Demat Account: Definition, Importance, Process & Types

What is a Demat Account?A Demat account is an acronym for a dematerialized account that assists investors in holding and trading equities and securities in an electronic format. It enables investors to keep track of all their investments, such as equities, bonds, ETFs, and mutual funds, in one place. In India, Demat accounts are maintained by two depository organizations, NDSL and CDSL. Like a bank account, a Demat account holds shares and securities, instead of money.

Importance of Demat AccountEarlier, shares and bonds were held in the form of physical certificates, which undoubtedly were difficult to transfer or store. Demat account has made maintaining records and transfers fairly easy. Additionally, here is why a Demat account is important:

• Quick transfer of equities.

1. Eliminates fear of damage or loss of the physical certificates, theft, or forgery. Moreover, additional paperwork is more prone to errors and delays.
2. Digitally secure way to hold equities and securities.
3. Bonus shares or stock splits are automatically updated in your Demat account.
4. The easy online access enables you to operate your Demat account from a laptop or mobile phone with just a click.
5. The nomination facility of the Demat account ensures your funds and shareholding is transferred to the nominee in case of the investor’s demise.

Process of Opening a Demat AccountTo open a Demat account, one must reach out to a trustworthy broker, like Klevertrade. One needs to complete an online account opening form, which is paperless. Here are a few steps to open a Demat account:

• Fill in the account opening form.• Link your bank account and add your bank details.• Upload necessary KYC documents for identity and address verification.• E-sign the form through mobile linked to your Aadhar card. • You will receive an account opening confirmation with login credentials upon completing the application process.

Types of Demat Account

Now that we have understood the Demat account, let us quickly run through the three types of Demat accounts:1.Regular Demat Account- For Indian citizens residing in the country, a regular demat account is enough, and a regular Demat account is everything that has been stated above. 2.Repatriable Demat Account- This Demat account is for the NRIs, as it enables the transfer of money abroad. However, the Repatriable Demat account must be linked to an NRE bank account.3.Non-Repatriable Demat Account- This Demat account too is for the NRIs. However, herein transfer of funds overseas is not possible.

Financial Takeaway!If you are from India and looking for an online broker to begin your trading and investment journey with, then look no further! Klevertrade has got you covered.

Summary!A Demat accounts assist investors in holding and trading equities and securities in an electronic format with no room for error. Klevertrade is a great online stock broker to start your investment journey with.

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