A demat account, which is a short form of dematerialised account, is necessary if one is planning to trade in securities in this country. It enables you to own shares and securities in electronic form. This account makes the trading process more accessible. It has become easy to trade in shares by using the digital platform to make purchases and sell them, while physical share certificates are not necessarily required.
Now, it is time to discuss how many types of demat account there are and the peculiarities of using each types of demat account.
Types of Demat Accounts
There are three types of demat account. These are to meet diverse needs and demands. The types of demat account include:
1. Regular Demat Account
This account is solely for people living in India. It holds securities electronically. People employ it to trade in the Indian securities markets. This account is ideal for active traders since it provides them with all the entry and exit tools they may need in the course of their trading. Retail investors particularly favour them.
2. Repatriable Demat Account
Non-resident Indians (NRIs) use this types of demat account. It permits fund transfer across borders. You require an NRE or associated Non-Resident External bank account. This account also affords easy ability to repatriate those funds. It, therefore, suits the NRIs who wish to invest back in their home country of India.
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3. Non-Repatriable Demat Account
This account is also available to non-resident Indians or people who live in other countries but are of Indian origin. Nevertheless, it does not allow the repatriation of funds to other countries, although there are some indications that this may change in the future. When getting an NRE account, you also require an associated Non-Resident Ordinary (NRO) account. This types of demat account is suitable for NRIs who do not intend to remit funds from India or supply funds to residents of India.
Benefits of Demat Account
Here are the benefits of demat account.
1. Easy Transfer
There is also ease in the transfer of shares. You can do this electronically. It can be prepared and transmitted electronically or through the Internet.
2. Reduced Risks
The original certificates cannot be lost, but physical harm or theft can also occur. Share certificates stay safe in digital format, and all shares are also safe in digital format.
3. Convenient and Fast
One of the significant benefits of demat account is that it compiles complex transactions. Trades can also be made from the comfort of your home through your demat account.
4. Cost-Effective
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No stamp duty is payable for the transfer of securities. This reduces costs.
5. Nomination Facility
There is an option to put the person of your choice as a nominee on your account. The system makes it easy to hand over the items to the beneficiaries.
How to Check Demat Accounts Details?
You can check your demat accounts by following these steps:
- Login to the CDSL/NSDL Website: The first thing you have to do is go to the official depository website.
- Provide Details: Please enter your PAN and other details, if necessary, for online transactions.
- Receive Account Information: Your Demat account details will be hosted on this website.
You can also check through your broker. It can give details of the client’s Demat accounts that are currently in operation.
Insights of Demat Accounts in India
Here we will discuss some statistical insights of the demat accounts in India.
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- 20 Lac+ unique clients
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1. Acceptability Dematerialised Accounts in India
Demat accounts have really gained traction in India, and the number is increasing. The number of demat accounts in India in the stock market is rising. Today, In the 20 months starting January 2023 until August 2024, over 6 crore new demat accounts were opened in India. As of 31st August 2024, the country’s total number of Demat accounts stands at 17.10 crore. Out of this, a major portion is with CDSL (Central Depository Services Limited) which has 13.34 crore investor accounts. The remaining 3.76 crore demat accounts are held with NSDL (National Securities Depository Limited).
This vast number suggests that people’s financial awareness has enhanced. More individuals are buying stakes in stocks and securities.
2. Number of Depositories in India
If you’re wondering how many depositories are there in India, the answer is, India has two primary depositories.
3. National Securities Depository Limited (NSDL)
NSDL began in 1996. It maintains a large part of demat accounts in India. NSDL works towards the maintenance of security and safety of electronic securities.
4. Central Depository Services Limited (CDSL)
CDSL began operating in 1999. The financial market was bearing the brunt of sharp fluctuations winged by the New Economic Policy in the mid-1990s. It is one of the recognised depositories in the country. CDSL also provides services for online share trading.
These depositories offer secure centres to maintain and trade securities.
Demat Account Example
A demat account example can be any trader in India who operates digitally. For instance, if you would like to invest, let’s say, in stocks. You can open a Regular demat account with one of the two brokers. When your account is activated, you purchase stocks of an organisation that has its stock on the NSE. Cuttings on these shares are reflected in your Demat Account. These are now held electronically by you. With this account, you can either sell or purchase additional shares.
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- 20 Lac+ unique clients
- 33+ Years of Serving
- Advance Technical Analysis
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Conclusion
Stock trading in India has transformed significantly with the introduction of demat accounts, offering safety, convenience, and efficiency to investors. Understanding the various types of Demat accounts is crucial in making the right choice for your specific needs. A demat account can cater to your investment requirements whether you reside in India or abroad.
With the growing number of participants in the financial market, the trend of opening demat accounts continues to rise. If you’re unsure about your own accounts, it’s important to know how to check how many demat accounts I have to stay organised and ensure proper management of your investments. Always consult your financial advisor before opening a new account to make the best choice.
FAQs
1. What is Demat account?
A Demat account, short for “Dematerialized Account,” is like a digital wallet where you keep your shares and other securities in electronic form. Just like you store money in a bank account, a demat account is used to store your investments safely. It removes the need for physical paper certificates and makes buying, selling, and holding shares easier.
2. Why do I need a Demat account?
You need a demat account to invest in the stock market in India. It is required to hold shares electronically. Without it, you cannot trade stocks. A Demat account also makes managing your investments simple, safe, and fast, as there is no risk of losing or damaging physical certificates.
3. How do I open a Demat account?
To open a Demat Account, you must approach a bank or a financial institution called a Depository Participant (DP). You must fill out a form, provide some documents like an ID card and proof of address, and sign an agreement. Once the DP verifies your documents, your Demat Account will be opened, and you will get an account number to start trading.
4. Is there any cost to maintain a Demat account?
Yes, there are some costs involved in maintaining a Demat Account. These include account opening charges, annual maintenance fees, and transaction fees. These costs can vary depending on the bank or financial institution you choose. However, these fees are usually small compared to the benefits and ease of managing your investments digitally.
References:
https://www.sharekhan.com/knowledge-center/demat/demat-account-basics
https://www.angelone.in/knowledge-center/demat-account/what-is-demat-account
https://www.5paisa.com/stock-market-guide/demat/what-is-demat-account
https://plutomoney.in/blog/demat-accounts-in-india-2024-a-comprehensive-guide-for-beginners
Author: All Content is verified by SMC Global Securities.
WHY SMC
- 20 Lac+ unique clients
- 33+ Years of Serving
- Advance Technical Analysis
- Free Demat Account