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Are you interested in trading and investing? Then you must have a demat account. It is a primary requirement to begin your investment journey. Demat account have changed the stock market scenario. In the era of internet, demat accounts was a revolution. Here is everything you want to know about demat accounts.
In 1996, a step was taken to free the stock market of physical share certificates. Back then, shares were sold in physical form. If you wanted to buy a share, you paid cash to the trader and got a certificate. Imagine the amount of paper each investor had! Encashing these stocks was also time-consuming. The dematerialization policy aimed to convert the physical certificates into electronic form and simplify the process.
What is a Demat account?
Just like a bank account holds money, a Demat account holds shares, mutual funds, bonds, government securities and electronic traded funds (ETFs). Every time you buy a share, it is credited to your Demat account and vice versa. It is mandatory for every investor to have a Demat account.
Role of a Depository
India has two depositories: NSDL and CDSL. They hold the details of all the Demat accounts in India in electronic formats. You can open a Demat account with any of the two depositories. They facilitate the buying and selling of securities.
Role of a Depository Participant (DP)
Once you have finalised a depository, you can open a Demat account with any of its DPs. A DP is a like a retailer. For example, you want to buy a Nestlé’s Maggi or Cadbury’s Dairy Milk. You will not visit the office of Nestle or Cadbury. You can buy these products from a local supermarket or grocery store. Similarly, you can open an account to be able to transact in securities with a DP. It could be an NBFC or broker or a bank. SAS Online is a reputed DP that facilitates online transactions in the stock market.
How to open a Demat account?
You can now operate your Demat account online. You are liable to pay an annual maintenance fee and a transaction fee.
Benefits of Demat account
The de-materialization policy has proved to be a boon for all investors. Will all these benefits and ease of transactions, investing has become easier for beginners too.
Read more about opening a Demat and Trading account procedure. If you want to open Demat account with SAS Online you can click here.
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