What is a Demat Holdings Account?
In India, Demat accounts ideally are held by one of the two depositories – NSDL and CDSL. Shares that are bought and sold in the stock market are not traded or stored in physical or ‘material’ form, but in a dematerialised electronic format. Storing shares in an electronic format is made possible by opening an online Demat account with a Depository Participant (DP) that are members of either NSDL or CDSL. In general, these DPs could be banks or stockbrokers and the Demat account opened with DP is termed as Client Demat account or Client Beneficiary account.
Demat holdings account or Client beneficiary account, simply put, is a beneficiary Demat account that holds a client’s shares as clear and updated balance.
> How is the Demat Holdings Account operated?
Trading in shares takes place using two accounts – a trading account with a broker and a Demat holdings account with a DP. When shares are bought from the market, they are transferred through the broker from the exchange in its Pool account after two days from the trading date. If the funds in the client’s banking account are clear, then the shares are transferred to the Client beneficiary account or the client’s Demat account. These clear holdings are termed as Demat holdings and the client is eligible for any bonus, dividend, rights, or any corporate actions on these held shares.
Generally, it is advisable to have both the trading account and the Demat account with the same depository or entity to avoid any settlement issues.
> Why should you monitor your Demat Holdings Account?
Once the shares are successfully transferred into your Demat account after 2 days from the trading date, it is automatically reflected in your Demat account statement. A Demat account statement can be broadly classified into two types:
It is important to monitor the statement of Demat holdings regularly for the reasons stated:
A Demat account statement allows investors to verify their stock market investments and their status. Thus, it is extremely important to register with a reliable brokerage firm that sends its clients the Demat holding statement regularly via email or SMS. Having an online Demat account also comes in handy in promptly monitoring the Demat account holding statement without depending on a broker. You can now view your Demat account statement directly by visiting the NSDL or CDSL web portals where your Demat account is registered.