The Demat Account : What is it and Why Do You Need One?

Understanding Demat accounts is as easy as saving accounts. In banks, as we have a savings account that protects our funds from any kind of theft or mishandling, A Demat Account (or Dematerialised account) is the name for investors. It’s known as a ‘prerequisite for stock investment’.

A Demat Account serves the purpose of holding shares and security funds in electronic format. The sole purpose of opening a Demat Account is to hold the purchased shares or dematerialize them. And this smoothens the process of trading, especially for online users.

In India, these account services are offered for free by depositors like CDSL and NSDL. It often happens with Demat customers that they’re in need to change addresses in the demat account or name change. To help you with such doubts, we have presented this article. So, let’s get started!

Read More: Understanding the Procedure of Dematerialisation of Shares

What is a Demat Account?

Broadly known as a dematerialized Account. It provides the service of holding shares and security funds of investors in electronic format. The shares purchased online are directly transferred to the Demat account, facilitating easy trade.

Moreover, a Demat Account enables the digital process of the Indian stock trading market and enforces better management by SEBI. It was first introduced in 1996 by NSE, where the Demat account process used to be manual. As the technology becomes advanced, it can be made within 5 minutes.

Benefits of having a Demat account

1. Convenient share storage: A Demat account provides the service of storing as many shares as you want. Therefore, it allows volume trading and keeps you updated on your Demat account share holdings.
2. Reduce the risk of physical paper share certificates: Earlier, for holding any share, paper-based certifications were required. And those have a lot of security risks such as theft, loss, tampering, and forgery. Plus, with lengthy paperwork, chances of errors and delays are prone to increase. But a Demat account solves all such problems. As it holds funds electronically, it keeps them safe and secure.
3. Have easy access: Demat accounts can easily be accessed online anytime you want. All you need is the internet and a laptop or smartphone.
4. Stores multiple investments: A Demat account can store various other investments as well, along with shares. Such as bonds, government securities, exchange traded funds, mutual funds and many more.

Why do you need a Demat Account?

Demat Account is pretty essential for the security of your shares and funds. Plus, you can store a large variety of investments in it such as mutual funds, government securities, bonds, equity shares and others. In simpler words, a demat account makes it easier to trade in today’s time. It’s functioning is quite similar to the back account as it also requires either a credit or debit card during an event.

Moreover, it reduces the unnecessary paperwork and helps streamlining of share trading.

Read More: Everything you need to know about KYC Updation

How does it work?

The functioning and nature of a Demat account is quite similar to that of a saving bank account. The key difference is that the former allows investors to store securities while the latter saves cash in electronic form into bank accounts.

And to store security in the demat account of a depository participant, it needs to be associated with the NSDL or CDSL. And whenever you purchase shares or securities, it is credited in the Demat account. And when sold, the account is debited as well.

And if you want to transact in equity and securities through your Demat account, you need it to be linked to trading and saving accounts.

How to change address in demat account online?

In India, the purpose of demat accounts is in the stock market. As we mentioned above, India has primarily two depositories- NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).

After creating your account, there are some situations where you need to change address in demat account online or update signature or name. In such a situation, having professional help as good as Infiny Solutions is all you need. The company will assist you in updating any information you need.

Process to change address in demat account online

With the help of legal and financial companies such as Infiny Solution, your name or address or signature is updated in your demat account easily.

Documents required

To change address in the demat account online, you need to submit certain documents attached to it, which are:

• Aadhaar Card
• Driving License
• Voter ID
• Bank Statement
• Passport

Read More: Importance Of Putting Nominee For Your Investments

Steps involved in the updation:

• Update Address as per latest aadhar card address: You need to enter the address registered on your latest aadhar card. Then it is required to complete the Re-KYC properly to initiate the address modification process.
• Change address on KRA: To change address in demat account, raise a ticket to receive your KRA details required in changing address. Make sure to confirm it through the registered email address.
• According to Address Proof: Another thing that you can do is send the update details form to your DP attached with the current address proof.

Same goes for name change in your demat account. And for the signature update, you need to fill in a request form to update the signature in your demat account containing necessary details along with old and new signatures. If approved, your signature updated in your demat account.

Why do you need professional help to change addresses in Demat accounts online?

Usually, the process for address and signature updates becomes quite complicated, which a shareholder wouldn’t understand properly. That’s why you need professional help. And Infiny Solution is the most reliable firm you’ll find.

A professional would collect all the essential documents and immediately start the changing process. Plus, they’ll also ask for a self-attested copy of each of your documents.

When you shift to a new place for a job or marriage, you need to update and change the address in your demat account.

After collecting the documents, Infiny Solutions would send them to the head office, then to the depository participant or to an online portal to change your address in your demat account online. Later, you’ll receive a notification for the update.