Demat Account Basics

What is a Demat Account and is it necessary?

Demat Account is an account wherein you can hold shares of various companies in the dematerialised (electronic) form. Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in an electronic form and are credited into the beneficiary’s account with his Depository Participant.

What are the advantages of a Demat Account?

There are various benefits of dematerializing securities such as-

  1. Safe and convenient way to hold securities
  2. Immediate transfer of securities
  3. No stamp duty on transfer of securities
  4. Minimizes paper work
  5. Elimination of risks associated with physical certificates such as damage, theft, fake securities, delays, etc.
  6. Reduction in transaction cost
  7. No odd lot problem; one can even trade a single share
  8. Nomination facility
  9. Automatic credit into Demat account of shares, arising out of corporate actions (bonus, split, consolidation, merger etc)

Where do I get a Demat Account?

You get a Demat Account from a company like Angel Broking that provides Demat Account Services.

How can companies like Angel Broking provide Demat Services?

Companies who are Depository Participants are registered with a Depository that gives them the authority to provide Demat Services.