Stock Market Basics – What is DMAT Account

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When we talk about the shares, the underlying question of any beginner is how the money transaction is done. Do we go to the company and pay the money and buy its shares? Or do we go to any financial institution and get the shares of the specific company? The good news is that there is nothing to worry about these transactions. It is because the bank that holds your savings account can very well create and give access to your Demat account very quickly.

What is a Demat Account?

Many decades back, the shareholders used to hold the share certificates they used to purchase and used to store them safely. Now all this material is dematerialized, and these dematerialized documents are turned into the Demat accounts. So, Demat account is the best place to hold the dematerialized accounts for you, being a shareholder of the particular company, listed in the stock market.

How Is It Different from Your Bank Account?

When your bank account is held and helps you to keep and store your money safely, the Demat account helps you to organize the documents and the significant figures of the shares. Just like your bank account reveals all the transactions of how much you deposited at each operation. And what is the amount you debited from each transaction, in the same way, the Demat account also gives you complete specifics about the shares. In the way, when did you purchase your shares, the prices of each of the shares and even at what price each of the shares is purchased? The Demat account also tells of the brokerage charges and other incurred charges.

When a Demat account is opened, the bank is considered as a trust. So, when you buy a share, the bank becomes the custody of the shares. In other words, it becomes a registered owner of the shares, and you are the beneficiary owner of the shares.

One Bank for Demat and Saving

Let us say, you have a savings account in ICICI, you have Demat account in HDFC, the transactions for the shares become very tedious and delayed jobs. The finance experts always advise you that you maintain both the savings account and Demat account in one bank, even including the one for Broking code. When all the three are held in one bank or the financial institutions, the transactions done on the savings account and Demat account will be quick and also hassle-free. When one bank manages these accounts, the transactions can be settled very quickly, in just a few minutes. If the transactions are done among the banks with different accounts, it doesn’t give the comfort, and it is not advisable.

Having understood the basics of the Demat account and the way it has to be held and maintained in the banks, it would be easier and faster to perform the transactions. Always ensure that you go to the right financial expert, who supports you all the time, during the lifecycle of the shares that you hold.