Features of a Demat Account
- 06 May 2024
- By: BlinkX Research Team
A Demat account is a digital vault for stock investments, storing shares electronically instead of dealing with physical certificates. Its purpose is to ensure the safety of shares, reducing the risk of loss or forgery. To participate in stock market trading, two essential accounts are needed; a Demat account for electronic shareholding and a trading account for swift buy and sell orders. Demat trading was introduced in India in 1996 for NSE transactions. The online process has made Demat accounts popular, allowing for quick openings in just 5 minutes. In this article, we will explore the features of Demat account in detail.
What is Demat Account & What is the Use of it?
A Demat account (dematerialised account) was first introduced by NSE in 1996. Shares and securities are held in an electronic format account during online trading. Holding stocks in electronic format eliminates the risks associated with theft, damage, and malpractice. Initially, investors had to manually open their accounts, and it took many days for them to receive authorisation. The process of opening a Demat account online now only takes five minutes. Demat has been widely known thanks to the end-to-end digital method.
Table of Content
- What is Demat Account & What is the Use of it?
- Why do you Need a Demat Account?
- Features Of A Demat Account
- How does Dematerialisation Work?
- Benefits of Opening a Demat Account
- Types of Demat Account
Why do you Need a Demat Account?
Since investors are allowed to keep securities in both physical and electronic formats, converting physical securities to electronic form is voluntary. However, compared to their dematerialised equivalents, physical certificates are more challenging to manage.
Moreover, it is difficult to buy or sell shares in person. Comparatively, the number of people transacting in dematerialised securities is far higher than the number of agents dealing in physical shares and the number of buyers prepared to purchase physical shares.
- Seamless and fast transfer of shares
- Facilitates digitally secured storing of securities
- Eliminates loss, damage, forging, and theft of security certificates
- Easy tracking of trading activities
- All-time access
- Allows to add beneficiaries
- Rights issues, split shares, and bonus stocks are automatically credited.
Features Of A Demat Account
Many features of a Demat account can simplify financial transactions:
How does Dematerialisation Work?
The process of transferring physical share certificates into an electronic format, which is much easier to maintain and available to access from anywhere, is known as dematerialisation. An investor must open a Demat account with a Depository Participant (DP) to trade online. The goal is to make it unnecessary for investors to keep physical share certificates in their possession and to make tracking and monitoring ownership easier.
Demat has sped up the entire procedure and stored security certificates in digital format, helping to simplify the time-consuming share certificate issue process. After your Demat account is activated, you can submit a Dematerialisation Request Form (DRF) along with all of your physical assets to convert paper certificates into digital format. Additionally, don't forget to deface "Surrendered for Dematerialisation" on each physical certificate. When you turn in your share certificates, you will be given an acknowledgement slip.
Benefits of Opening a Demat Account
You can explore different benefits that you can get from a Demat account in the below points:
Types of Demat Account
Three distinct types of Demat accounts are commonly offered by Indian depository participants. Each Demat account has its features.
Conclusion
Every Indian must now register a Demat account before they can begin their trading career. Users can benefit from the capital market by investing in stocks, mutual funds, and commodities with the use of a Demat account. In general, a user will be able to take advantage of the benefits and profit guarantees on their shares by holding a Demat account.
To make your trading experience easier and more convenient, consider using a reliable and user-friendly trading app like blinkX. The demat trading app provides a user-friendly platform for stock trading, allowing you to trade on the go. You will get all the amazing Demat account features in the application.
Features of a Demat Account FAQs
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