are a long-term investor trying to invest in ETFs or an amateur investor who wants to participate
in intraday trading, Demat accounts can make things super easy for you.
2. Enhanced Safety of Documents:
Since there are no physical documents to be handled, the chances of forgery and theft are
reduced drastically. Having a password and unique ID is mandatory to gain access to a Demat
account. Therefore, your documents are safe with you as only you have access to them.
3. Faster Transfer of Securities
Demat accounts have made it very easy to buy and sell securities. Transferring funds from one
account to another is also convenient owing to the absence of paperwork. Everything is done
online and is just a click away.
4. Eligibility for IPO and FPO
By making a Demat account, investors can now participate in Initial Public Offerings (IPO) and
Follow-on Public Offerings (FPO) of all kinds of companies. However, investors need a separate
Demat account to sell these shares in the future at a better rate.
Conclusion
A Demat account is essential for participating in the stock market. It helps you secure your
securities in digital format and invest or trade as per your preferences. Demat account
enhances convenience and enables you to invest. To start trading or investing, open an account
with Dhan. It is India’s one of the leading online trading and investment platforms that offers you
a wide range of tools.
