Investing has become more popular after the coronavirus pandemic as it shows that we must not depend on a single source of income. To invest you need a demat account, However, You must know the Aims and Objectives of Demat Account to start investing via a Demat Account.
Table of Contents
What is a Demat account?
The definition of Demat accounts is relatively simple. It’s an automated way to keep track of all of somebody’s finances, including securities, equities, and mutual funds.
Types of Demat account
Demat accounts are classified into three categories:
Regular Demat Account
A standard demat account that is used by Indian investors.
Repatriable Demat Account
NRIs use a demat account from which they can move funds internationally. This form of demat account necessitates the use of an NRE bank account.
Repatriable Demat Account
NRIs use a demat account in which money cannot be transferred outside of the country. This form of demat account generally requires the use of an NRO bank account.
Aims and Objectives of Demat Account
There are many justifications why the opening of a Demat account has been actively advertised since its introduction. The following is the major aims and objective of demat account :
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Reduces the risks
Since Demat accounts enable investors to maintain shares in digital form rather than hard copy, there is no risk of misplacement, loss, stealing, or fraud, as there is with paper stocks. As a result, the aim of a Demat account is to make stock management easier than it was before.
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Simplify the process
A Demat account aims to simplify processes as well. Transferring stocks is now faster than before, and it can be done in a matter of hours rather than weeks.Furthermore, with the introduction of Demat accounts, the process of changing addresses has become more smooth and time-consuming.
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Convenient
Another aspect where Demat accounts strive to change is comfort. It has eliminated time-consuming procedures such as purchasing and pasting stock market stamps, as well as limits on selling stock in unusual quantities. As a consequence, the process is quick and easy.
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Reduce the transfer time
Furthermore, because of the digital system, stock transactions require much less documentation, making them a cost-effective operation.
Now that you know what Demat accounts are and what they’re about, let’s look at some of the terms and processes that go along with them.
after understanding Aims and Objectives of Demat Account now let’s talk about other related things.
Who needs a Demat account?
A demat account is required for anybody who desires to trade in the financial markets. This account assists you in trading in a flawless and easy method. The transactions are also safe. The goals and ambitions of Demat account is ideal for all clients.
Objectives of demat account
- No-hassle share buying and selling
- Dematerialization and rematerialization in possible in short period
- Shares as collateral for a loan is acceptable
- Account suspension or reactivation is easy and simple
How to Transfer of Holdings from one Demat Account to another?
People can transfer their investments from one Demat account to another without paying any extra fees.
If they choose this option, the Beneficial Owners (BO) accounts at both the transferor and transferee Depository Participant (DP) are identical.
If they want to transfer it to a joint Demat account, They would have to open a new Demat account with the same name.
Process
- The account owner must send the duly filled form to the establishment in person. An approved signatory of the organisation may transfer or close corporate accounts.
- In the presence of a DP representative, all stakeholders must sign the form.
- In the availability of a bank employee, any of the joint owners must sign.
- The crystal report or client master file from the central depository of the new account where the move is being requested must be authorized and signed.
- All instruction sheets that have not been utilized must be cancelled and returned.
- The self-attested identification proof copy must be submitted and checked by a bank representative.
What is a Depository?
A depository is a centralized storage facility for all digital securities. The Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL) are 2 major depositories in India. People may obtain these facilities under the Depositories Act by their DP(depository Participant).
How to get stocks in Demat account from Physical certificates?
Physical certificates are transformed to digital stocks in this method. All transactions are now carried out digitally, making it necessary for shareholders to do the same.
Process
The DP will check the information after receiving the certificate and the Demat Request Form (DRF) before passing them to the Entity or Registrar. The dematerialization process takes about 30 days to complete.
The Registrar or Entity handles the application after receiving the DRF and actual securities. When the transaction is completed successfully, the holders’ Demat accounts are credited with an equivalent quantity of electronic shares.
If the application is denied, investors should contact the DP for guidance in submitting a new DRF.
Process of transferring shares in case of death of Joint account
If the investment is maintained in the joint name of an expired investor, the documents, the death certificate, and the Transmission cum Demat form must be sent to the DP by the living holder/s.
All remaining account holders’ titles must reflect the information on the Demat account.
What to do when Mismatch in the name of Demat Account and physical certificate?
If the names on the Demat account do not match the identities on the physical certificates, a Transposition cum Demat form must be sent to the DP to transfer the physical certificates to a digital form.
How to get a physical certificate for digital stocks?
By applying the Remat Request Form, digital investments are transformed to physical certificates (RRF). All owners must sign the RRF, which must then be checked by the DP before being sent to the Firm or Registrar.
Freezing and De-freezing of a Demat Account
By sending an application to the DP, Demat account holders may have their accounts suspended.
To de-freeze demat accounts, the account owner must send an application in the acceptable order as specified by the DP in order.
Closure of Demat Account
An application form must be completed and signed by all owners. Prior to closing the Demat account, all of the account’s holdings must be relocated. Closing a Demat account that has pending dematerialisation applications or corporate activities is not practicable.
Conclusion
People may begin financial planning by equity investing once they know the unique Aims and Objectives of Demat Account and how it operates.
This is all from our side regarding Aims and Objectives of Demat Account. Let us know your viewsabout demat account aims and objectives in the comment section.
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Advantages of demat account?
It is simple, easy, and hassle free for every investor even if you are a newbie.
Types of Demat account?
There are 3 types of demat account - Regular Demat Account, Repatriable Demat Account and Non-Repatriable Demat Account.
Importance of demat account?
The major importance of demat accounts are it's safe, easy to maintain and safest investment option.
Advantages of Demat Account?
The major advantages of a demat account are 1. No Stamp duty on transfer. 2. quick settlement and disbursement. 3. avoid risk by loss, theft, mutilation.
Functions of Demat account?
Dematerialized or digital stocks and investments are stored in a demat account.
