@BB_Expert wrote:
Hi Sooraj,
Demat stands for ‘dematerialised’. Instead of an investor storing hard copies of certificates and other documents involved, shares and securities are held electronically in a demat account. Anyone who wishes to invest in the stock market opens this account with an investment banker or a sub-broker. This demat account number is then used for all transactions made in the stock market.
With demat accounts in place, investors don’t need to worry about the paperwork involved in transacting shares. It may not sound like a big deal, but it helps avoid a lot of confusion and trouble related to paper shares. Since there’s no paperwork involved, the risk of losing important papers reduces significantly. This system was introduced in India under the Depository Act of 1996, which made the process of dealing in shares quite convenient.Apart from eliminating paperwork (and saving a lot of paper, of course), here are the other benefits of a Demat account:
There’s no stamp duty involved on the transfer of securities
One demat account is all you need, to hold both equity and debt investments
With a demat account in place, the overall transaction cost decreases
Traders get to work from anywhere as there’s no complicated paperwork involved
Demat account facilitates an immediate transfer of securities
No paperwork also means better security since the chances of losing important paper shares and other relevant documents reduces as well
You get to avail the facility of auto credit of Public Issue refunds to the bank account
You get to keep a record of all the transactions as they’re sent to you via email
The liquidity increases as you get to sell the securities at any time of the day (during trading hours)
You also get to avail the facility of auto credit of Rights / Bonus / Public Issues / Dividend through ECS
For things like change of address, registration of power of attorney etc., all you need to do is give an instruction to the Depository Participant (DP)Want to invest in Mutual Funds? Click here.
Cheers,
BB Expert