What is Demat Account?

It is the short form of Dematerialized Account. As banks provide a saving/current account for monetary activities, stock the brokers provide the demat account for stock activities. Banks do not require any annual maintenance charge for their saving/current accounts (however they require minimum balance requirements in some cases), many stock brokers charge an annual maintenance charge for having this type of account with them.
Shares and mutual funds held by investors are kept in these demat accounts. In early days, equity shares of companies were traded in the form of papers and investors had to pay stamp duty on it. After advancements, the equity shares are traded in electronic forms and they are held in these accounts.

Trading through demat account

Stockbrokers connect the investors to stock exchanges through the demat accounts. The investor buys or sells equity shares through this type of account. After buying, shares are credited to this account and after selling the shares are debited from this account. Many stockbrokers charge some price for each trade by the investor. This charge varies from broker to broker.

How to Open the Demat Account?

To open this account, customers need to visit the stockbroker, either through their website or by visiting their office. There are many popular brokers in India like Zerodha, Angel Broking, Axis Direct etc. There are some documents required by brokers including:-
– Pan Card
– Aadhar Card
– Photographs
– Photo Identity Proof
– Address Proof
– Bank Details
– Cancelled Cheque
Please ensure that you have the internet banking active in your bank account which you want to link to your demat account.
All the best!!

(Read: Basics of Share Market)

Disclaimer: This post is meant for educational purpose only. This does not provide stock buying/selling recommendation to investors and it never leads the investors to make any investment decision.

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