Demat Account

Types of Demat Account

There are 3 different types of demat accounts. They are as follows:

1. Regular Demat Account: The Regular Demat Accounts are used by individuals who qualify as Indian citizens. These accounts can be used to hold the shares purchased online.
2. Repatriable Demat Account: The Repatriable Demat Account is for individuals who qualify as Non-Resident Indians or NRIs. Using these accounts, the account holder will be able to transfer funds abroad. However, in these cases, the account is required to be linked with an NRE bank account.
3. Non-Repatriable Demat Account: The Non-Repatriable Demat Account is for individuals who qualify as Non-Resident Indians or NRIs. However, the holders of these accounts will not be able to transfer funds abroad. In the case of Non-Repatriable Demat Accounts, the account is required to be linked with an NRO bank account.

Compare Best Demat Accounts 2023

Listed below are some of the best demat accounts in India.

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Features and Benefits of Demat Account

The features and benefits of demat account can be summed up as follows:

1. Lower risk: As the process of buying, selling, and holding securities in a demat account is completely online, the risk of loss, forgery, or damage of the securities do not arise.
2. Hassle-free process: As the process is online, the hassle of paperwork in relation to physical shares and securities is eliminated.
3. Cost efficiency: The demat account allows you to buy, sell, and hold your securities online which terminates the additional costs (such as handling charges and stamp duty) which is otherwise required for the physical certificates of securities.
4. Elimination of lots: With physical certificates for the securities, the shareholders were liable to buy or sell only in the quantities specified. However, demat account eliminates that limitation.
5. All in one holding system: All shares and investments can be summed up under the same account using a demat account. This makes it easier for the account holder to keep a track of all the investments through a single portal.

Demat Account Eligibility

The eligibility criteria for opening a demat account are quite straightforward. The factors can be summed up as follows:

1. Age: There is no age limit for opening a demat account. Both minors and adults are eligible. However, a guardian or parent of the minor will be required to handle the account.
2. Permanent Account Number (PAN): It is mandatory for the applicant to have a PAN card.
3. KYC documents: The applicant will be required to produce all the necessary KYC documents which are required at the time of opening an account.

Documents Required to Open Demat Account

The list of documents required to open a demat account can be summed up as follows:

• Proof of Address: This includes the likes of -
  • Utility bills such as gas bill, electricity bill, telephone bill, etc.
  • Passport
  • Voters ID card
  • Ration card
  • Insurance copy
  • Driving licence
  • Bank passbook
  • Registered lease agreement, and so on.
• Proof of Identity: This includes the likes of -
  • PAN card
  • Passport
  • Aadhaar card
  • Voters ID card
  • Ration card
  • Photo ID issued by an office of central or state govt.
  • Driving licence, and so on.

How to Open Demat Account

The account opening process in relation to demat accounts is quite simple and hassle-free. You can follow the steps mentioned below to open a demat account:

• Collect the account opening form.
• Fill up all the necessary details in the form and submit the same.
• Submit all the necessary documents for KYC.
• Once the documents are verified, you might be required to go through an in-person verification.

These steps will easily help you open your demat account. There are also a number of brokers and firms which help you open a demat account through online process.

How to Close Demat Account?

In order to close a demat account, you will be required to follow the steps mentioned below:

• You can download the account closure form from the depository participant or DP website.
• Fill up the form with all the relevant information and submit the same.
• The details of a savings bank account have to be provided in case there is any balance in the demat account which has to be transferred.
• After the completion of this process, the account will be closed within 7 to 10 working days.

Advantages and Disadvantages of Demat Account

The advantages and disadvantages of demat account can be listed as follows:

What is Depository and Depository Participants

The definitions for the following are as follows:

1. Depository: The institution or organisation which is responsible for holding the shares and securities of an investor through the depository participant is called a depository. The depository is also responsible for extending the services which are related to the securities.
2. Depository Participant: The registered stockbroker or the agent of the depository is called the Depository Participant or DP.