Any individual you designate to manage your account by signing a power of attorney can do so on your behalf. More than one person can hold a Demat account at the same time.
If you want to have more than one person on a Demat account, you must do so when you open the account. You cannot add another person to an existing account. Your only option is to open another Demat account.
Let's start with a fundamental understanding of what a Demat account is.
A Demat account is an electronic account in which investors can store their securities for short or long periods. It works similarly to a bank account, with the exception that a bank account allows you to store your money, but a Demat account allows you to keep your securities, such as shares, debentures, commodities, currency, mutual funds, and so on.
National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are two well-known current depositories in India that offer free Demat account services.
Individuals who wish to trade stocks and securities should open a Demat account, which will allow them to keep their stocks and securities in a safe, convenient, and secure manner.
The operation of a Demat account is dependent on its connection to two other accounts. Demat accounts must be linked to both a trading account and a bank account.
1. Online trading/broking account –An online trading/broking account is a mandatory account that an investor must open to trade on the stock exchange. As a result, the trading account is required to be linked to a Demat account. All of your trading account transactions are electronically copied and stored in your Demat account.
While an investor's shares are held in a Demat account, the actual purchasing and selling are done through a broking account. So, it is necessary to open a trading account.
2. Bank Account & Demat Account – The bank account is used to credit and debit all amounts credited and debited during share transactions. For successful transactions and records, the bank account should be linked to the Trading and Demat accounts.
Operating a Demat account is a simple operation.
For opening a Demat account, you must first register with an investment broker or sub-broker. You will be given a transaction password after the account has been opened.
- Choosing a DP
After that, you must choose a depository participant (DP). When choosing a DP, make sure the service provider's offerings and functionalities match your requirements.
- Be ready for a face-to-face verification
The DP will dispatch an official to conduct an in-person verification after the documents have been received.
- Copies of the signing agreement
After verification, your DP will want you to sign a contract. All of the depository participant's and investors' responsibilities and rights are outlined in this agreement.
- Find out what your BO Identification Number is
Your DP will begin processing your Demat account application once this is done. Once your application has been granted, you will be given a unique Beneficial Owner Identification Number (BO ID). This BO ID is employed to access your Demat account.
Investing in real stock shares is a time-consuming process with a lot of paperwork and the risk of receiving bogus shares. A Demat account is necessary to keep the entire process simple and fast. Demat accounts are used to hold shares and securities in a dematerialized/electronic state while trading online.
Having a Demat Account allows you to purchase shares and safely store them. You can easily open a Demat account on online platforms like Motilal Oswal, where you will experience the best services.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account
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