Demat is not a new term. Demat is used for trading and investment purposes. India implemented the Demat Account system for NSE trading in 1996.

History of Demat Account:

Before 1991, all financial activities such as investments, trades, and security purchases and sales were conducted in physical form. The transactions were kept as physical certificates, those were tangible pieces of paper, and losing them was often found to be risky. This system led to numerous issues including failed trades, time-related trading problems, and widespread fraud. However, this changed in 1991 when the Indian Government decided to dematerialize all share certificates. This initiative was led by two entities viz. NSDL and CDSL.

With time, demat account has taken its digital form, and all individuals whether minors or adults are entitled to open their online demat account. Let’s understand, what is demat account.

Demat Account Meaning

To understand the meaning of the demat account, let’s understand the meaning of demat first. Demat is the sort form of Dematerialization. Dematerialization means the transferring of physical shares or securities in an electronic format. So, Demat account meaning is very simple and crisp i.e. an account where an individual can store the shares and securities in electronic format.

How to open demat account?

In today’s digital world, demat account can be opened online from anywhere, anytime via a mobile phone. Opening a demat account is a four-step process where an individual has to start with a registration process either with email or phone number.

Once, registration is done by verifying the OTP to the respective mobile number or email, you will proceed to the steps of Aadhar verification through Digilocker. This is followed by the KYC and KRA verification process. Further, you will have to draw or upload your signature and photograph to complete the entire process of demat account opening.

Almost all the brokers today provide free demat account opening opportunities for all those who aspire to be a part of the Indian stock market. A free demat account does not charge you any fees or commissions. You will get access to the global market with a free demat account opening online.

Benefits of online demat account:

An online demat account is a paperless account and all the records are kept in an electronic format. Apart from offering multiple opportunities for investments and trading, the demat account has the following benefits:

1. A demat account lets you hold shares and securities in digital form. You can watch your purchased securities in your portfolio.
2. An online demat account allows you to buy and sell stocks and other assets easily and quickly. The transaction is secured at multi-layer and is also encrypted.
3. For those, who are holding the securities in a physical certificate, through an online demat account, they can change them into electronic form, making investments easier to manage and access.
4. Demat accounts let you use your securities as collateral for loans, making it simpler to get credit. According to your portfolio, you will get the credit abilities.
5. Easy to get market information, updates regarding the market and corporate happenings, company’s profile. You can check your demat account information from any device with an internet connection.
6. Dividends and bonuses are directly credited to your trading account which is linked with your demat account, eliminating the need for physical dividend warrants or checks.
7. You can name a maximum of three beneficiaries for your demat account, allowing a smooth transfer of assets in the event of your demise.

Demat On Mobile App:

Demat account is accessible through a mobile app that offers a convenient way to manage your investments. You can easily buy and sell stocks, bonds, and other securities right from your smartphone with an internet connection. The app provides real-time market updates, allowing you to make informed investment decisions quickly. Additionally, you can monitor your portfolio, view transaction history, and receive important notifications directly on your mobile device. Security features like two-factor authentication keep your account safe. With a user-friendly interface, a mobile demat app simplifies the process of investment and trading by keeping them at your fingertips.

Conclusion:

A Demat account simplifies trading, boosts liquidity, and safely manages your investments. If you're interested in opening one, contact a reputable financial institution or brokerage firm.