What is Demat Account?
Demat account is also known as a Dematerialized account. The primary use of Demat account is to hold shares and securities in an electronic format. It helps you in online trading like buying or selling shares, or converting physical shares into electronic form. All the shares, mutual funds, bonds, government securities, and other investments are saved in a dematerialized account. Also, through demat account investors can perform intraday trades.
Demat Account Eligibility Criteria
Proof of Identity
- PAN card with photograph (mandatory). Although there are a few exceptions to the PAN Card rule –
- Traders relating to specific income slab as per section 139A.
- Traders resident of Sikkim state.
- Transactions done on behalf of Central or State governments or by officials appointed by Indian courts.
- The applicant should submit any one of the following:
- Unique Identification Number (UID) (Aadhaar)
- Voters ID card – Valid Driving license
Proof of Address
- Voters Identity Card
- Aadhaar Card
- Registered Lease or Sale Agreement of Residence
- Valid Driving License
- Utility bills like Telephone Bill (only landline), Electricity bill or Gas bill – Not more than 3 months old.
- Bank Account Statement/Passbook — Not more than 3 months old.
Benefits of Demat Account
Following are some of the benefits that a Demat account offers,
- Easy to use, convenient, and secured.
- Automatic credit of share in the event of a company merger, bonus, consolidation, and so on.
- All the Demat account information is accessible online just using a secure login.
- You do not need to keep visiting the stock market for transactions.
- Low transaction costs
- No stamp duty
- Unlike physical shares, here you can make transactions with odd numbers too.
- It offers a common banking solution.