Ease of Opening Demat Account
In the present day, stock market in India has expanded in a big way. India’s stock market consists of numerous exchanges at state level, and two major exchanges at country level. The two major exchanges are National Stock Exchange and Bombay Stock Exchange. National Stock Exchange, popularly referred to as NSE, was established in the year 1995, while Bombay Stock Exchange, or BSE, got recognized in the year 1970. Only 3% of stock market’s volume comes from the BSE, while 93% of its comes from the NSE.
In case your want to start trading in the Indian stock market, you have got to open a demat account. So the next question arises, what is a demat account? Demat account is another way of saying dematerialized account. This account is necessary in order to be able to trade in the market. These accounts are mainly owned by central depository security, or CDSL, and national depository security, or NSDL. In fact, all the banks are Depository Participants (DP) of CDSL and NSDL.
In order to open a demat account via bank with depository services, one has to first open a saving account in the bank with whom you would like to open a demat account. Once the savings account is opened, the person will have to fill in the application for demat account. The documents needed for opening savings account will be required for opening demat account also. So after the verification of those documents, the account will be opened.
After this, the savings account will be linked to your demat account as all the monetary transactions related to the dematerialized securities will take place through the savings bank account. This account would include the entries of purchase and sale of all the shares in question.
There are largely two kinds of demat account, online demat account and offline demat account. An online demat account helps in carrying out direct trading via Internet, while an offline demat account doesn’t allow direct trading through Internet per se but is carried out through a broker. The limit in an online demat account is about five times more than the limit present in the account.
In case of offline demat account, since the trading is not done directly, it is done through the investor’s broker by calling him or by visiting him. The benefit of having an offline account is mainly the limit offered on it. Brokers typically offer a trading limit of about 5-6 times the money present in the savings bank account. However, this limit is negotiable and can be increased by the broker.
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