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Friday, April 19, 2024

Features of Demat Account in 2023

Demat Account

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Before 1996, shares and securities were issued and traded physically. However, in 1996, the Securities and Exchange Board of India introduced the concept of dematerialisation. Due to this, investors were able to trade from anywhere with access to the internet. Additionally, you can hold, invest, monitor, and trade more quickly and cheaply with a demat account. This blog explores the features of a demat account.

What is the Need for a Demat Account?

An investor may hold securities in either physical or electronic form, and it is optional to convert physical securities to electronic form. However, monitoring physical certificates is more challenging than monitoring their dematerialised counterparts. Additionally, purchasing or selling shares in person is time-consuming and difficult. This is why it is recommended that you have the best Demat account in India.

Features of a Demat Account

The Demat Account has the following features:

1. Easy Share Transfers

With an electronic Delivery Instruction Slip (e-DIS), investors can transfer shares quickly. On these slips, users can include all the information necessary for a transaction to run smoothly.

2. Freezing Demat Accounts

Demat account holders can temporarily freeze their accounts if necessary. Using this option may prevent unauthorised debits or credits from being made to a Demat account. You can also freeze securities up to a certain amount in the account.

3. Pledging Facility To Avail Loan

The borrowers can obtain loans secured by securities in their Demat accounts through a number of brokers. Account holders use these holdings as collateral when applying for loans.

4. Speed E-Facility

The National Securities Depository Limited allows users to send instruction slips electronically instead of handing them in. Thus, the process is faster and more convenient.

5. Multiple Accessing Options

Due to the fact that demat accounts are managed electronically, they can be accessed in a variety of ways. You can access these accounts from a computer, smartphone, or other smart device connected to the Internet.

6. Corporate Benefits and Actions

Any dividends, credits, or interest that corporations offer to their investors are automatically available to Demat account holders. In addition, all shareholders’ Demat accounts are automatically updated when the company issues bonus shares, right shares, or splits stocks.

7. Nomination Facility

In accordance with the depository’s instructions, a Demat account offers a nomination facility. As a result of an unfortunate event, the nominee will be entitled to receive the shareholding in the Demat account.

Advantages of Opening a Demat Account

Here are the advantages of opening a demat account:

1. Reduced Time

By having a Demat account, the users are able to complete transactions in less time. With the time reduction, the account holder can make additional purchases and sell security holdings more efficiently. For all users entering the stock market today, a Demat account has become a necessity.

2.  Ease of Carrying Out Transactions

It is not necessary for an investor to visit a physical office or company to buy or sell shares. They will be able to process their transactions with just a click if they have a Demat account. Within two business days, an investor will have their shares reflected in their Demat account if they purchase shares.

3. Reduced Costs

In the past, physical certificates included several additional costs, such as handling charges, stamp duty, and other expenses. A user with a Demat account does not have to pay any additional expenses since they are eliminated. Ultimately, this lowers the cost of owning shares.

4. Reduced Risk

The physical share certificates were always at risk of theft, loss, forgery, or mutilation. All of these risks have been eliminated from users’ lives with the advent of Demat accounts.

5. Faster Transactions

Before Demat accounts were introduced in the stock market, settling a single transaction took several days. With a Demat account, a user can buy or sell every day, and the transaction is settled instantly once the trading day is over.

Conclusion

When starting your investment journey, it is important to understand all the above features of a Demat account. In this way, you will have clarity while placing trades, and the entire process will be smoother. Demat accounts have amazing features, such as making it easy to transfer shares, allowing you to freeze your account when needed, using your holdings as collateral for loans, and conducting quick electronic transactions. These accounts also let you access them through different devices and keep you updated on company actions. Opening a Demat account means faster transactions, simpler trading, reduced expenses, and improved security compared to old-style paper certificates. Kotak Securities offers the best trading app in India that simplifies online trading.

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