Investing in Initial Public Offerings (IPOs) is more like buying shares of a company. However, the shareholder does not receive a declaration certification in this case, but shares are enlisted in their name electronically in a Demat account. You can apply for an IPO online through net banking or trading accounts. When you apply, the IPO amount you have applied for will be impeded in your record through ASBA, a mandatory guideline by SEBI.
So, what happens when you don’t have a Demat account?
Having a Demat account to invest in an IPO is mandatory. There might be an arrangement that permits financial brokers to apply for the IPO on your behalf, even if you do not possess a Demat account. However, there are risks involved; because of an absent recipient’s bank account number, some deferral in share apportioning will be deferral. So, it’s only safe and smart to have a Demat account before you apply for an IPO.
Opening a Demat account is easy. Banks and broker firms offer what is known as a 3-in-1 record that joins banking, trading, and Demat offices. These records help smoothen your account opening journey under one record, saving you the difficulty of opening separate records for every purpose.
There are stockbroking firms that offer Demat accounts as well. It doesn’t matter where your account is from – a private brokerage firm or a bank or any other trading service providers; you need to ensure that the account is loaded to take care of the expense of purchasing those shares.
While a Demat account allows you to hold all your securities in the electronic format, a trading account facilitates the sale and purchase of these shares and securities. Brokers often allot these accounts bundled together. Some DPs even offer 3-in-1 accounts that offer Demat, trading and banking facilities.
So, if you are interested in investing in IPOs and becoming one of the first public investors in a company, it is best not to delay opening your demat account
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