What is Demat?

Demat account is the short form of dematerialized account. Few years back, all securities were traded in physical certificates form, but now these are held in electronic form in Demat Account. The variousĀ  securities which can be held in a demat account are shares, mutual funds, government bonds, ETFs etc. For applying an IPO, we require a DP Id which is unique for every person. A demat account can be opened online with any reputed broker just by uploading KYC documents. Demat works as a link between bank account and a trading account. Money is transferred from bank account to trading account for the purpose of buying securities. These securities are kept in demat account and can be sold as and when required by the owner/investor. On selling investor will get money which she can transfer from trading account to his linked banked account. These accounts are opened by all brokers in mainly two depositories viz. NSDL and CDSL. A consolidated account statement is also sent by NSDL/CDSL every month to their investors in which full details of client’s holdings are given as record. Every investor can check CAS on his email linked to his demat account.

Benefits of Demat Account

Opening a Demat Account is the first step to enter in Indian Stock Market.Demat holds securities in electronic form at two major depositories in India namely NSDL and CDSL. Demat Account has many advantages, few are listed below:

  • It provides nomination facilities to Investors.
  • There is no deduction of TDS for demat securities.
  • DEMAT is an easier and convenient mode to hold securities with safety.
  • Demat account helps in quick transfer of shares from one account to another.
  • No stamp duty is involved in transferring of securities since they are held in electronic form.
  • Demat account holds shares and securities in electronic form which significantly reduces the involvement of paperwork.
  • There is no risk of theft, damage or misplacing the share certificates which was present in case of physical holdings previously.
  • Corporate benefits like dividend, bonus shares, rights issue, interest, refund, etc. can be disbursed or settled by the companies through the demat account.
  • You can trade on the go. If you have your trading app on your phone, your demat account is accessible from anywhere enabling you to follow the live market.
  • If you want to change address with all the companies in which you are an investor; any change of address with the Depository is communicated to all the companies

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