In order to understand what is all- in- one Demat account we need to first understand the concept of the Demat account.
Demat account basically means a Dematerialised account through which shares and securities are held in an electronic form instead of possessing certificates in a physical form. While registering with a broker (also known as a depository participant), the investor opens a Demat account. All the transactions and settlements take place electronically via Demat account. Once the transactions are completed, the securities can be bought and sold on the Dematerialised account. The investor’s account is automatically credited as soon as the bonus or right shares are allotted to him.
The Demat system was adopted in India for electronic storing where shares and securities are traded electronically so that all the troubles linked with dealing in shares in physical form. Risks resulting from the issue of paper certificates were minimised with the advent of the Demat system. Furthermore, the risk associated with the loss caused due to theft, mutilation or fire is mitigated.
There are lower transaction costs in Demat system as compared to the physical system. The Demat system eliminates the risk which arises on account of forgery. There are no failures in delivery due to signature mismatch or loss of theft of certificate in transit. There is no need to pay stamp duty on the transactions made on Demat account, this results in the reduction of transaction costs.
Benefits of a Demat account
- A timely service is provided by a company trading on Demat system to its shareholders and investors
- From the broker’s point of view, the risks involved in the delayed settlement of transactions is minimised
- This system instils confidence among the investors and ensures the overall protection of the investors
- Risks associated with the physical delivery system are eliminated
- Transfer of securities takes place immediately
- Brokers or traders or investors can trade from anywhere. Thus, distance barriers are eliminated
- Brokers make higher profits as a result of increase in the trading volume
Earlier only trading of securities was done on the Demat account but now this facility has been extended to other areas as well. In order to facilitate and allow an investor the operation of his Demat account, online trading account and savings bank account, a single platform has been developed.
This single and an all- purpose account is commonly known as three-in–one account. This account can be opened with a bank using a single form meant for opening an account and a know-your- client form.
3-in-1 account= Trading account + Savings account with bank + Demat account
Money can be transferred from your bank account to your trading account at the time of purchasing securities and to your bank account at time of selling securities. The paperwork involving fund transfers, account statements, cheques, branch banking transactions and contract notes is reduced to a great extent.
The option of net banking is not offered with the 3-in-1 passwords. The account can be debited solely for online transactions which are linked to trading account. The Demat account cannot be debited in the favour of a third person.
The best thing about a 3-in-1 account is that there is seamless and secured transactions that assure the customers of an unmatched convenience since all the three accounts are linked together.
While the trading costs are high with the companies providing 3-in-1 account, an integrated financial solution and a simple investing experience offers unique benefits.
Who all Offers
Many leading banks are offering the 3-in-1 online trading account. Some of them are:
- HDFC Bank
- Standard Chartered Bank
- ICICI Bank
- Axis Bank
- Kotak Mahindra Bank
- IDBI Bank
ICICI Bank 3-in-1 account is the oldest, popular and the most relied upon service. HDFC Bank on the other hand offers cheaper services than the former and is regular with contract notes and intimations through emails. It also offers a discount on annual charges of Rs. 750 during the first year on the Demat account and provides for reduced annual charges from the second year by making more and more transactions. IDBI Bank offers nominal trading rates along with investment advice. Kotak Mahindra bank offers a high speed online trading tool which enables you to trade at real time in the market, known as KEAT Pro X.
This facility is especially beneficial to those investors who are ready to pay a little higher brokerage for a hassle free investing and also for those who make investments in the stock market on a long term basis.
What you can do with all in one Demat account
- Trading in derivatives
- Trading and investing in equity
- Investing in IPO
- Mutual fund investments
- Tax services, insurance and other financial services
Hence, we can conclude that the all in one Demat account is a very beneficial online trading platform which links your savings account, trading and Demat account.