Demat accounts were first launched in India in 1996, before which equities and securities were issued and traded physically. The significance of establishing a free Demat account is that it enables investors to retain their securities digitally in their Demat accounts. The Features of Demat Account are that it makes the overall investing, holding, tracking, and trading process faster, easier, and more cost-effective.
Table of Contents
Need of Demat Account
Since an individual can hold assets in either physical or digital form, the conversion of physical assets to digital form is voluntary. Physical certifications, on the other hand, are more difficult to track than their dematerialized equivalents.
Furthermore, buying and selling stocks in tangible form is complicated. When compared to individuals trading in dematerialised equities, the number of agents trading in physical stocks, and also the number of customers willing to purchase physical equity, is significantly lower.
Features of Demat Account
Let’s discuss the demat account features & characteristics of demat account in detail to understand them properly.
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Smooth equity transfers
When buying or selling securities, investors can use a delivery instruction slip (DIS) or a receipt instruction slip (RIS) to transfer their holdings. These slips allow users to supply all of the information needed to complete a transaction easily.
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Quick dematerialisation and rematerialisation of stocks
Depository account holders can give their depository participant (DP) directions to change physical certificates to digital form. Furthermore, if necessary, digital securities can be transformed to physical form.
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Avail Loan against stocks
Several lenders offer loans secured by securities kept in the borrowers’ Demat account. These assets are used as collateral by account holders to obtain loans.
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Freezing your demat account
If necessary, demat account holders can put their accounts on hold for a set length of time. This option is useful if you wish to avoid sudden debits or credits to your Demat account. The ability to freeze a particular amount of stocks in an account is also available.
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Demat account access
Demat accounts are maintained online, so they can be accessed in a variety of ways. These accounts can be managed using a laptop, cellphone, or other smart device via the Web.
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Online facility
Customers can send instruction slips to the National Securities Depository Limited (NSDL) electronically rather than physically presenting them to the DP. As a result, the procedure is more easy and time-efficient.
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Actions & Benefits
These benefits are instantly accessible to Demat account holders if the companies pay dividends, refunds, or interest to their shareholders. Furthermore, corporate acts like as bonus issues, right shares, and stock splits are instantly posted in all shareholders’ Demat accounts.
After talking about Features of Demat account let’s discuss the benefits of Demat account.
Benefits of Demat Account
The following are some of the characteristics of demat account after demat account features:
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Risk Free
Thefts, losses, and damages to physical stocks are all risks. Furthermore, faulty deliveries or bogus stocks pose additional dangers. With the setup of a Demat account, which allows holders to hold all of their assets in digital form, these dangers are fully avoided.
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Tracking Investments
Physical certificate maintenance is a time-consuming task. Furthermore, maintaining track on their performance is an additional burden. Demat account holders can make it easier to manage and track all of their investments by consolidating them into a single account.
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Lot issues
Purchases and sales physical certificates were limited to the numbers stated. It was also not possible to deal with odd lots or single security. This problem is no longer a problem with demat accounts.
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Cost
Physical certificates came with a slew of extra prices, including stamp duty, handling fees, and other other charges. With Demat accounts, these additional costs are fully avoided.
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Time
The time necessary to complete a transaction is reduced due to the removal of paperwork. The account holder can perform more purchases and sells of security holdings in less time and with higher efficiency because the time required has been reduced.
Demat accounts are easy to use, hassle-free, and incredibly profitable. They are a must for financial management in today’s world.
Dematerialisation of stocks
Dematerialisation is the process of turning physical securities (shares, stocks, mutual fund units, bonds, debentures, and so on) into digital form.
Dematerialisation provides security, ease, and flexibility. Certificate forgeries, the loss of crucial share certificates, and the resulting delays in certificate transfers were all concerns associated with holding share certificates in physical form.
By allowing clients to convert their physical certificates into digital form, dematerialisation reduces these inconveniences.
Shareholder rights with dematerialized securities
Dematerialized shareholders have the following rights:
- If disclosed and approved, you will receive rights, shares, bonuses, and other benefits.
- Annual reports, as well as any other periodic reports, will be sent to you.
- Dividends, if any, will be paid out as soon as they are approved.
- General meeting announcements, postal ballot forms, and explanatory statements will be sent to you.
- Join in general meetings and vote.
- Obtain statutory registrations and papers for inspection during the company’s designated working hours.
- At general meetings, demand a vote on any resolution.
In general, a Demat shareholder has the same rights as a shareholder who owns physical securities.
Rematerialisation of Shares
rematerialisation of shares is the process of transforming digital assets (shares, stocks, mutual fund units, bonds, debentures, etc.) into physical form (certificates).
Process of Rematerialisation
- The account holder must complete and submit a Remat Request Form (RRF) to the Depository Participant (DP).
- After confirming the request, the DP sends it to the depository and provides the holder with a signed and stamped acknowledgment slip.
- The depository (NSDL or CDSL) subsequently informs the company’s Share Transfer Agents of the request.
- The Share Transfer Agent then prints and sends these certificates to the holder, along with a confirmation to the depository.
- The account holder receives a rematerialisation notification from the DP.
Conclusion
People who want to trade in the stock market can actually benefit from a demat account. In summary, time is money nowadays, and a demat account saves both investors and stock exchanges a lot of time (NSE, BSE etc.)
This is all from our side regarding Features of demat account. To Open Demat Account with Indian Number 1 Discount Brokerage Click Here and comment below if you have any doubt about characteristics of demat account.
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Aims and Objectives of Demat Account
Frequently Asked Questions about Features of demat account
What are the benefits of using demat account?
The benefits of using demat account are No There is no stamp duty on securities transfers. Transfer of securities in a timely and efficient manner. 'Bad Deliveries' are no longer viable. Loss, theft, mutilation, and other forms of danger are eliminated. Corporate advantages, such as bonuses, rights, and dividends, are settled and disbursed more quickly.
What is demat account and its function?
Demat Account stands for dematerialisation account and simplifies the process of holding investments such as stocks, bonds, government securities, mutual funds, insurance, and exchange-traded funds (ETFs) by eliminating the hassles of physical handling and maintaining paper stocks and related documents.
Which type of demat account is best?
Discount broker's demat account is best for people having good knowledge of stock market. Whereas full service demat account is good for people with less knowledge of stock market.
What are the disadvantages of demat account?
The major disadvantages of demat account are Annual Charges, Technology Savvy, trading addiction and Stockbroker Supervision.
Is demat account safe?
Regulatory authorities can now track any fraudulent conduct by brokers. With these criteria, demat accounts are relatively safe. Nevertheless, there are some things you can do as an investor to safeguard the security of your Demat account.
