In this article

  • What is a Demat account?

  • Background and history of Demat account

  • What is Dematerialisation Process?

  • What is Demat account number I.E. Boid or beneficial owner id?

  • Advantage & disadvantages of a Demat account

  • Demat and trading account – the linkage and relationship

What is a Demat account?

What is a Demat account?

A Demat account is a “Dematerialised securities account” which helps the individuals or account holder hold shares, mutual funds, bonds and other securities in a digital format. A Like a bank account holds your money A Demat account holds securities like stocks, mutual funds, Dematerialised gold units, bonds, debentures, etc.

A Demat account helps you hold your securities in digital format. In India, there are 2 depositories that provide Demat services namely NSDL and CDSL. Depository participants or stockbrokers like Samco facilitate services of opening a free Demat account.

Background and history of Demat account

Long back before Demat account was introduced, shares were held in physical formats meaning in actual paper format. There were alot of challenges with the physical format.

  • Alot of manpower was required to operate this system
  • Physical shares could easily be stolen, damaged or lost
  • Duplicate shares were easy to create
  • Storing alot of physical shares required real estate and was inconvenient

To tackle these challenges Demat account was introduced in the 1990s. The primary objective of the Demat account was to eliminate the physical shares and paperwork. All shares and securities could be now held in digital mode.

What is the Dematerialisation process?

The process of converting your physical share sand securities into digital format is know as the Dematerialisation process. This new electronic format makes holding and transacting shares easily accessible from anywhere in the world. In order to trade and invest in the stock market, one must open a free Demat account via a depository participant like Samco.

What is Demat account number I.E. Boid or beneficial owner id?

Once you open a Demat account with a depository participant, you shall be allotted a Demat account number. This is also known as a BOID or Beneficial Owner ID. In case you open a Demat account with SAMCO, your BOID will be a 16 digit BO ID. The first 8 digits are SAMCOs DP ID viz. 12054200 and the next 8 digits shall be unique for each account holder.

Advantage & disadvantages of a Demat account

Few advantages of Demat account are as follows

Security and safety – No more loss or theft of shares

Faster and smoother settlements

Reduction in errors that occurred due to manual intervention in physical shares settlement.

Simplified Accounting and management

Better liquidity and monetisation

Read more on advantages and disadvantages on Demat account

Demat and trading account – the linkage and relationship

While people commonly mistake Demat account and trading account as the same thing, while they are tightly linked to each other, they are NOT the same.

A Demat account is in essence like a custody account where financial assets are held in custody for the account holder. No movement of funds happens in a Demat account.

However, to actually buy and sell shares, an investor needs an online trading account that is linked to a Demat account. Both, movement of funds and securities happen

The flow of events and inter linkage between a Demat account and trading account is as illustrated below

Features of a Demat account held with Samco

The above example is for a purchase transaction. The reverse flow would happen in case of sale transactions where the investor’s Demat account would be debited instead of being credited as in the case of purchases.

At Samco, when you open an investment account, a unified account gets opened – i.e. Demat account, online trading account and mutual funds investing account.

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Features of a Demat account held with Samco

Holding a Samco Demat account comes with lots of features and it allows you to enjoy a host of benefits like:

  • [Samco Exclusive] Instant updates on securities held

    When you open a Samco Demat account, you get live updates of stocks and securities held in your account on the StockNote app. You don’t need to separately set up notifications or alerts. If your company makes any announcement, you shall be notified instant on Samco’s StockNote App which is one of the best mobile trading apps in the country. If your company announces a dividend, it’s results, send an EGM notice or anything else, you’ll be up to date.

  • Pledging/un-pledging securities for trading margin with stock broker

    You can pledge securities held in your demat account with Samco’s broking division and use it against margin obligations for your trading account. Samco is one of India’s only brokers to offer a true zero balance margin against shares trading account with StockPlus.

  • Pledging/un-pledging of securities for loan against shares

    You can also pledge/un-pledge securities in your Samco Demat account with a Bank/NBFC for availing a loan against shares/mutual funds. Typically, these loans are far cheaper than personal loans and should be preferred by investors over other expensive modes of financing. You can also apply for a loan with Samco’s NBFC arm by raising a ticket at www.samco.in/support

  • Dematerialisation of physical certificates

    In case you hold physical share certificates of shares bought years ago, you can dematerialise those shares by sending a dematerialisation request to Samco and these shares can get converted to Demat form.

  • Nomination facility

    You can add a nomination facility to your Samco Demat account to ensure that in case of death, the transmission of account to your loved one’s is seamless and without any hassles.

  • Automation of settlements with limited purpose POA

    Along with your Samco Demat account, you can also setup a limited purpose power of attorney to automate your settlement transactions so that in case you sell your shares, you don’t need to worry about any paperwork.

  • E-DIS facility for online on market transfer of shares

    In case you don’t wish to setup a PoA for your demat account, Samco also allows you to sell your shares using an online digital delivery instruction slip facility. Check out how you can use EDIS to sell your holdings

Samco securities offer India’s best, safe and secure Demat account services!

  • Zero Account opening fee for opening a Trading and Demat account
  • Lowest cost Demat Account with charges for Demat delivery charges almost 30-50% lower than the competition and other service providers.
  • Zero % Brokerage for Online Share Trading
  • Great Savings up to 98% on brokerage as you pay Flat Rs. 20 per executed order – irrespective of order size, segment.
  • 3 – in – 1 account – Online Trading, Demat Account and Mutual Fund Investing Account
  • Get Margin against shares held in Demat account
  • Rated India’s Best Equity Stockbroker by CNBC-Awaaz
  • Invest in IPOs (Initial Public Offerings) at the click of a button
  • Trusted by over 200000+ investors from over 4000+ cities in India!
  • And a lot more!

FAQs on Demat account

Q
What are the types of securities that can be held in a Demat account?
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A
All digital securities like stocks, mutual funds, dematerialised gold units, bonds, debentures, etc can be held in a Demat account.
Q
How can one open a Demat account?
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A
A Demat account can be opened online by completing an online KYC process or by physically submitting a Demat account opening form with a depository participant. Get comprehensive details on how to open a demat account.
Q
What are the charges of operating a Demat account?
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A
Demat accounts usually have fixed annual maintenance charges and transaction based fees. Check out all charges of operating a demat account.
Q
What are the advantages of a Demat account?
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A
The most important advantage of a Demat account is that it completely eliminates to hold financial assets in a physical paper format. Check out all the advantages and disadvantages of holding a demat account.
Q
Can I hold mutual funds in a Demat account?
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A
Yes. Contrary to usual practice, investors can even hold mutual fund units in a Demat account. When you open your account with Samco, you can choose your preferred mode of holding Demat securities – either in a physical statement of account or in a digital format.
Q
Is a Demat Account Safe?
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A
Demat account services are tightly regulated by SEBI which ensures that the interests of investors are completely protected and all security standards are met by all service providers. Having said that, it is advisable for you to follow certain do’s and dont’s for demat accounts to ensure the safety of your demat account.
Q
Can I apply for IPOs using a Demat Account?
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A
Yes. You can apply for an IPO with Samco’s demat and trading account. Check out the detailed procedure on applying for an IPO online.
Q
Can we withdraw money from Demat account?
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A
Demat account is a custody account only for holding securities in an electronic format. Fund based transactions cannot be carried out in a Demat account. All fund based transactions are carried out in the trading account linked to your demat account.
Q
Can I have 2 or more demat accounts?
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A
An investor can have up to 20 demat accounts with the same depository participant and can have any number of demat accounts with multiple depository participants. However, for administrative purposes, it is advisable to restrict the number of demat accounts to a handful.