Question 1

What is a Demat account?

Accepted Answer

The term ‘Demat’ is short for ‘Dematerialisation’, which technically means removing the materialistic aspect of an object. In regard to the share market, `blue-linktext` 'articles/demat-account/difference-between-dematerialisation-and-rematerialisation-1' 'Online Demat Account' dematerialisation of shares means converting the materialistic paper shares to electronic form. So, a Demat account is a virtual locker, similar to a bank account, which stores your financial assets like shares, bonds, ULIPs, Sovereign Gold Bonds (SGBs) etc. in electronic form.

Question 2

What is a Trading account?

Accepted Answer

The terms Demat and trading account are used interchangeably, but they are not the same. A Demat account can only hold your securities. Whereas a trading account facilitates the actual buying and selling of the assets. So, your trades (buying and selling) take place through a trading account, but the settlement (debit in case of sell order and credit in case of buy order) happens in the Demat account.

Question 3

What are the different types of Demat account?

Accepted Answer

Demat accounts are mandatory for investors who wish to invest in the Indian stock markets. A virtual account, Demat account stores financial assets in electronic form, assisting in seamless and hassle-free trading. There are three basic types of Demat accounts in India – Regular Demat account is opened by resident individuals and is linked with a resident (regular) bank account. The second type of Demat account is called Repatriable Demat account, which is ideal for NRIs who want to invest in the Indian markets from across the globe. As the name suggests, investors can repatriate or transfer funds back to foreign countries, as and when required. A regular Demat account holder will not be able to repatriate funds overseas. A Non-Resident External (NRE) bank account is compulsory when opening a repatriable Demat account. The third type of Demat account is Non Repatriable Demat account, which is also for NRIs but here, funds cannot be transferred back overseas. A Non-Resident Ordinary (NRO) bank account is a must when opening a Non Repatriable Demat account. There is a lesser known fourth type of Demat account – Basic Services Demat account (BSDA). This account is for small retail investors where the value of the assets held in Demat account is less than ₹2 lakhs. The account maintenance charges for BSDA is lower than a regular Demat account.

Question 4

What are the advantages and features of DEMAT Account?

Accepted Answer

The primary advantages and features of DEMAT account are as below: You can conveniently transfer your shares from one investor to another or one DEMAT account to another. You can dematerialise or convert your old share certificates to the electronic form. You can also rematerialise them to the paper form if needed. You need to pay a nominal fee for rematerialisation and dematerialisation, which differs from broker to broker. You can enjoy the many corporate benefits associated with investing in market securities. For instance, you can access benefits like dividend payment, interest on investments, refunds, etc., offered by the companies in which you have invested. One of the most prominent DEMAT account advantages is that you can avail of loan and overdraft facilities with DEMAT account. You can use your existing securities as collateral to avail of these facilities. DEMAT accounts reduce the risk of losing, misplacing, or damaging your investment certificates and proof of investments. You can easily exit or liquidate your investments online with just a few clicks. Per SEBI guidelines, you must mandatorily file a nominee or provide a signed declaration if you wish not to register one.

Question 5

What are the steps to create a Demat account online?

Accepted Answer

Opening a m.Stock Demat account is a simple, hassle-free process that takes less than 5 minutes. To open m.Stock Demat account:

Download m.Stock mobile app from Appstore or Play store. You can also visit www.mstock.com
Click on ‘Open an Account’ button
Enter your mobile number and submit
Verify your mobile number with OTP
Enter and verify your email id with OTP
Enter your PAN and Date of Birth
Complete your documentation
In the next step, you have to upload your selfie and signature.
Once this is done, add your preferred bank account and verify the same.
Now fill in your personal details like name, trading experience, nominee details etc.
If you trade or are planning to trade in Derivatives segment (F&O) then you will have to activate derivatives segment and upload any one proof like 6-month bank statement, salary slip, ITR acknowledgement slip, form 16 etc.
Then comes the eSign stage. Once your signature is successfully uploaded, your account opening process is complete! You can now reap the benefits of zero brokerage for life!

Question 6

What are Demat account charges?

Accepted Answer

Demat account charges vary among different brokers. At m.Stock, for example, you can open a free demat account and you will not be charged brokerage on equity delivery, mutual funds, IPOs and ETFs.
Other demat charges include DP sell charges, pledge creation & closure charges and so on.

Question 7

Who is a Depository Participant, and what is the role of a DP in DEMAT accounts?

Accepted Answer

A Depository Participant is simply an intermediary or entity through which you can invest in market securities. DPs serve as a link between the two primary depositories in India - The National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL) and the account holder. Banks, Brokerage Houses, and other financial institutions registered with the Securities and Exchange Board of India (SEBI) serve as DPs in India.

Question 8

How to check Demat account balance?

Accepted Answer

Checking account balance in your m.Stock account is a fairly straightforward process. There are two ways to go about it. For summary: Login to your m.Stock account. On the home screen, your total assets, equity, and cash balance will be displayed. In case of a negative cash balance, you can add funds to ensure an uninterrupted trading experience. For detailed view: After logging in, access ‘reports’ section under the menu option. Here, you can check your ‘Funds Summary’, Ledger, Pay Later (MTF) Ledger and other reports. In the ‘Funds Summary’ report, you will find detailed information on your account balance.

Question 9

Can we withdraw money from a Demat account?

Accepted Answer

When you sell shares, the sale proceeds are received in your trading account, not Demat account. This trading account is linked to your bank account. So, when you want to withdraw funds (after selling stocks or closing a position), you can place a ‘funds payout’ request with your broker and once approved, the funds can be conveniently transferred from your trading account to your linked bank account. While there are  no restrictions or upper limit on the withdrawal amount, it is recommended to maintain sufficient balance to cover your open positions and avoid unnecessary penalties or square-offs.

Question 10

Can I open more than one Demat account?

Accepted Answer

Yes, you can have more than one Demat account mapped to your trading account by transferring your single or joint DP ID with an upper limit of 3 account holders. However, you will have to pay operating charges for each Demat account you own.

Question 11

Can a Demat account be opened in the name of a minor?

Accepted Answer

Yes, it is possible to open a Demat account in the name of a minor but all the transactions will be through the parent or guardian, till the account holder reaches the age of 18. However, a trading account cannot be opened for a minor.

Question 12

Do I require a Demat account for SIP?

Accepted Answer

Systematic investment plan (SIP)  is super popular among retail investors as it allows them to invest a small amount (SIP starts with ₹100) at regular intervals, eliminating the need for timing the market. Disciplined SIP investing also helps investors benefit from the power of compounding. There are multiple ways of investing in SIPs. You can directly invest via a Demat account (preferable) or invest via a mutual fund distributor or agent. However, investment made with distributors is typically in regular plans, where the expense ratio is on the higher side, which directly impacts an investor’s take-home income. Hence, it is recommended to invest in SIPs through a Demat account so that the units are held digitally and can be bought and sold from any corner of the world. Another advantage of investing in SIPs via a Demat account is that you can start or stop SIP with a click of a button. However, the biggest advantage of investing in SIPs through a Demat account is that you can invest directly with the AMC, eliminating any middlemen and saving on expense ratio, which will increase your take-home profits and create a substantial corpus difference in the long run.

Question 13

What are the AMC charges in m.Stock?

Accepted Answer

A standard annual maintenance charge of Rs 120 is charged every quarter by many brokers. With an m.Stock demat account, the AMC charge is ZERO for life.

Question 14

Can I apply for IPOs using a Demat Account?

Accepted Answer

Yes, you can apply for the latest upcoming IPOs with m.Stock Demat account. With a 100% online (paperless) application process, separate tracking, and ASBA feature, applying for an IPO on m.Stock is super easy and convenient. To view the list of all upcoming IPOs on m.Stock’s website and mobile trading app.

Question 15

Can I hold mutual funds in a Demat account?

Accepted Answer

Yes, you can hold mutual funds in a Demat account. While some investors still prefer the physical route, since redemption in mutual funds is subject to cut-offs, any delays in processing application can result in missed opportunity. Hence, it is recommended to hold mutual fund units in dematerialised form in your Demat account. There's another catch here. Since your physical applications are processed by a distributor or agent, you are most likely investing in regular plans where you're paying a higher expense ratio which reduces the return on investment. But when you invest in mutual funds with m.Stock, you earn 1% higher returns via direct plans and you get access to 5,000+ mutual funds on 1 platform.

Question 16

What are the types of securities one can hold in a Demat account?

Accepted Answer

A Demat account can hold a plethora of securities in electronic or digital form. Here are some of the securities you can hold in a Demat account: a) Equity: Common equity shares, partly paid up shares and preference shares b) Fixed income: Bonds, Debentures c) Mutual Funds d) Sovereign gold bonds e) Unit Linked Insurance Plans (ULIPs) f) Exchange Traded Funds (ETFs) g) Capital gains and tax-free bonds h) Money market instruments: Treasury bills, Commercial papers, Certificates of Deposits

Question 17

Is nomination facility available in Demat Account?

Accepted Answer

Yes, nomination facility is available in your m.Stock Demat account. Nomination is a must-do activity for investors and even the Securities and Exchange Board of India (SEBI) has now made nomination a mandatory requirement for any stock market investment. Nomination ensures hassle-free transfer of assets to the next of kin or nominees in case of any eventualities. Follow the below steps to update the nominee in your m.Stock account: 1)Login to m.Stock 2)Visit the ‘profile’ section and go to ‘segments’ under account details 3)On the following page, click on the ‘Nominee Modification’ option and click on ‘Add Nominee’ 4)Once submitted, your nominee will be updated within 24 hours.

4X Investments with
Pay Later (MTF)

4X Investments
with Pay Later (MTF)

Powerful. Stable. Secure.

Elevate your trading experience

Invest. Trade. Prosper.

One platform for all your needs

m.Stock, a Mirae Asset brand

3 simple steps is all it takes

FAQs

What is a Demat account?

What is a Trading account?

What are the different types of Demat account?

What are the advantages and features of DEMAT Account?

What are the steps to create a Demat account online?

4X Investments with Pay Later (MTF)

4X Investments with Pay Later (MTF)

Powerful. Stable. Secure.

Elevate your trading experience

Invest. Trade. Prosper.

One platform for all your needs

m.Stock, a Mirae Asset brand

3 simple steps is all it takes

FAQs

What is a Demat account?

What is a Trading account?

What are the different types of Demat account?

What are the advantages and features of DEMAT Account?

What are the steps to create a Demat account online?

4X Investments with
Pay Later (MTF)

4X Investments
with Pay Later (MTF)