A demat account is a common term that an individual interested in stock market investments must have heard about. Individuals can hold and receive or deliver securities electronically by inter-account transfers with their demat accounts online. If you want to open your new demat account, let us familiarise you with a demat account and two central depositories in India with which you hold your demat account.
Investors holding a demat account should know that they may not be able to log in to their demat account from October 1, 2022. As per the circular issued by the National Stock Exchange (NSE), demat account holders must enable 2-factor authentication (2FA) using biometric authentication and knowledge/possession factor to continue using their accounts for online trading. September 30 is the deadline.
Let us start the post with an elaboration on depositories.
What is NSDL in the Stock Market?
Among two depositories in the Indian stock trading system, one is National Securities Depository Ltd. (NSDL). Another is the Central Depository Services Ltd. (CDSL). NSDL was incorporated in 1996. At present, it safeguards 2,88,59,976 investors’ securities through its registered participants, offering the facility of demat account opening online.
What is an NSDL Demat Account?
NSDL holds your financial assets, like equities, bonds, mutual funds, in dematerialized form and facilitates trading on stock exchanges operating online. You need a demat account to benefit from its services. NSDL provides several other services related to online trading in addition to demat accounts through its registered participants.
Your demat account with NSDL has 14 numeric digits and starts with ‘IN’. It is quite easy to know if your broker is registered with NSDL through your demat account number format. A demat is the primary requirement for investors, unlike individuals involved in intraday trading.
NSDL Demat Account Services
NSDL demat account services include the following basic services:
- Dematerialisation: The process of converting paper-based security into electronic security.
- Rematerialisation: The process of converting electronic securities into physical certificates.
- Market Transfer: Investors can receive/deliver securities electronically.
- Off-Market Transfer: It facilitates trades that do not settle via the clearing house.
- Inter-depository transfer: You can transfer securities from one depository to another in a demat account.
- Transmission: It eases the process of transmission in case of demise, succession, marriage or inheritance.
- Corporate actions: It is credited with corporate benefits from ESOPs, dividends, bonuses, split issues, etc., automatically.
- Alerts: Demat account holders receive SMS alerts concerning all trading transactions in their accounts free of cost.
- Online Delivery Instruction: NSDL has recently launched an internet-based facility – SPEED-e for delivering instructions to brokers. The demat account holder can monitor the status of such delivery instructions for timely execution. Using IDeAS (Internet-based Demat Account Statement), you can check your demat securities status.
How to open an NSDL demat account?
- First, you will need to approach a stockbroker registered with NSDL.
- The demat account application form is available online at the official website of the broker.
- Enter personal details required in the demat application form.
- Provide the Know Your Customer (KYC) specifications online. It involves uploading the required copies of your PAN card, identity proof, address proof, and bank account details.
- Complete the verification process. You need to shoot a short video using your smart mobile phone and upload it for personal identification.
- The broker will go through all your details and documents and activate your NSDL demat account.
How to Save on Demat Services Charges?
Discount brokerage firms were introduced in the online trading system with the advantage of cost-effective demat services. You can create a demat account at no cost with their unique subscription-based trading plans. With reputed discount brokers, you can save on demat credit transactions. Also, they offer free demat account maintenance services for the first one or two years of opening the account.
Individuals can check the list of NSDL registered stockbrokers at the official website of the NSDL.