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Demat Account: What is it all about?

You might have heard the word `Demat Account’ frequently in the past few years. If you’ve wondered what a Demat Account is, let’s explain it to you. A Demat Account is a bit like a bank account for your share certificates and other securities that are held in an electronic format. Demat Account is short for dematerialization account and makes the process of holding investments like shares, bonds, government securities, Mutual Funds, Insurance, and ETFs easier, doing away with the hassles of physical handling and maintenance of paper shares and related documents with Adani power share price.

To understand Demat Account’s meaning, let’s use an example. Let’s say you want to purchase the shares of Company X. When you buy those shares, they will have to be transferred in your name. In earlier times, you got physical shares certificates from the exchange with your name on them. This, as you can imagine, involved tonnes of paperwork. Each time a share was bought and sold, a certificate had to be created. To do away with this paperwork, India introduced the Demat Account system in 1996 for trades on NSE.

Today, there’s no paperwork involved, and physical certificates are no longer issued. So when you buy shares of Company X, all you get is an entry in electronic form, in your Demat Account. So what is a Demat Account? Today if you want to trade/invest in the stock market (NSE & BSE) or other securities, having a Demat Account is a must. Your Demat Account number is compulsory for electronic settlements of the trades and transactions you do with Adani power share price

How to get a Demat Account?

Now that you know what a Demat Account is, let’s see how you can go about getting one. When you open a Demat Account, you are opening one with a central depository like the National Securities Depository Ltd (NSDL) or the Central Depository Services Ltd (CSDL). These depositories appoint agents called Depository Participants (DP), who act as intermediaries between themselves and investors. Your bank, for instance, HDFC Bank, is a DP, with which you can open a Demat Account. Stockbrokers and financial institutions too are DPs, and you can open a Demat Account with them also.

Just like a bank account holds money, a Demat Account holds your investments in an electronic form, which is easily accessible with a laptop or a smart device and the Internet. All you need to have is the unique login ID and password to access it. However, unlike a bank account, your Demat Account need not have a ‘minimum balance’ of any sort with Adani power share price.

You can check the websites of any of the depositories to get a list of DPs with whom you can open a Demat Account. The choice of a DP should ideally depend on its annual charges with Adani power share price. Note that you have more than one Demat Account, but not with the same DP. So one PAN card can be linked to multiple Demat and Trading Accounts.

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