Top myths and facts of the demat account

Are you wondering about opening the demat account? Are you confused about the procedure or whether your money is safe or not in the demat account? With a lot of information available, demat accounts create many questions in people’s minds. This is why people are curious about the facts before using them. 

In this article, we will tell you the myths and the facts of the demat account, along with its basics. Let’s start with the meaning of the demat account first. 

What do you mean by demat account?

The account holder of the demat account holds the amounts with the DP, not stored with the issuer. The demat account is easily handled by individuals or companies. The security ownership in the demat account is proved only by booking the entries rather than the physical certificates. 

The payment modes are based on the types of mutual funds or shares you own. You can use the physical certificate of the claims for selling or buying if you have one. In the case of the demat shares, you can easily open the demat account online.

 Once you purchase the product, you can transfer the shares of ownership to this account to avoid the payable tax on every transaction. 

Top myths and facts of demat account

Some facts and myths of the demat account for your complete understanding. Read the following points to get comprehensive information on the demat account. 

Myth 1: Demat account is a secure place to make investments

Fact 1: Demat account is kept by the custodians, security depositories, and banks that approve the physical certificate for safe custody. It is not a savings account and can not be used much. There have been some aspects where the demat accounts are hacked and the money transferred from your account to any other account. 

Myth 2: All shares are in our name, but we do not know where

Fact 2: Not all the claims may be in your name. Some of your physical claims are held by the depository participant. If you purchase the shares directly from the bank, they would be held in the depository participant of the demat account opening. 

Myth 3: It is compulsory for investment in shares

Fact 3: Demat account Is not need to invest in shares. You need this account to hold the stakes if you purchase them through the stock exchange. 

Myth 4: A demat account is required in online trading

Fact 4: You can also trade if you have no demat account. The shares held in the demat account act as the version pledged with the bank and other financial institutions for security. 

Myth 5: it is the banking facility

Fact 5: A demat account does not have the banking facility for the checkbook or the ATM card. The one way to access the demat account funds is by selling shares from your account. 


This article will give you information on the myths and the facts of the demat accounts. All the data benefits you because it will provide a complete understanding of the demat account.  


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