What is a Demat Account? - At first, stocks and shares were exchanged using actual receipts known as certificates. This, however, resulted in extended documentation and a significant amount of time. To combat this and capitalize on the growing popularity of computerized trading platforms in the Western and Asian markets, the dematerialization (demat) of shares began in 1996. Physical share certificates were transformed into equal electronic securities with the same number and price and credited to the investor's Demat account. Thus, commerce began in this manner.
To put it another way, Demat accounts enable investors to buy and sell and trade stocks and shares, and other items conveniently and without the need for any documentation.
Understanding the Basics of Demat Accounts in India
Consider the following three critical words to grasp Demat accounts in India better.
Dematerialization
It is a technique that enables the physical transfer of share certificates to an electronic format. Following that, shares are straightforward to manage and provide more accessibility from any location in the world.
Additionally, dematerialization enables easy monitoring and tracking of your assets on the go.
Depositors
A depository participant operates as an agent or middleman for a central depository, providing eponymous services to investors and dealers. Currently, India has two central warehouses registered with the country's leading trade and investment regulator, SEBI.
NSDL
CDSL
A depository participant must be registered with one of these two approved operators to create a Demat account.
16-digit customer identification number
Each Demat account is granted a unique 16-digit client identification number that serves as the investor's identity. The first eight digits of the ID denote the participant in the repository. In comparison, the last eight digits serve as a unique identifier for the investor, permitting the selling and purchase of securities and shares.
How to Open a Demat Account in Step-by-Step Order? - Opening a Demat account is a straightforward process. But, if you're considering starting one, this step-by-step guide can help you get started.
Step 1: Open An Online Demat Account
To establish a free Demat account via the IIFL Securities app or website, In the fields provided, provide your mobile number and email address.
Step 2: Submit Your KYC Information Online
To register with the DP and create a free Demat account online, you must first complete the KYC (Know Your Client) procedures. Your KYC information may be submitted via the website or the mobile application.
Step 3: Verify Your Documents
Once you've provided your KYC information online, your DP client will validate it for maximum transparency.
Step 4: Identify the Beneficiary Owner (BOID)
UPON COMPLETING YOUR APPLICATION, the DP will provide you with a unique 16-digit Demat account number (BOID). After receiving your BOID, you have successfully created a free Demat account with IIFL Securities.
