Benefits & Features of Opening a Demat Account
India introduced Demat accounts in 1996. Before that, shares and securities could only be physically issued and traded. It is important to open a Demat account for free. This allows investors to electronically store their securities in their Demat accounts. This allows investors to trade, hold, monitor, and invest faster and more efficiently.
Benefits of a Demat Account
These are just a few of the many benefits of a Demat account.
Lower risks
Simple holding
Odd lots
Lower costs
Reduced time
Lower risks:
Theft, loss, and damage to physical securities can make them very dangerous. Bad deliveries and fake securities are additional risks. Demat accounts offer holders the opportunity to hold all of their investments electronically, eliminating these risks.
Simple holding:
It is tedious work to maintain physical certificates. It is also difficult to keep track of their performance. It is easier for Demat account holders to track and hold all of their investments from one account.
Odd Lots:
Physical certificates were only valid for specific quantities. It was not possible to deal with a single security or odd lots. This problem is eliminated by Demat accounts.
Lower costs:
Additional costs for physical certificates included stamp duty, handling fees, and other expenses. Demat accounts eliminate these extra costs.
Reduced Time:
The time it takes to complete a transaction is reduced by the absence of paperwork. This reduces the time required to complete transactions and allows account holders to purchase and sell more security holdings faster and more efficiently.
Demat accounts can be very lucrative and easy to set up. They are essential for financial planning in today’s world.
Demat accounts are essential for your financial security.
An investor can hold physical securities in electronic or physical form. Therefore, the conversion of physical securities into electronic form is not required. Monitoring physical certificates can be more difficult than dematerialized ones.
It is also difficult to sell or buy securities in physical form. There are fewer agents who deal in physical shares than there are buyers who will buy physical shares. This is in contrast to those who transact in dematerialized securities.
Demat account features
Share transfers easy:
Investors have the option to transfer their holdings by using a delivery slip (DIS) and receipt instruction slips (RIS) to buy or sell shares. These slips enable users to enter all details necessary for the smooth execution of a transaction.
Faster dematerialization & rematerialization of securities:
Demat account holders may give instructions to their depository participants to convert physical certificates to electronic forms. If necessary, electronic securities may also be converted to physical form.
Loan facility for the pledge:
Many lenders offer loans against securities held by borrowers in their Demat accounts. Account holders can use these holdings as collateral to obtain loans.
Freezing Demat Accounts:
If necessary, Demat account holders may freeze their accounts for a specified period. This can be useful if you want to avoid unexpected debits or credits from your Demat account. You can also freeze securities that are already in your account.
Multiple accessing options available:
The electronic operation of Demat accounts means that they can be accessed via multiple methods. These accounts can be accessed via the Internet with a smartphone, computer, or other smart devices.
E-Facility
The National Securities Depository Limited allows users to electronically send instructions slips to the DP instead of physically submitting them. This makes it easier and more efficient.
Corporate benefits and actions:
Demat account holders can automatically receive dividends, refunds or interest if the companies offer these benefits. All shareholders have access to the Demat account, which automatically updates any corporate actions, such as stock splits, bonus issues, right shares, or right shares.
Shares: Dematerialization & Rematerialization
Dematerialization of shares:
Dematerialization is the process of converting physical securities such as shares, stocks, mutual funds units, bonds, and debentures into electronic form. Dematerialization is the process of converting physical securities (shares, stocks, mutual fund units, bonds, etc.) into electronic form.
Dematerialization offers convenience, security, and flexibility. Having share certificates in their physical form was risky. There were risks such as certificate forgeries and loss of valuable share certificates. This could also lead to delays in certificate transfer. These problems are eliminated by dematerialization, which allows customers to convert physical certificates into electronic formats.
Rematerialization of shares:
Rematerialisation is the process of converting electronic securities holdings (shares and stocks, mutual funds units, bonds, debentures, etc.) into physical form. Rematerialization is the process of converting electronic securities (shares, stocks, mutual fund units, bonds, and debentures) into physical forms (certificates).
- These are the steps involved in rematerialization:
The account holder must fill out a Remat Request Form, (RF), and submit it to the Depository Participant.
After verifying the request, DP forwards it to the depository and issues a signed acknowledgment slip to the holder
This request is then confirmed by the depository (NSDL/CDSL) to the Share Transfer Agents of the company.
The Share Transfer Agent then prints the certificates and sends them to the holder.
The DP sends a rematerialization notification to the account holder
Rights of a shareholder who has dematerialized shares
Shareholders of dematerialized shares have the right:
Receive rights, shares, bonus, etc. If declared and approved
Get annual reports and any other periodic reports
As soon as dividends are approved, you will receive them.
Notifications, postal ballot forms, and explanations of general meetings are available.
Participate in and vote at general meetings
For inspection, demand statutory registers or documents during company working hours
Poll on any general meeting resolution
Demat shareholders enjoy the same rights as those who hold shares in physical form.
