Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account. The purpose of opening a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users during online trading.

In India, depositories such as NSDL and CDSL provide Free Demat account services. Intermediaries, depository participants or stockbrokers facilitate these services. Each intermediary may have Demat account charges that vary as per volume held in the account, type of subscription, and terms and conditions between a depository and a stockbroker.

Opening a demat account can be very simple, and it requires minimal paperwork. Here’s how you can open a demat account.

To open a demat account, follow the simple steps below:

Step 1: Fill the account opening form

Step 2: Submit documents

Step 3: Finish the in-person verification (IPV)

Step 4: Get an account number/ID

You could also opt for a digital demat account where the entire application process is online. The steps are similar: Fill in the application form, upload scanned copies of your documents, and complete the IPV. The only difference is that it all happens through digital channels!

Just give us your name, phone number, and email address.

One of the biggest benefits of demat account for investors is that it is digital. Having said that, there are many other advantages of demat account that can be listed as follows.

1.   Security of shares: The most important benefit of demat account is that it is safer than holding physical shares which can get lost, damaged, or stolen.
2. No forgery or theft Since the demat account is electronic in nature, the risk of documents getting stolen, damaged, or lost does not exist.
3. Seamless trading and transfer Unlike transporting physical certificates, demat accounts allow the transfer of shares quickly and securely. This has lowered order processing times.
4. Lower cost Physical share certificates attract paperwork and stamp duty, which increases costs. With a demat account, all this is eradicated and you can get a demat account in no time.
5. Multiple access points A demat account is operated electronically, which essentially means that users can access the account from multiple touch points—mobile, tablet, PC, laptop, etc.

The key difference between a Demat and a Trading account is that a Demat account is used to hold your securities such as your share certificates and other documents in electronic format whereas a Trading account is used for buying and selling these securities in the stock market.

Although a Demat account and a Trading account have two different purposes, they are closely related. In fact, your actual stock market activity is a close interplay between your Trading account, Demat account, and your bank account.

The 3-in-1 account consists of 3 separate accounts open together including a Bank Account (a normal bank account where your money resides), a Trading Account (a share broker account which allows you to trade in equity, F&O etc. segments) and a Demat account (it holds the equity shares purchased by you).

The beauty of 3-in-1 account is seamless transaction between these three accounts. It also offers a wide range of investment products under this account.

When the account holder buy shares through trading account; the money gets automatically debited from the saving bank account and share are automatically credited to the demat account. Similar way when shares are sold through trading account; the money gets credited to the bank account and shares are withdrawn from demat account. The money remains in your bank account can be used like any normal bank account (i.e. you can withdraw that using your debit card).

While the cost of trading is generally high with the companies offering 3-in-1 account, the hassle-free investing and integrated financial solution provides unique benefits. These accounts are especially good for people who invest in the stock market for long term basis or people who do not mind paying a little more brokerage for the hassle-free service.

If you are a beginner in the stock market or an investor in the market (not a regular trader) then this type of account is highly recommended.

Other benefits of 3-in-1 account include:

1. Investment and trading in Equity
2. Investment in IPO’s
3. Online Mutual Funds investment
4. Derivative Trading (Trading in Futures & Options or F&O)
5. Saving Account can be used as normal bank account

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