Dematerialization (Demat) account is the prerequisite for investing in the stock market. According to SEBI, no transfer of securities can take place in physical certificate form, whether it’s stock exchange or an off-market transaction.
Physical share certificates have become illiquid except transfer to inheritor/nominee in case of demise of the owner (transmission of shares).
However, the new owner/successor must dematerialize the shares if he/she wants to sell shares further as the shares cannot be traded or transferred if they are in physical form.
Millions have invested in the stock market and still have shares in the physical form that’s estimated worth is Rs 5.30 lakh crore. So, 100% dematerialization is not there.
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Transactions involving physical share certificates are time-consuming, attract stamp duty, expose to the risk of theft and loss, and wear and tear damage. Every shareholder needs to open Demat account to overcome such issues.
Issues to Open a Demat Account
1. The Right Brokerage Account
It may be that you are not able to select the right broker for yourself. There are two types of brokerage firms – full-service and discount brokers. The main difference between full-time and discount brokers is the products and services offered by them.
Full-time brokers provide a wide number of products and services than discount brokers such as research and reports, advisory, retirement corpus planning, tax-saving tips, and much more. Determine what type of investor/trader you are and what type of support you need for investing. Then choose a brokerage firm as per your requirements.
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2. In Search of Low-Cost Demat and Trading Accounts
Maybe you want to open multiple Demat and trading accounts – separate accounts for investing and trading, but thinking of implied charges on each account. With the Demat account, you can save brokerage on delivery trades. So, you can lower your brokerage cost.
3. Incomplete Documents
A PAN card is the first requirement for opening a Demat account. Without a PAN card, you cannot invest in the share market.
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4. Time Schedule Issues
If you do not have spare time then maybe you face this issue of waiting in queues of the banks to open brokerage accounts. Search for a broker offering online services to open Demat accounts.
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How to Open Demat Account Online?
One can open a Demat account free from account opening costs in easy digitized steps to hold different financial securities such as shares, bonds, mutual funds, ETFs, etc.
Here is the Step-by-Step Guide on How to Open a Demat Account Online?
Step 1: Provide your basic details in the online account opening form available on the BFSL official website. Register Here with your name, contact number, email ID, residential address, etc, and of course your PAN Card details.
Step 2: Add bank details. It is mandatory as your bank account will be credited with dividends, interest, etc. on shares your Demat account holds. You need to add your account number, IFSC code, account type, etc.
Step 3: Upload documents. Keep your photo, ID proof, address proof, and passport-size photo in the digital form and upload them in the online form.
Step 4: In-person verification. BFSL provides the facility of verification at your home. You can do it by yourself at your home. No need to wait for an agent to verify your identity. You need to record a short video while you are reading out the given script and upload it.
Step 5: E-sign. Sign your application digitally in this convenient process.
That’s it. You can review your details and submit your form. Shortly, you will receive your Demat account number and login credentials.
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Dematerialise Physical Share Certificates
If you are an inheritor/nominee and want to sell your shares, you have to dematerialize them. Fill Dematerialization Request Form (DRF) with your broker. Submit the same to your broker along with your share certificates.
You need to quote each share certificate as ‘Surrendered for Dematerialisation’. You will receive an email request to transfer your shares into Your Demat account. It will take a maximum of three weeks to dematerialize shares after successful verification of the DRF and authentication of certificates.
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