If you’re involved in the equity markets in India, then you’ve heard of a Demat account. If you’re investing in equity markets in India, it’s mandatory that you have a Demat account. This, coupled with the increasing demand for stocks and bonds has created a massive surge in the amount of Demat accounts. This surge has shown no sign of slowing, with nearly 4.1 million accounts added in the last twelve months alone.
What is a Demat account?
A Demat account, or a dematerialized account, is an account that’s used to hold shares and securities in an electronic format. This makes share trading simple for people performing online trading.
How to open a Demat account?
To open a Demat account, you’ll need to get in touch with a registered depository participant (also called a DP). You can find a list of DPs through the NSDL or CDSL websites. You’ll then need to collect the required account opening forms and provide any needed signatures. You’ll also need to include a copy of your PAN Card, proof of address, bank statements, and photographs, as well as any other documents required. You can also open a Demat account online (though you will still require an Aadhar number to do so).
What are the advantages of a Demat account?
1.To trade inequities
First and foremost, you need a Demat account to trade in the stock market. This is the number one benefit of and reason to own a Demat account.
2.Track your portfolio performance
A Demat account allows you to quickly and easily track the performance of your stocks, letting you see on a day-by-day basis how your money is performing.
3.Allows for quick trades
Your Demat account allows you to process quick trades. The CDSL and NSDL permit you to send instruction slips to your DP with ease.
4.Follow the market news
Having a Demat account lets you keep your pulse on the market and follow announcements from companies you’ve purchased stocks with.
5.Convert physical shares faster
Having a Demat account allows you to convert physical shares in a dematerialized form quickly by providing info to your DP.
6.Easy transfers of shares
Demat accounts make transfers of shares easy. Any holdings you want to transfer can be done through a Delivery Instruction Slip or Receipt Instruction Slip.
7.Freeze your stocks
Using your Demat account, you can freeze your stocks for a certain period of time. This will stop any unexpected debiting or crediting into the account. You can also do this for only a specific quantity of securities in the account.
8.Loans against shares
A Demat account allows you to use your shares as collateral against your loans.
9.Eliminates risks
Physical certificates open you to risks like bad deliveries, fake securities, delays, and thefts. A Demat account prevents this and also Demat accounts are easier for investors to check on.
10.Corporate benefits
Demat accounts allow you to take advantage of any dividends, refunds, or interests that companies you are invested in may offer.
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