There are various benefits of opening a demat account such as it is safe and convenient way to hold securities compared to holding them in physical form. No stamp duty is levied on transfer of securities held in demat form. A demat account offers instant transfer of securities thereby providing liquidity.
How to open a demat account?
A demat account cannot be opened directly with CDSL (Central Depository Services (India) Ltd). It has to be opened only though a DP (depository participant) of CDSL.
What is a depository?
A depository is a provider of facility for holding securities in book entry or electronic/demat form. It is a kind of bank for securities like shares, debentures, bonds, etc. It also facilitates transactions in the securities held by it.
Procedure for opening a demat account
An investor—already having a demat account—can open another account with any other CDSL depository participant. There is no restriction on number of demat accounts which an investor can open.
No opening charges
According to SEBI, investors should not pay any account opening charges, besides the statutory charges.
Number of account holders
A demat account can be opened in the name of a single holder account or a joint holder account. A demat account can have maximum three account holders i.e. one main holder and two joint holders.
Modification in names