Benefits Of Having A Demat Account
Everyone who is even remotely associated with the share market has more than once heard the term Demat Account. Having an active Demat account is mandatory for an individual to be able to trade in the share market in India. The popularity of Demat accounts has seen a dramatic rise. If you check the statistics, there are roughly 37 million active Demat accounts in our country. The number of Demat account opening every year is on the rise. The ever increasing number of Demat accounts is a sign of constant growth in indivduals’ desire to invest in the share market. Before the introduction of Demat accounts in India in the year 1996, all the trading in the market happened through physical shares and it was a long process. In this article, we will try to explain to you the benefits of a Demat account. But first, let us begin with what does a Demat account mean?
A Demat account can be defined as an account that is used to hold our shares and securities.
The shares and securities are held in an electronic format. This means that an individual no longer has to hold on to their physical share certificates. And as most of the transactions are now carried out on the internet, Demat accounts make the process even easier. The process of converting the physical shares and securities to an electronic form is known as Dematerialisation. And hence the name. The process of opening a new Demat account is simple too. Contact a Depository Partner (DP) that is registered with the SEBI. Fill a form and submit all the documents. Once the verification is complete and the application is processed, you will be provided with a Demat account number and you can then start trading in the share market using your newly opened Demat account.
Opening a Demat account has a lot of benefits. Below is a list of a few of them:
- Safe and Secure
Shares and securities in a physical format are susceptible to damage, theft and loss. Demat account eliminates the possibility of these factors. But keep in the mind, the rise and fall in the value of your securities depend on the market position. A Demat account simply lets you store your investments safely.
- Quick and Easy Share Transfer
One of the biggest benefits of Demat accounts is the speed of transactions. Once an order is placed, it is executed within a matter of seconds and with a complete lack of errors. Transfer of securities has also become easier due to Demat accounts. Earlier, transferring assets could take months and now the entire process is completed within minutes.
- No restrictions on the number
There are no restrictions on the number of shares that you are allowed to buy or sell. Unlike the old days where only lots in even number of shares were traded, today you can choose to buy a single share if you want to.
- Wider Reach
The availability of the internet and Demat accounts has allowed investors from smaller cities to join their counterparts from the big cities to get into the trading business.
- Corporate benefits
Collecting benefits like dividends and bonus shares has become easier thanks to the Demat accounts. Dividends get automatically transferred to your account when its time.
- Easy access
Demat accounts have eliminated the need for traders to be present at the stock exchange in order to trade. They can do it from any location that is convenient for them as they can access
a Demat account from anywhere.
We hope that the list of benefits of Demat accounts will encourage you to open your account today and start trading in the share market.