What Is Meant By Demat Account?

What Is Meant By Demat Account?

Having a Demat account is one of the primary necessities if you intend to invest in the share market in India. To understand what a Demat account is, you can compare it to a savings account you open with your bank. Your savings account acts as a store for your cash. It keeps your cash secure, and you can access the cash anytime through net banking, UPI or ATMs. You require a Demat account for a similar purpose. However, instead of cash, it holds the shares you invest in. Demat accounts have made it possible to hold shares electronically.

The shares are credited to your account after two trading days when you invest in shares. Whereas when you sell the shares in your account, they are debited. Before the online trading system was implemented, physical share certificates were. Physical share certificates were susceptible to wear and tear theft and forgery. Thanks to Demat accounts, most of the problems with physical trading cease to exist. To open a Demat account, you can approach a stockbroker authorised by SEBI (Securities and Exchange Board of India). To open a Demat account, you may be required to pay a certain account opening fee. However, brokers like IIFL Securities let users open free Demat accounts.

Demat Account stands for Dematerialise Account, which means that all your financial assets are stored in electronic format. If you want to trade and invest in securities and securities market, then in that case a trading-cum-demat account is manadatory. There are also many brokers who provide FREE Demat-Cum-Trading account.