Investing and trading activities have become more secured with the Demat account. With time, it keeps on adding various benefits that make holding and maintaining different financial securities easy. Some of its benefits are listed below:
- Immediate transfer of securities
Buying/selling has become much easier. There was a time when physical share transfer takes more than one month. With a Demat introduction, the transfer process has been simplified.
- Faster settlement
Off-market transactions between beneficiary owners, settlement of trades by delivery or receipt of securities from/in beneficial owners, IPO receiving are really faster now with a Demat account.
- Disbursement of Corporate benefits
Demat account allows you to receive non-cash corporate benefits such as bonus and rights shares or any other non-cash corporate benefits digitally in fast mode.
- Easy Dematerialisation
If an individual holds shares in paper form, he/she can convert it in a dematerialized form easily. Investors need to make a request to their depository participant/broker to convert physical securities into electronic form.
- Reduced Cost of Transaction
With the dematerialization of securities, the cost of investing has cut down because there is no stamp duty on the transfer of securities in the dematerialized form. Also, there is no TDS deduction for Demat securities.
- Hold Wide Variety
A single Demat account allows holding a wide variety of investments. You can hold different equity and debt instruments in a single account such as shares, bonds, mutual fund, etc.
- Quick and Easy Access
Demat account and trading account allows you to track and access your investments and statements online from anywhere through smart devices thus make share trading more convenient. You can maintain a record of securities held in electronic form easily.
- Convenient Transmission
Demat comes with convenient nomination facilities. There is convenient transmission in case of the death of a shareholder.
- Elimination of Bad Deliveries and Mutilation
Demat account has eliminated the risk of losses due to bad deliveries of shares, theft or damage of physical share.
- Reduction in paperwork
Dematerialized securities involve less paperwork in the transfer of securities than physical shares.
A Demat account holder can pledge dematerialized securities to get a loan against shares. There will be fewer formalities comparatively and faster processing for grant of loan.
- Freezing of account
You can freeze the Demat account if you do not intend to do any transaction and want to take a break. This helps in restraining from unauthorized use of Demat accounts and hence prevention of frauds. A ‘freeze’ account can be ‘defreeze’ only by the account holders.
A Demat account can be frozen for debit only and credit in the account will be continued. Or you can freeze it completely. There will be no transfer from or received in the account. You can block a number of debits as well.
- No Odd Lot Issues
There is no restriction on the number of shares to be traded. A Demat account holder can buy/sell even one share.
- Automatic credits
In a demat account, you will get automatic credits of shares arising out of
bonus/split/consolidation/merger etc. No need to claim for each company benefits separately.
- Correspondence Address Change Facility
Once you change your address recorded with your depository participant/broker, it will be changed with all business entities in which you hold securities. There is no need to change correspond with each company separately.
You have seen how beneficial a demat account is and how conveniently it holds your securities and keeps them secured. You can open a Demat account and trading account online with most of the brokers.