Demat Full Form: What is Demat Account Full Form?

Full Form of Demat stands for Dematerialization. It's a procedure that converts your physical share certificates into digital form, making it simpler to manipulate your investments. Think of it as a virtual locker for your securities such as shares, bonds, and mutual funds, in electronic form.

Dematerialization is the first step – transforming your physical shares into a digital format. Your Demat account is the final destination – the secure digital space where these electronic shares reside.

Just like you need to have a bank account to store your money, similarly, you need a dmat account to hold your shares. If you are looking top open free demat account, you can simply choose a stockbroker according to your needs and then start investing.

Demat Account Types

There are various types of demat account you should know:

• Regular Demat Account- If you are a citizen of India and have valid documents, you can open a regular Demat account. And the best part is that you don’t have to wait for your 18th Birthday to open your demat account. However, all the trading has to be done by the parents or guardians in the case of a minor demat account.
  
• Repatriable Demat Account- Not only Indian citizens but NRIs can also have a demat account in India. This is generally called as NRI demat account. If you are an NRI and want to open a repatriable demat account, you need to link your NRE bank account to your demat account. In this way, you can transfer funds across the globe. If you open a repatriable demat account, you have to follow the rules of  FEMA,that is, the Foreign Exchange Management Act.
  
• Non-Repatriable Demat Account- This is also an NRI account and the only difference between the repatriable and a non-repatriable demat account is the transfer of funds.  If you have a non-repatriable demat account, you can link your NRO account. But with this account you cannot transfer funds abroad.

These are the various types of Demat Account that you can open in India. Since we know that it is mandatory to open a demat account to start your stock market journey, let us have a look at the benefits of a demat account.

Benefits of a Demat Account

Since it is a necessity now, there are various benefits associated with the same. Let us look at some of the benefits of demat account.

• Safety- The major purpose of demat account was to provide safety to the individuals trading in the stock market. So, with the introduction of demat account, safety has become very convenient. Earlier, the shares were kept in a physical or paper format which possessed a lot of problems to the people in cases of theft or misplacement of the shares.

With the introduction of a demat account, it has become easier to keep the shares and there are no chances of misplacement. The two depositories, NSDL and CDSL can also regulate the Demat account in a proper way.

• Easy Management- Demat account has also made it easier for investors to track their transactions. They can easily watch the shares that they buy and also the profit and loss on their entire portfolio.
  
• Convenient Transactions- In earlier times when an investor had to buy and sell shares in the stock market, he/she had to personally go and do it. In addition to this, the transaction was completed in a few days.

Now, with the introduction of demat account, the entire transaction can happen within a span of seconds and from the comfort of your space.

• Loan Facilities- If you want to trade but do not have the capital to spend, you can easily pledge your current holdings. This means keeping your existing shares as collateral and getting some money from the broker. This allows you to trade and make profits even when you run out of capital.
• Easier to receive bonus splits- There are a lot of companies that split their shares. This means that if you have a single share of a company and they split their shares in the ratio of 1:2, then you will have 2 shares. With the advent of demat account, it has become easier to receive any bonus shares or the shares after the stock split.

With these benefits included demat account has not only become a necessity but also an asset to the stock market world.

Conclusion

Demat account refers to dematerialization and it also has significance in the meaning of a Demat account. This is simply a place where you can store your shares in a dematerialized or electronic format to protect your investments from any fraudulent activities.

If you are entering the stock market, it is not only important to choose the right stocks for maximum benefits but also essential to open a Demat account with the right stockbroker.

Want to start investing in the share market, open a Demat account with Choice today!