Demat means dematerialization. It is a type of account where the shares and other securities are stored in paperless form. The companies that issue the shares issue them in paperless form and credit them into the demat account of the concerned investor. Even for trading, the trader needs to have a demat account to park the shares which he may have purchased from the open market. It is an account which helps to hold the securities in the electronic form instead of holding them in the form of physical certificates. There are only two authorities that can open the demat account which is known as CDSL and NSDL. One can get the account opened with any of these two institutes. The demat account is the same to the securities, as the bank is to money. The demat account helps in easy buying, selling, and transferring of the securities.
Here’s a look at important features of the demat account:
- Easy transfer of shares
The demat account facilitates easy and convenient holding of the securities and makes it easy to transfer the shares via delivery instruction slip or receipt instruction slip which helps in buying and selling of the shares.
- Pledging facility
The best demat account in India helps in pledging the securities for securing loans by the account holders. The securities are held by the lenders as collaterals.
- Faster dematerialization/ re-materialization of securities
The demat account helps in faster conversion of the physical certificates into electronic form. If required in future, the shareholder can issue a direction to its DP for reconverting the electronic shares into the physical units.
- Multiple access points
The demat account can be accessed from various terminals just like an online bank account. The account can be accessed from anywhere at any time from the internet operated devices and DP’s back office.
- Speed E-facility
The service is offered by NDSL wherein the clients can send electronic delivery instructions to the DPs through speed E-website instead of submitting the DIS to the DPS in their physical form. This makes the whole procedure quite easy and saves a lot of time.
- Corporate benefits and actions
The dividends that are issued by the companies are directly credited to the bank account of the shareholder which is linked to the demat account. It also helps with easy updating of the bonus shares, stock split and right issues of the shareholders.
- Nomination facility
The demat account enables the shareholder to nominate an individual who can claim the securities once the account holder is no more.
Benefits of the demat account:
The demat account makes it safer to hold the securities as there is no risk of loss and fraudulent activities.
- Flexibility of workplace
Unlike the physical certificates, the demat account gives the traders freedom to work from anywhere through different online terminals.
- Reduced cost
The demat account eliminates various costs such as stamp duty and several other expenses involved with physical certificates.