Do you have a checking or savings account? You'd probably respond yes, and you may even have many bank accounts. A Demat trading account functions similarly to a bank account. The only difference is that Demat keeps your securities, which might be in the form of bonds, shares or debentures, rather than money in your bank account.
If you want to invest in the stock market, you'll have to open a Demat account online first. Everything you need to know about free demat account opening may be found here.
A Demat account is an electronic account that holds your securities instead of physical certificates. As an investor, you must create a Demat account with a Depository Participant in order to purchase and sell securities on the Indian stock market.
Depositories are companies that store your securities electronically and make transactions easier. NSDL and CDSL are the two depositories registered with SEBI.
Depositories and investors are represented by Depository Participants. You must go through a DP in order to use the services of a depository. A Demat account is the kind of account you must have with a DP.
To open a Demat account online, most DPs do not charge a fee. Some charge a refundable account opening fee, while others demand a set fee. Other fees include transaction fees, yearly maintenance fees, and fees for changing shares from physical to electronic format.
Stocks are maintained in an electronic format in your Demat account; it does not handle cash transactions. You must first log in to your trading account, which is connected to your Demat account, in order to conduct the money withdrawal.
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