What is a Demat account?

A Demat account is a short form of Dematerialized account and it makes the process of taking part in investments like shares, bonds government securities, mutual funds, Insurance, and ETFs easy way. Demat account removes the hassles of physically handling and maintaining paper-based shares and other financially related documents.

How to open a Demat account?

In India, Demat account services are offered by depositories like NSDL and CDSL through intermediaries or Stockbrokers such as Angel one. To open a Demat account you must contract Depository Participant and fill out their account opening form. Once it is done you need to submit the duly filled form along with proof of identity and proof of Address documents. The documents required to open a Demat account are identity proof like a PAN card, a copy of valid residence proof, existing financial balance sheets, and recent photographs. Once the applicant's details are verified, the application process is processed. The sharebroker then dispatches a welcoming kit that contains details of the applicant's User ID and password. One can access their Demat account using the details and start trading in the stock markets. It is necessary to open a Demat account with reputed stock broking companies.

Best banks to Open Demat Accounts

An Investor requires 3 accounts to invest and trade in the stock markets in India. These 3 accounts are namely saving account, Trading account, and Demat Account. These 3 in-one accounts are mostly opened by all national banks which includes opening 3 accounts at the same time. This 3-in-one account is a set of 3 accounts that are linked for seamless transactions between them. This 3-in-1 account enables making stock market investment very easy for beginners in the stock markets. Most beginners use the Demat account for the Demat + trading account but technically it is very different. A trading account

All large banking institutions in India offer Demat accounts which are namely SBI, PNB, ICICI bank, HDFC bank, Yes bank, and Axis Bank.  Generally, a Demat account is an account in which you hold shares of the company in electronic format. They are similar to bank accounts but in place of money, they store shares, mutual funds, bonds, ETFs, etc in Demat Accounts.

Best bank to offer Demat account in India 2022

ICICI Bank

HDFC Bank

Kotak Mahindra Bank

Axis Bank

SBI Bank

These above-mentioned banks are quite similar in their offerings, charges trading platforms, and customer services.

What is Online Demat Account?

An online Demat Account holds shares and securities in electronic or dematerialized format. It is an easy and convenient way of holding assets like shares, Exchange-traded Funds ETFs, government securities, and bonds. A Demat Account allows for fast safe and handy transactions for buying and selling shares and extra securities. With a Demat account, shares and other fiscal instruments can be easily accessed and all actions are instantaneously checked by just logging into the account anytime. A Demat account is associated with a trading account to make things easier in stock market transactions.

Dematerialization Meaning

Dematerialization means a proper form of keeping records online in a Demat account and then planned to offer enhanced protection and increased rapidity in buying and selling in electronic formats. A Demat account in the online method enables electronic transactions of shares and securities to be brought and sold through the process of Dematerialization. The financial transaction involves, buying and selling stocks and other securities that are held in a Demat Account as a means of convenient and hassle-free trades.

Demat Account Security

Along with regulations of SEBI (Securities and Exchange Board of India in place the online transactions are transparent therefore operating a Demat Account is generally a safe process. You can likely open a Demat Account with your password and username, but if someone steals your username and password then your stocks are gone. A Demat account helps investors to hold shares and securities in an electronic form which we have already discussed is Dematerialized account. It also assists to keep track of all investments which an individual makes in shares, ETFs, bonds, and mutual funds in one place. If you want to freeze the Demat Account you can give a signed instruction to your depository participant. In most cases, Depository participants allow you to freeze your Demat Account online. The freeze remains effective till you unfreeze your accounts to enable debit transactions.

Tips to safeguard your trading account.

Do not click on unverified emails

When you are surfing the internet then you must know what you are clicking. While Phishing is getting more complicated, an ideal way to safeguard yourself from malicious attacks makes sure you do not click on any unverified emails. Even if you are sure the link is valid it is safe to avoid clicking. Instead, you must go to the financial firm’s website or app to confirm the information sent to you.

Use robust passwords.

Never saved passwords on your computer, do not distribute them or make a note of them in any place which can be easily viewed and stolen. Use tough and diverse passwords for dissimilar accounts and change your passwords frequently.

Do not use a public computer.

As a trader requiring keeping tabs on market at any time or place, you can be tempted to use a shared computer which is vulnerable to malicious attacks which at times is risky. For one, there may be no assurance about the network security or it may be that the computer which you are using has been infected with malicious software.

Always enable two-step verification or multifactor authentication.

Always use a multifactor and two-step verification process to enter your password, provide your password with a thumbprint, and an OTP sent to you as text on your Smartphone to access your trading account.

Maintain up-to-date information.

Make sure you get alerts on every financial activity and all financial transactions. Doing this will ensure you receive instant notification of any suspicious account activities thus allowing you to react instantly to unauthorized transactions.

Update your computer security. You must install effective and robust antivirus antispam software into your computer. This is mandatory if you are going for online financial transactions. If you are using a computing terminal then ensure that you have up-to-date security software. Remember to configure and update your software for new updates and patching. If you are using a smartphone device, then you must install security updates the moment you receive an updated notification. Always look to improve the safety of your computer system to ensure it is up to date on online security.

Conclusion- Demat accounts are very much used these days to make financial transactions. Demat account holders use online methods to buy and sell mutual funds, stock shares, ETFs, and bonds. The use of Demat accounts has saved a lot of paperwork in handling securities.  

Demat Accounts and its best players in India