The word Demat stands for dematerialization and enables the shareholders to perform trade without using the papers. There are three types of Demat accounts. They are mentioned as:
• The regular account: this is the account which can be operated by every Indian resident.
• The repatriable account: This is the account for non-resident Indians and one will have to require an NRI bank account for such transfers
• The non-repatriable account: This account is Also for NRI but this account does not allow is the fund transfers abroad.
The wisdom capital is well known for providing the best Demat account in India.
The procedure to operate such an account is mentioned as follows:
• In the first step one has to open the account with the help of a DP. This account will be the account in which actual trading of shares will take place. As the individual will start trading the shares sold and purchased will be shown in that account. This account is basically a safety deposit based locker for the shares which the individual has.
• The trading account can be opened online and the orders can also be placed from anywhere and at any time. One can also open the trading account with the help of DP who will act as intermediaries in the whole process.
• After the broker has been selected then we still have to submit the opening form along with KYC so that he or she can be allotted with the identification number for the account.
• With this account the bank account can be linked very easily to have a convenience of transactions. With this link, the investors are enabled to perform and update all the information with every trade which they do. Some of the institutions also provide three in one account which will help to fulfil all the requirements of the investors. The cash flow will take place from the buyers account to the seller’s account and the shares flow will take place from the sellers account to the buyer’s account.
• After this one can indulge in online trading even with the help of phone if the brokerage company allows. Settlements can be done based on T+2.
All the investors are required to maintain the margins so that they can start the trading. They are mentioned as follows:
1. The initial based margin: This is the minimum amount which has to be maintained in the account so that one can begin trading
2. The maintenance based margin: This money has to be maintained in the account all the time and one must replenish it in case of shortfalls.
3. The variance-based margin: This is the difference between the above margins and in case it is excess in the money has to be returned to the investor. With the help of usage of this account, there is almost no risk to the investor and the transactions are highly safe and secure. The quality of share trading has been improved with the introduction of this concept and now various new options are also available to the investors.