Demat A/c - What is demat, How to open, How to use.

A demat account, also known as a dematerialized account, allows you to hold shares and assets in electronic format.  During online trading, shares are bought and held in a demat account, which makes it easy for the clients to trade.

 It is similar to a bank account, in which you can deposit money in the bank and keep track of your debit and credit balance in the bank passbook.  Similarly, whether you buy or sell shares, your demat account is credited or debited accordingly.  It is used to store a wide range of investments including stocks, ETFs, mutual funds, bonds and government securities.  You can also open a Demat account even if you do not hold any stocks.  And you can keep zero balance in your demat account.

 Demat account is used to transfer the stock holdings of an investor.  Similarly, Delivery Instruction Slip (DIS) is used for trading shares.  You can buy shares and store them securely with a demat account.

(Types of Demat accounts)

In India, there are mainly three types of demat accounts offered by the depository.  You can choose the right type of account for your share trading and investment purposes, depending on your residential status.

The different types of demat accounts are as follows:

Regular Demat Account:

These are dematerialized accounts for the residents of India.  If you are a resident of India who mainly deals with equity trading and investments, then you should open a regular demat account.

Repatriable Demat Account:

It is one of the two types of demat accounts available for non-Indian citizens.  As its name suggests, a repatriable account allows you to transfer your money abroad if you are an NRI.  You need to link this account with a Non Indian External (NRE) bank account to enjoy repatriation of your funds.

Documents Required to Open a Demat Account

 You can open a demat account just like a bank account, which holds stocks, shares and bonds instead of money.  The procedure for opening a demat account and the mandatory documents required are the same everywhere.

 The documents required to open a demat account are as follows.

 proof of income:

 A photocopy of the Income Tax Return (ITR) submitted to the Income Tax Department

 Photocopy of Annual Statement of Certificate of Net Worth.

 Salary Slip of Current Month

 proof of identification:

 PAN card with valid photo

Aadhar Card / Voter ID Card / Driving License / Passport

proof of address:

One photocopy of Passport/Identity Card/Ration Card/Driving License/Insurance.

A photocopy of the bill such as telephone bill/electricity/gas bill which is not more than 3 months old.

One photocopy of bank passbook not more than 3 months old.


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