What is a Demat Account?

Overview of Demat Account

It is compulsory to have a demat account for the investors to buy and sell shares in India. The investor has to open a demat account with a depository through a Depository Participant.

Demat Account is an electronic account where the investors hold shares of various companies in the dematerialised (electronic) form. Shares owned by the investors are held electronically in his/ her demat account. Demat Account gives the facility to an investor to buy or sell shares in a secure and safe way over the internet in electronic form.

Features of Current Account

  • Current Account can be opened only after completion of Know Your Customer (KYC) norms.
  • Current account has continuing nature and there is no fixed tenure of deposit kept in it.
  • As current account is not meant for regular saving, interest on deposit in current account is not paid.
  • More than one current account should not be opened for the same business entity.
  • Account holder is required to maintain Minimum Average Balance (MAB) as prescribed by the bank.
  • There is no cap on number of transactions in current account in most of the banks.

Features of Demat Account

  1. Provides facility to trade online
  2. To dematerialise and rematerialise the shares
  3. Provides easy pledging facility to avail Loans
  4. Easy and fast transfer of securities in demat form
  5. Many investors are unaware that DP charges on dormant account as well
  6. Avail of a loan against shares

Benefits of Demat Account

  1. Fast processing due to instant transfer of stocks from one account to another
  2. Reduced transaction cost
  3. No stamp duty on transfer of securities
  4. Risks of losing shares due to theft, fire, flood and earthquake do not exist
  5. Safer than paper-shares
  6. Minimization of paperwork
  7. Convenient way to hold securities in electronic form
  8. Convenient method of consolidation of folios/accounts.
  9. Investments in equity, debt instruments and Government securities held in a single account.
  10. Immediate transfer of securities
  11. Even one share can be sold
  12. Change in address recorded with a Depository participant (DP) automatically gets registered with all companies in which investor holds securities. Therefore, there is no need to correspond with each company separately by the investor/li>
  13. Transmission of securities is done by DP eliminating correspondence with companies
  14. Automatic credit into demat account for shares arising out of Corporate Benefits like IPO, bonus, split, consolidation, merger, etc.
  15. Nomination facility is provided in demat accounts
  16. In one demat account, the investors can keep investments in both equity as well as debt instruments. Further, they can keep the units of Mutual Funds, Exchange Traded Fund (ETF), etc.
  17. Investors/ Traders are free to operate from anywhere

Disadvantages of Demat Account

  1. The investor needs to be internet savvy
  2. Investors have to pay various fees to the DP to maintain their demat accounts such as annual maintenance fees, charges for dematerialisation, transaction charges for debit of securities, fees for pledge of securities, etc.
  3. There are many regulatory frameworks that have to be conformed to such as the Depositories Act, Regulations and the various Bye-Laws of various depositories.
  4. Agreements are entered at various levels in the process of dematerialization.
  5. It is not possible to close a demat account having illiquid shares and the investor is required to pay the charges to the depository participant regularly.
  6. Most of the investors don't know that it is necessary to close their DP (Depository Participant) Account after liquidating the holdings and the DP can charge them fees, if the account is not closed.
  7. Many investors are unaware that DP charges on dormant account as well.

Points to be Checked beforeSubmitting Demat Application

  • Name appearing on certificates should match with that in the Demat Account
  • Quantity, number of certificates, folio number, certificate numbers and distinctive numbers should be written on the Demat request form very carefully and without any error
  • Separate forms are to be filled up for each category of shares i.e. equity/preference etc.

Important Points regarding Demat Account

  • A Demat Account can be opened with no balance of shares.
  • You can have multiple demat accounts, if you wish so.
  • A Demat Account does not require that a minimum balance be maintained.
  • You can choose your DP as per your choice & convenience.
  • It is not compulsory to open DP account with your stock broker. You can open it with any DP of your choice.
  • DPs are free to charge either a flat fee per transaction or on the basis of the transaction value subject to a fixed minimum amount.

Upcoming Bank Holidays

2018 October 24 is a bank holiday in Andaman And Nicobar Island due to Lakshmi Puja/Maharshi Valmiki Jayanthi.
2018 October 27 is a bank holiday in Himachal Pradesh due to Karva Chauth.
2018 October 31 is a bank holiday in Sikkim due to Lhabab Duechen.
2018 November 01 is a bank holiday in Karnataka due to Kannada Rajyostsava/Kut.
2018 November 06 is a bank holiday in Andaman And Nicobar Island due to Diwali Amavasaya (Laxmi Pujan).
2018 November 06 is a bank holiday in Arunachal Pradesh due to Kali Puja/Diwali/Naraka Chaturdashi.

Banks Loan Service

Credit Card By Banks

Credit Card Category

ALL INDIA BANKS LIST
A B BANK LIMITED ABN-AMRO Bank N.V ABU DHABI COMMERCIAL BANK AIRTEL PAYMENTS BANK LIMITED
ALLAHABAD BANK American Express Banking Corp ANDHRA BANK Antwerp Diamond Bank NV
AU SMALL FINANCE BANK LIMITED AXIS BANK B N P PARIBAS BANDHAN BANK LIMITED
BANK OF AMERICA BANK OF BAHARAIN AND KUWAIT BSC BANK OF BARODA BANK OF CEYLON
BANK OF INDIA BANK OF MAHARASHTRA BANK OF TOKYO MITSUBISHI LIMITED BARCLAYS BANK
BHARATIYA MAHILA BANK LIMITED Calyon Bank CANARA BANK CAPITAL SMALL FINANCE BANK LIMITED
CATHOLIC SYRIAN BANK LIMITED CENTRAL BANK OF INDIA CHINATRUST COMMERCIAL BANK LIMITED CITI BANK
CITY UNION BANK LIMITED CORPORATION BANK DBS Bank Ltd DCB BANK LIMITED
DENA BANK DEUSTCHE BANK DHANALAKSHMI BANK EQUITAS SMALL FINANCE BANK LIMITED
ESAF SMALL FINANCE BANK LIMITED EXPORT IMPORT BANK OF INDIA FEDERAL BANK FINCARE SMALL FINANCE BANK LTD
HDFC BANK HSBC BANK HSBC BANK OMAN SAOG ICICI BANK LIMITED
IDBI BANK IDFC BANK LIMITED INDIAN BANK INDIAN OVERSEAS BANK
INDUSIND BANK JAMMU AND KASHMIR BANK LIMITED JP MORGAN BANK JSC VTB BANK
KARNATAKA BANK LIMITED KARUR VYSYA BANK KOTAK MAHINDRA BANK LIMITED Krung Thai Bank Public Co. Ltd
LAXMI VILAS BANK MASHREQBANK PSC MIZUHO CORPORATE BANK LIMITED NORTH EAST SMALL FINANCE BANK LIMITED
OMAN INTERNATIONAL BANK SAOG ORIENTAL BANK OF COMMERCE PUNJAB AND SIND BANK PUNJAB NATIONAL BANK
RBL Bank Limited SBM BANK MAURITIUS LIMITED SHINHAN BANK SOCIETE GENERALE
SONALI BANK LTD SOUTH INDIAN BANK STANDARD CHARTERED BANK STATE BANK OF BIKANER AND JAIPUR
STATE BANK OF HYDERABAD STATE BANK OF INDIA STATE BANK OF MYSORE STATE BANK OF PATIALA
STATE BANK OF TRAVANCORE SURYODAY SMALL FINANCE BANK SYNDICATE BANK TAMILNAD MERCANTILE BANK LIMITED
THE BANK OF NOVA SCOTIA THE NAINITAL BANK LIMITED UBS AG UCO Bank
Ujjivan Small Finance Bank Limited UNION BANK OF INDIA UNITED BANK OF INDIA UNITED OVERSEAS BANK LIMITED
UTKARSH SMALL FINANCE BANK VIJAYA BANK Woori Bank YES BANK
ZILA SAHAKARI BANK LTD