A Demat is a Dematerialised Account. It is a form of an online portfolio that holds a customer’s shares and other securities. It has denied the necessity of holding and trading physical share certificates. A demat account carries shares and securities electronically. These accounts can also create a portfolio of Bonds, Mutual Funds, ETFs, and familiar Stock Market assets.
Demat trading was first introduced in India in 1996 for NSE transactions. As per SEBI regulations, from 31 March 2019, all shares and debentures of listed companies must be dematerialised to carry out transactions on any stock exchange. After understanding what is Demat Account, let us understand its features.
Features of Demat Account
Here are the features to understand Demat Account better
Easy access
It provides quick access to all your investments and statements through Net Banking.
Easy dematerialisation of Securities
The depository participant can convert all your physical certificates to electronic form and vice versa.
Receiving stock dividends
It utilises quick and simple methods to receive dividends, interest, or refunds, all of which are auto-credited in the account. It also uses an Electronic Clearing Service to update investors’ accounts with stock splits, bonus issues, rights, public issues, etc.
Easy share transfers
Transfer of shares has become much more accessible and timesaving with a Demat Account.
Liquidity of shares
Demat Accounts have made it easier, faster, and timelier to get money by selling shares.
Loan against securities
After you open a Demat Account, you can also take out a Loan against its Securities.
Freezing Demat Account
One can freeze a certain amount of Demat Account securities for a specific time. This eventually stops the transfer from any Debit or Credit Card into your account.
Documents required for opening a Demat Account
- PAN card
- Aadhaar
- Address proof
- Passport-size photos
- ID proof
Benefits of Demat Accounts
If you open a Demat Account, you will enjoy several benefits:
- Demat Accounts remove the risk of damage, forgery, misplacement, or theft of physical shares.
- The electronic system is also considerably easier and can be completed within hours. It has eliminated several time-consuming operations, making the whole process streamlined and time-saving.
- Demat Accounts have remote access benefits; individuals should have a Net Banking facility with the financial institution.
- Investors can join Bank Accounts with Dematerialised Accounts to facilitate electronic fund transfers.
- Customers can also benefit from a facility called nomination if they open a Demat Account online.
- Account holders holding specific securities units in their portfolio can freeze their accounts for a certain period. This can help prevent unwanted transactions into one’s Demat Account.
Conclusion
A Demat Account is the perfect solution if you want to invest and keep track of your investments.
