Demat Account is referred to as an account that is used to secure shares as well as securities in an electronic format. Demat is an acronym for Dematerialised account. The main objective of having a Demat account is to hold the shares that have been acquired or dematerialized, thereby making it easier for users to trade online.
In India, the reckoned depositories like CDSL and NSDL offer free Demat account services. Stockbrokers, depository participants, or intermediaries are the units that offer Demat services. Each intermediary may have different charges based on the volume of shares you are holding in the account, subscription package, and the agreement terms between the stockbroker and depository.
Features of Demat Account
Following are some of the prominent features of the best Demat Account —
Boosted Dematerialisation and Rematerialisation of Securities
The account holder can offer instructions to the depository participant, also known as DP. They can transform physical certificates into digital formats.
Easy Transfer of Shares
Investors can easily transfer their shares via a receipt instruction slip or delivery instruction slip to facilitate buying or selling. Moreover, these slips enable users to offer all information that is essential to execute a seamless transaction.
Helps in Availing Loan
Many lenders offer loans against securities that are secured in the Demat accounts. Such holdings are leverages as collateral to acquire loans.
Demat accounts function electronically, meaning they can be accessed through multiple modes. Moreover, users can access these accounts through multiple devices such as desktop, smartphone, tablets, etc. All they need is a good internet connection.
Freezing Demat Accounts
The account holders of Demat can freeze the Account for a specific time period. It proves to be a beneficial feature when users want to protect unexpected credit and debit into their Demat Account. However, freezing is only available for a certain quantity of their holdings in the Account.
E-Facility That is Faster
The National Securities Depository Limited or NSDL enables account holders to send their instruction slips digitally. People no longer have to physically submit these slips to the DP. By providing e-facility, the overall process has become less arduous and more convenient.
If the organizations provide refunds, dividends, or interest to the investors, they can directly be transferred to the Demat account. Additionally, corporate actions such as right shares, stock split, or bonus issues are updated automatically into the Demat Account of the shareholders.
How to Open a Demat Account with Ease?
Now that you have understood the critical features of opening a Demat account, and realized its benefits, it’s time to get started and learn how to open Demat account. The process is quite streamlined that doesn’t require any extensive preparation. Follow the below steps to get your own Demat account for share trading-:
Opening a Demat account is as easy as it can be if you have found the right depository participant to complete the process.
Documents Required During the Process
It is essential to keep all your necessary documents handy before visiting a depository participant. Here’s the list of documents you will need-:
Make sure you have all these documents with you in order to avoid the last-minute hustle.
The Bottom Line
Converting physical securities into electronic format entirely depends on the preferences of the individual. However, tracking your physical certificates becomes complex as opposed to managing them electronically.
Moreover, when securities are in physical form, it becomes challenging to sell or buy securities. When securities are digitized, they remain safe. You can keep track of multiple securities from one access point. Hence, the Demat account is the safest and efficient solution for managing your shares and securities.
By eliminating paperwork, Demat Account allows you to reduce a lot of time, which you can spend on making more sales and purchases with enhanced efficiency. Demat accounts are straightforward, hassle-free, and highly lucrative. The above mentioned were some of the important information regarding the Demat account that you need to know about. By understanding perks and features, it is essential to focus on opening a Demat account to start trading.
Photo by Austin Distel on Unsplash
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
2014 The Global Indian New Network (TGINN)