Slowly and steadily the Indian economy is adopting paperless transactions. Be it getting your bank account details or transferring funds, all financial transactions are done in a span of a few seconds. In case if you are planning to invest in shares or bonds you can do it with the help of a Demat account. But before we figure out in-depth about free Demat account there are certain pointers you have to be aware of.
Demat is an electronic account where the shares are being held in dematerialized form. In the days gone by the shares were only available in physical form and to deal with it was time-consuming and risky as pointed to various occurrences of fraud. This process went on to bear fruit in 1966, where the physical shares were converted on to the electronic form.
The charges of a demit account vary from one DP to another. While some provide it free of cost, others tend to levy a charge. Though most of them have an annual charge for maintaining the account, in case of certain DPs, they waive off the charges if the transactions exceed a certain limit. You can access the account from any remote corner of the world.
The benefits of a Demat account
The benefits of a Demat account are numerous. Not only it provides ease of access, flexibility convenience, and security features. With the shares that are held in your Demat account you can apply for a loan. When you are executing a loan bank are known to take the pledge of these securities. If the shares are kept in a Demat account, it can be traded from anywhere as you can track the portfolio at any time. These tend to be a highly secured form of securities as the scripts are sold through your account. It is transferred to the bank account that is registered with the Demat account.
Things you need to be aware
When you are opening a Demat account you need to provide proper information about your personal details and bank account. When you are opening an account with DP, a couple of types of accounts can be formulated, with the DP a trading account and another one for a Demat account. For intraday transactions, there is no need for a Demat account as you can execute them when you are trading with a DP.
For trading in futures or options, there is no need to open a Demat account. When you happen to sell a share, the broker pulls one from the trading account on to your Demat account for further settlement. In order to transfer the shares, the broker is expected to attain the power of attorney when you open an account. Though it is not mandatory, it makes the process of executing transactions a lot quicker when you open an account.
When you are opening an account with a broker you need to check out on maintenance charges, the transaction fees, etc.
