Demat accounts had been incorporated in the Indian stock market in 1996. Before that security as well as shares were issued in physical form and also traded in the same manner. Now people are able to retain their securities in electronic form by means of demat account. This procedure has rendered the whole process of investing, retaining, trading, and monitoring very rapid, easy and economical.
Features of Demat account
There are various features of the demat account, and a trader or investor needs to know them before opening the same with any of the brokers. It is doubtlessly a mandatory requirement that one has to get a demat account opened with the exchange. As there is no paper form of shares available nowadays, one can buy or sell the shares in this dematerialized form only, and that is not possible without having a demat account.
Easy transfer of shares
Now investors are able to transfer the holdings by means of a DIS –delivery instruction slip or it can be RIS—receipt instruction slip with regard to selling and purchasing shares. These slips enable users to offer the entire information needed for carrying out a transaction efficiently.
Quick re materialization as well as dematerialization regarding securities
People who hold demat account are able to offer directions to the DP – depository participant to bring about the conversion of certificates held in physical form into electronic format. On the other hand securities in electronic form are able to be reconverted into a physical format.
Facility of loans by pledging
A few lenders offer loans in lieu of securities which are retained by the borrower in their demat account. These holdings may be utilized by way of collateral to get loans by the holders of the demat account.
Can freeze their accounts
Holders of the demat account are able to freeze their accounts for some time if they think it is needed. This choice can be said to be advantageous if the demat account holder does not want unexpected debit as well as credit into his account. This choice of freezing is also meant for a particular volume of securities retained in the demat account.
Manifold Accessing Options
All demat accounts can be managed by electronic means which implies that these accounts are able to be accessed by utilizing multiple modes. Also, these demat accounts can be accessed by way of the internet employing a smartphone, any computer or various other such devices.
NSDL – the national securities depository permits users to convey direction slips in electronic form in place of submitting physically to the depository participant this slip. It renders the process very easy and takes less time.
Corporate advantages and actions
In case the companies give refunds, dividends, or interests in favor of the investors, all such benefits automatically become possible to the account of the demat account holders. Moreover, corporate actions such as right share, issues of bonuses or split of stock do get automatically updated within the demat account in relation to the shareholders.