What is Demat Account?
Demat or the dematerialized account is essential for Indian individuals to trade in listed stocks or debentures. According to the Securities Exchange Board of India (SEBI) guidelines, one is required to maintain a Demat account where shares and securities are held in electronic form. While registering with an investment broker (or sub-broker), it is opened by the investor. In short, it is a simpler and hassle-free way of trading online.
Advantages of Demat account
To hold securities, it is a safe and convenient way. Not only does the account enable the immediate transfer of securities one also does not need to pay any stamp duty on transfer. Since it holds securities online it also eliminates the risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. Moreover it cuts down the paperwork involved in transfer of securities as well as brings down the transaction costs. One does not face the problem of odd lots as you can sell even a single share,while using the account. The account also provides the facility of nomination.
An account holder has shares automatically credited to the account in the event of a bonus/ split/ consolidation/ merger etc. additionally, one can hold investments in equity and debt instruments in a single account.
Why I need a Demat Account
Nowadays, practically all trades have to be settled in a dematerialized form. Traders no longer wish to hold physical shares, although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form. Hence, a Demat account is a must for trading and investing.
Many folks who have the experience of investing in stocks are familiar with the DEMAT accounts. On dematerialized investments, still there is large part of Indian population which is depended are unknown to the DEMAT or depository accounts.
Due to lack of information they become confused or they don’t find any way to get it done within right time as there are many people who want to open an account or a depository account. Hence here we are going to get some of the facts which are very helpful while opening the Depository or DEMAT account.
When the DEMAT comes in our mind many of us start thinking about what is DEMAT account? The DEMAT account is same as like a bank account in which you can keep your bonds, stocks, shares and other financial assets and is nothing but the Dematerialized account.
Another question which makes us to think is what are depositories?
An agency that keeps all types of securities and makes them easily available in electronic form is known as depository. There are two major agencies that provide the depository services in India, these agencies are NSDL i.e. National Securities Depository Limited and CDSL i.e. Central Depositaries Services Limited. For keeping all the vital steps to carry out the depository service smooth going on these two min agencies have many banks and several other financial institutions. The banks and the other several financial institutions act as the participant in the depository services in India in other words.