A demat account for shares is exactly like a bank account for your money. To simply put, a demat account is what holds the certificates of
all your financial instruments like equities, commodities, currencies and mutual funds in electronic or in dematerialized form.
Without a demat account, one cannot trade in the stock market.
This data is on the basis of a research work in August 2015
Select a broker/online trading firm
Fill up an account form and submit the KYC documents along with a passport-sized photograph
The broker will check the details, verify and open an account within 2 to 3 working days, providing you with the account number called Beneficial Owner Identification Number (BOIN)
With an electronic demat account there is no chance of your share certificates being stolen. They remain absolutely safe in your account, unlike traditional method of trading.
Gone are the days when shares were sent through registrar or company to transfer it to an individual’s name which would nearly take days or months. Now shares get transferred immediately to a demat account, which in turn increases the efficiency and effectiveness of the share market.
No stamp duty required on transfer of securities to the demat account, which further reduces the overall transaction cost.
In a demat account you can keep all your investments, including mutual fund, gold exchange, and equity. This helps you to keep track of all your investments under one roof.
Like a bank account, you can now nominate individuals while opening a demat account.
Both the depositories NSDL & CDSL now allow the demat account holders to send instruction slips electronically, which in turn reduces the overall time of the procedure and increases the convenience.