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Demat refers to a dematerialized accounts
Demat account is same as that of your bank account in
terms of its functions but
the difference lies in the asset it holds: bank account holds money whereas
demat account holds your shares in electronic form. Once you open demat account
all your shares will be transacted through the demat account in dematerialized
form.
Let me explain you above the scenario in details.
If you wish to save money, create wealth, transfer money from one bank account
to another then you need a bank account for these transactions. Similarly, when
you want to develop share portfolio in Indian share market then you need to open
demat account. In this account you can keep your shares for and perform buying
or selling of the shares easily.
If you buy 25 shares of Wipro, 100 shares of Reliance Industry, 300 shares of
Infosys from reputed brokers like Angel Broking, Sharekhan, Indiainfoline, then
a the money collection from you and then share delivery to your account takes
place through a number of steps. The respective broker will collect your money
from T+2 basis (T means trading day with 2 days leverage) and on your behalf,
the broker will deposit money to the stock exchange and get shares in his
(broker’s) pool account. Once you have completed your payment to the broker, he
will transfer your shares in your DP account (DP: depository participants. Your
broker in this case will open demat account
for you and a shareholder is allowed
to have multiple Demat account with multiple brokers. If you feel that, your
current broker is charging you exorbitantly then you have the option of
transferring your shares from current broker’s account to another broker’s
account. Current broker will charge you minimum amount. Commonly, Rs. 30 is
charged for every transaction.
Most of the brokers have back office facilities for their clients. Clients can
login to their account and view his/her daily or historical transaction done in
Indian share market.
Presently, there are two depositories in India - the National Securities
Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). There are
over a 100 DPs and your broker is a register member of any one of them.
Hence, you don't have to keep a stock of physical
documents / certificates, which will act as a proof of your ownership of the
shares you hold. Once you open demat account the
shares and certificated will
remain in it in the electronic form mapped under your broker. Nowadays,
operating your DP account is very smooth. Whatever transaction you will do, it
will get adjusted in your account instantly.
Just like a bank passbook or statement, the DP will provide you with periodic
statements of holdings and transactions.
Enjoy the hassle free DP transaction and open demat account with top share brokers in India.
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