What is DEMAT Account?
A demat account is an account that facilitates investors to secure shares in an electronic format. It simply acts like a bank account which can be used for monetary transactions without actually using money in a physical format. In such cases a demat account allows one to buy and sell shares on the stock market electronically without exchanging physical share certificates.
To initiate transactions, you will need to log in to your demat account, using a client ID (provided by your brokerage firm, for example, Kotak Securities) and a password.
A DEMAT account also acts like a safe deposit – it holds the certificates of your financial instruments like shares, bonds, government securities, mutual funds and exchange-traded funds (ETFs) in a demat form.
What is DEMATERIALIZATION?
Dematerialization is the process of converting share certificates from physical to electronic format.
By holding your certificates in demat form, you:
- gain higher security and escape forgeries
- successfully avoid hassles of managing and maintaining physical documents which can decay, disappear or be damaged
Since India has shifted to dematerialized share certificates, you compulsorily need a DEMAT account before you start to trade on India’s stock exchanges.
Benefits of Demat Account
- ZERO RISK:
Dealing with physical share certificates can put you at the risk of:
- Forgery – forging a copy of a paper is easy, using a demat account to store your shares electronically will help you avoid such a situation
- Loss – with our busy schedule, losing or misplacing a paper is commonplace. Using a demat account ensures that all your shares are stored in one place, safely
- Damage of paper or ink – over time, papers decay and inks erode. Using a demat account ensures there is a permanent, digital record of your transactions
In the demat form, certificates last forever and opening a Demat Account with Kotak Securities puts you at zero risk
- ZERO PAPERWORK:
When you use a demat account to buy and sell shares, all your certificates are in electronic form - thus transactions are hassle-free and less cumbersome. When you trade shares or other financial instruments, there is no need to actually hand over certificates to the buyer or seller.
After opening a demat account, you will have to deal with zero paperwork.
- ZERO COST:
Dealing in physical securities involves a lot of additional costs such as handling expenses, stamp duty as well as for safety. These are very hard to determine beforehand. All these are eliminated when maintaining a demat account. Since the brokerage charges you have to pay are detailed in advance, you pay zero hidden costs.
- ZERO TIME:
Buying and selling shares through your demat account in electronic format is instant. Earlier, exchanging physical certificates used to take weeks, if not months. This means transactions become seamless and inexpensive. And transactions require zero time.
Advantages of a Demat Account with Kotak Securities
Opening a demat account with Kotak Securities comes with the following great advantages:
- Three-in-one account - DEMAT account, trading account and a bank account with Kotak Mahindra Bank, bundled together in one hassle-free account opening process - you will not have to open three accounts separately, but instead do so with a single application form. Also, you won’t have to manually transfer money to your trading account from your bank account. The required funds get credited automatically. (Alternately, you may also choose to open only demat and trading account with us, and continue to use your existing bank account for fund transfers)
- Free Intraday Trading – A DEMAT account with Kotak Securities comes with free intraday trading. Which means, when you buy and sell your shares on the same day, you do not pay us any brokerage! (As per SEBI norms, brokerage cannot be zero, so we charge an almost negligible 1 paisa per trade)
- Margin Facility – Usually, you buy shares using your own money. However, sometimes when you do not have sufficient funds in your demat account, some shares can look very tempting. Instead of passing on the shares, you can use our margin trading facility and borrow money from us to invest in the stocks.
- Stock Trading mobile app – Opening a demat account with Kotak Securities gives you access to our demat account app (available on iPhone and Android). This app enables you to browse live stock market news, share price updates, your portfolio and fund transfer facility
- Stock Research reports – Our trained financial and equity analysts
How to open a DEMAT account – Procedure
Step 1: Fill up demat account opening form
Step 2: Submit Documents
Step 3: In-person Verification
Step 4: Once the process is complete you will be provided with the Account Number / ID
When you fill up the short, demat account opening form on our website, you will receive a call from a Kotak Securities customer care executive within 3 minutes on a working day. This call helps us understand:a) If you have valid Pan Card and Aadhaar Card,
b) Your location, so we can assign a Relationship Manager (RM)
You then have to submit copies of these documents to our Relationship Manager, who will collect it from any location convenient for you. This also completes the mandatory in-person verification required to open a demat account.
On the completion of the above procedures, you will receive your Demat Account number and Client ID on your email as well as by post.
The demat account opening procedure at Kotak Securities is hassle-free and does not take more than a few days.
Get more Demat account information:
- Demat Account Brokerage Charges
- What is Collateral Amount in Demat Account
- Use Of Demat Account
- What is Dematerialization Account
- Demat Account Charges
Documents required for a DEMAT account with Kotak Securities
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Filled application form for opening DEMAT account
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Passport size Photographs
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Proof of identity (Aadhar Card, Driving License, Voter Id)
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Proof of address(Aadhar Card, Passport, Driving License, Voter Id)
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Copy of PAN card
- Mandatory by SEBI
- Easy Portfolio Management
- Security of Equity Investments.
DEMAT Account Charges
- Account opening fees = Nil (Avail Free Demat account in 15 Minutes)
- Demat account maintenance charges = Rs 50 per month for resident Indians, Rs 75 per month for NRIs.
- No maintenance fees will be charged on demat accounts if there are no transactions and no securities in the account for the respective year.
DEMAT Fees
| 1 | Dematerialisation | Rs.50/- per request and Rs.3/- per certificate |
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| 2 | Rematerialisation | Rs.10/- for 100 securities (shares, bonds, mutual funds units etc). | Rs. 15/- |
| 3 | Regular (Non- BSDA Account ) (For Individual Accounts only) Market/off-market Transactions(Sell) BSDA Account (For Individual Accounts only) Market/off-market Transactions(Sell) |
0.04% of the value of securities(Plus NSDL Charges) 0.06% of the value of securities(Plus NSDL Charges) |
Rs. 27/-(Plus NSDL Charges) Rs. 44.50/-(Plus NSDL Charges) |
| 4 | Regular Account Maintenance Charges | RESIDENT- Rs 65 p.m for upto 10 debit transactions. Rs 50 p.m. for 11 to 30 debit transactions. Rs 35 p.m. for more than 30 debit transactions. NRI-Rs 75 p.m. |
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| 5 | Pledge charge | 0.05% of the value of securities | Rs. 30/- |
| 6 | Invocation of pledge | 0.04% of the value of securities | Rs. 30/- |
| 7 | Charges for client master change
(Applicable for Address, Email, Mobile and Bank Updation) |
Rs. 49/- per modifi cation request |
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| 8 | DIS Re - Issuance | Rs. 99/- per DIS Booklet |
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| 9 | Charges for CAS | Rs. 3/- per month |
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A Brief history of the DEMAT Account:
Just like the whole world, the stock markets too have undergone a significant change since the time of its inception.
When the Bombay Stock Exchange, the oldest in Asia, was founded in 1875, it was an open outcry floor trading exchange. This means traders would buy or sell stocks by verbally shouting prices on an open floor. Today, it is vastly different. It is an electronic system where you buy or sell stocks online.
Similarly, earlier, shares were physical receipts. On buying shares, you got a certificate. Over the years, people thought stock market trading was not for them because of the sheer paperwork involved in completing a transaction. Stock market settlements, wherein you receive shares if you buy or money if you sell them, were longer. In 1996, trading began on NSE for shares held in DEMAT account form. It was the beginning of a new paperless trading stock market trading environment. If you buy a share today, it gets credited to your account in two days. Today, shares get transferred to your DEMAT account.
You cannot trade in the stock market without a DEMAT account.(Open Demat Account Today)›
Here are some things to know about DEMAT account:
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ELECTRONIC CERTIFICATE
There are three key requisites for trading in the stock market – a bank savings account, trading account and a DEMAT account. When you buy a share, you own a portion of a company’s assets. To prove your ownership, you are given a certificate. Today, this certificate is electronically available in your DEMAT account or DEMAT accounterialized account.
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CENTRAL DEPOSITORY
For this reason, the first step of trading in the equity market is creation of a DEMAT account. There is a central database of all DEMAT accounts. It is called a depository. There are two depositories – CDSL and NSDL.
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DEPOSITORY PARTICIPANTS
Banks, brokers and financial institutions are empowered to offer DEMAT account services. They act as the intermediary between the central depository and the investor, and are called depository participants (DPs). This means, CDSL and NSDL hold details of your shareholding on your behalf, just like banks hold your money in different kinds of accounts.
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TRANSACTION IDENTIFICATION
Just like the DEMAT account, a trading account is a must for investing in the stock market. You register for a trading account with a stock broking firm. Each account comes with a unique trading ID, which is used for conducting transactions. To conduct a trade, you deposit some money in your trading account. This is linked to your DEMAT account. Using the money in your account, you place an order for a stock. Once the order is processed, the stock exchange identifies that the order belongs to you using your unique trading ID. It then forwards the shares to your DEMAT account.
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PORTFOLIO HOLDING
At any time, your DEMAT account reflects the details of your portfolio. This includes stocks, bonds, mutual fund units, Exchange Traded Funds (ETFs), as well as government securities in electronic form. So, whenever you invest by buying stocks, it will be credited to your DEMAT account. Similarly, if you sell any of your holdings, these will be removed from your account.
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NO MINIMUM BALANCE
A bank account requires a minimum balance. However, this is not so for DEMAT Account. There is no minimum number of securities required to keep the account rolling.