2.4 million demat accounts opened, highest since 2008, theres a craze in Indian economy towards the stock market.
There was a time when investing in shares meant maintaining them in the physical form. This meant keeping track of a lot of physical documents. There was the risk of loss of investments due to theft of securities, misplaced papers, delivering of fake security papers etc. Things now have changed a lot.
Thanks to a demat account now, investment in shares has become a lot less stressful. Given the rise in awareness about the benefits of investing in the equity market, a significant rise in mutual fund and financial assets investment has been witnessed.
The Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) saw a major rise of 13.2% and 6.6% in the opening of new demat accounts, respectively in 2016. The total number of investors rose to 153.3 lakh at NSDL while CDSL clocked 119.2 lakh investors at the end of January 2017. (1)
What is a Demat Account?
Last year, over 2.4 million new demat accounts were opened, the highest ever since 2008. People are now increasingly aware of the benefits of investing in shares, mutual funds and financial securities that can offer higher returns than bank deposits or gold.
A demat or dematerialized account is opened by an investor who wants to invest in equity shares or mutual funds, or any other financial securities. The securities are held in a digital format and hence, remains safe, secure and is convenient to use. All you need is internet connectivity for trading. Trading in securities is only a matter of few clicks now.
To cut a long story short, demat account is similar to the bank account where you save your money and transact online using net banking services. With a demat account, you do the same managing your financial investments.
The Indian Demat Account Status
The market saw the highest number of demat account holders in the year 2008 when it went up to three million. What was once known as a privilege allowed to the affluent, with demat accounts today, even a middle-class person can afford to open invest in financial securities and reap benefits. Systematic Investment Plans (SIP), investment has become a lot more convenient and affordable.
How to Open a Demat Account
While the benefits of a demat account have been stated, if how to open demat account is a question on your mind, here are the simple steps to follow.
To open a demat account, you will have to do so with Depository Participants. They are known as DP. Depository Participants are the primary bank accounts through which the transactions can be made. It is a DP that enables the link between you and depositories. In India, the NSDL and CDSL are the two depositories registered with SEBI.
To open a demat account, follow these two steps:
- With a Depository Participant, register by filling in the forms and submit the necessary KYC documents (proof of identity, address and bank details).
- You are provided with an account number to access your demat account.
You are now good to trade online.
There are many stockbroking companies like Kotak Securities, Karvy, MotilalOswal Securities etc. with which you can open a demat account.
If you haven’t given your savings and investments a serious thought yet, it is time to do so now. Look forward to this space for more information on demat accounts.