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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. Like a bank account holds your money, a Demat account holds securities like stocks, mutual funds, Mutual Funds
Mutual Funds pool money from various investors and invest in asset classes such as equity, debt, gold etc. Mutual Funds can be actively managed or passively managed. Equity, Debt, Hybrid, Gold & Solution oriented funds are the 5 major types of mutual funds in India.Read More
Dematerialised gold units, bonds, debentures, etc.

A Demat account helps you hold your securities in digital format. In India, there are 2 depositoriesDepositories
Depositories are financial institutions which store your assets in electronic form. A depository eliminates the risk of holding physical securities. In India, depositories are regulated by SEBI. NSDL & CDSL are the two depositories in India.
that provide Demat services namely NSDL and CDSL. Depository participants or stockbrokers like Samco facilitate services of opening a free Demat account.Opening a free Demat account Open a free demat account in 3 easy steps:- Fill in your pan number, date of birth & Aadhaar card details. - Upload your documents. - Verify your Aadhaar details through OTP and within 24 hours your free demat account is opened.
Read More

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 a lot of challenges with the physical format.

  • A lot of manpower was required to operate this system
  • Physical shares could easily be stolen, damaged or lost
  • Duplicate shares were easy to create
  • Storing a lot 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 shares and 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 participantDepository Participant
Mutual Funds pool money from various investors and invest in asset classes such as equity, debt, gold etc. Mutual Funds can be actively managed or passively managed. Equity, Debt, Hybrid, Gold & Solution oriented funds are the 5 major types of mutual funds in India.
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 of Demat account

Demat and trading account – the linkage and relationship

While people commonly mistake Demat account and trading account as the same thing, they are tightly linked to each other, but 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 in an online trading account.

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 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.