Opening a Demat account is a prerequisite to online trading. Apart from holding your securities in electronic format, there are myriads of benefits extended by this account. But before you understand them, first understand what a demat account is, its features and benefits.
Dematerialization Guarantees Convenience
- Demat account opening allows for uninterrupted management of share transactions as it functions electronically. It rules out the need to be physically present to settle transactions
- Access to a demat account can be gained conveniently through a smart phone or computer.
Merging your Bank Account and Demat Account
- One of the benefits of a Demat account is that it can be linked to your bank account
- This helps in facilitating easy transfer of funds electronically
- Providing a nominee is one of the key features of holding a Demat account.
- Including a nominee will allow him/her to operate the account in your absence.
- Securities are credited and transferred by electronic means. Hence, the risks associated with paper securities, such as fraudulency and theft, are averted.
- Conversion of securities into electronic equities deems you the legal owner of your shares. Succeeding which, certificates need not be transferred to the company's registrar.
Demat Excludes the Need for Paper
- Handling your share trading online through a Demat account, eliminates the need to use paper-based document. This proves effective for companies to reduce administrative hassles while also adhering to environmental norms by cutting down on the use of paper.
Existing securities like bonds and debentures can be used to procure a loan. Securities in Demat account can be held as collateral.
Reduction in Transaction Costs
There is a marked decrease in transaction costs as the depository ensures that entitlements are directly credited to your account.
Function of the Depository Participant
- The depository participant (DP) is the intermediary between the depository and the investor. Angel broking is a certified DP registered with the Central Depositories Services Limited (CDSL) in India.
- Regular statements of your account activity and holdings are also provided by your depository participant.
Using a Demat account allows you an opportunity to be a participant in the market and invest in securities. However, in the event of failing to use your account, it is considered wise to deactivate the same. Deactivating the account will prevent the account from being utilized for fraudulent purposes.
- Deactivating an account is possible only in the absence of shares in the account
- Deactivation is completed by furnishing an application along with unused delivery instruction slips to the DP. It is mandatory to settle all dues before deactivation.
For safe and efficient handling of your securities, contact recognized stock broking companies like Angel Broking, offering one of the best Demat accounts in the industry. It is an Indian Stock Broking firm doing noteworthy work since 1987.