Demat Account: As an aspiring investor, you should know that it is mandatory to have a Demat account to start investing in the stock market. Opening a Demat account is the first step towards investing in the stock market. Like you keep your cash in a bank account, you keep stocks in a Demat account. Both bank and Demat accounts have different functions and they are distinguished from each other.
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Under the Depository Act 1996, a Demat account has been made mandatory to ease the investment process in the stock market. You can keep digital copies of your shares or other securities safe in the Demat account.
Before opening a Demat account, you should understand the difference between a Demat account and a bank account.
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How demat account ID differ from a bank account?
People keep financial assets (shares, bonds) in a Demant account.
Demat account is used for operative functions under the principle of dematerialization.
In the Demat account, digital shares are kept in place of physical share certificates.
A Demat account is used to collect all the shares of investors in one place.
Bank accounts are meant to deposit cash.
Account-to-account fund transfers can be done using a bank account.
Bank Accounts are tools to fulfil banking needs.
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How to open a demat account
- You need to choose a broker and then visit their official website.
- Next, you will have to submit details like name, mobile number, etc…
- You need to validate yourself using the OTP received on the submitted mobile number. Now fill in the other necessary information like date of birth, PAN card details, and bank account to complete the KYC process.
- Post KYC completion, a Demat account will be opened.
An investor can open multiple demat accounts. This account can be opened with a single depository participant or multiple depository participants. However, the investor can use the Demat account only when the KYC is done.
