The stock market is considered as a lucrative investment option. To add to the convenience and ease of trading, investors can invest online and manage their portfolio. Earlier, investors had to manage physical certificates and the entire process of buying and selling of shares took place through stock market brokers. It is now possible to maintain the shares in an electronic format. The process of transferring the physical certificates into a digital or an electronic form is known as dematerialization.
Investors are required to open a demat account with the bank and the account can be used for multiple security transactions. The securities purchased by the investor will be held in an electronic form in the account. There is no compulsion of maintaining a specific number of securities in the account and the investor is free to trade from the same.
How to open a demat account
Mentioned below are the steps you need to follow in order to open a demat account.
- Contact a Depository Participant registered with Central Depository Services Ltd and National Securities Depository Ltd.
- Fill the account opening form and complete the KYC procedure.
- Provide the original PAN card and a canceled check from the bank account, which is to be linked to the demat account.
- Sign an agreement with the Depository Participant (DP). The agreement copy and schedule of charges will be provided to you for future reference.
How to make the most of the account
There are various benefits of using the dematerialized account for the purchase and sale of shares.
- Purchase and sale of shares
In case of sale of shares, you need to provide a Delivery Instruction Slip (DIS) and in case of a purchase, a Receipt Instruction Slip (RIS) is provided.
- Corporate actions
When bonus or right shares are issued by the company, they are directly credited to the account. It is a quick and hassle-free procedure.
- Dematerialization of shares
The physical securities can be easily converted into an electronic form and vice-versa. You are required to provide your share certificates with a request form for dematerialization in order to make the conversion.
- Convenient to maintain
When shares are held in an electronic format, they are convenient to manage. You can easily make the transactions of purchase and sale through their computer or a smartphone without having the need to call a stockbroker for the same. Tracking and monitoring of the portfolio have become easier with an online account. All details about the investment are available at a single location.
Holding physical certificates is open to the risk of theft and loss of certificates. In case of holding the securities in a dematerialized form, there is no such risk associated and there is no stamp duty for the transfer of shares.
In order to transact into securities with ease and convenience, it is recommended that you should open a demat account online. It is ideal to open the account with the same bank, which has the savings account, this will make it easier to transfer the funds and transact online. You can do your own research and make investment decisions. It will help you save on the commission which is paid to the stockbrokers and will ensure that the transaction is carried out within minutes.