abhishreshthaa
Abhijeet S
Demat Account
What is Demat account ?
For eg :
Importance of Demat Account ?
Why Demat ?
Demat Advantages ;-
The benefits are enumerated below –
A safe and convenient way to hold securities ;
Immediate transfer of securities;
No stamp duty on transfer of securities
Elimination of risks associated with physical certificates such as bad delivery , fake securities , delays , thefts etc.
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
No odd lot problem , even one share can be sold;
Nomination facility.
Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;
Transmission of securities Is done by DP eliminating correspondence with companies;
Automatic credit into Demat account of shares , arising out of bonus / split / consolidation / merger etc.
Holding investments in equity and debt instruments in a single account.
- Demat account allows you to buy, sell and transact shares without the endless paperwork and delays. It is also safe , secure and convenient .
What is Demat account ?
- Demat refers to a dematerialized account.
- One needs to have DEMAT ACCOUNT if he wants to buy or sell stocks or shares.
- It is just like a bank account where money is replaced by shares.
- You have to approach the DPs ( remember, they are like bank branches ) , to open your Demat account.
For eg :
- If your portfolio of shares looks like this : 40 of Infosys, 25 of Wipro , 45 of HLL and 100 of ACC. All these will show in your Demat account .
- So you don’t have to possess any physical certificates showing that you own these shares.
- They are all held electronically in your account As you buy and sell the shares, they are adjusted in your account .
- Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions .
Importance of Demat Account ?
- In todays world, practically all trades have to be settled in dematerialized form .
- Although the market regulator, the Securities and Exchange Board of India (SEBI) , has allowed trades of upto 500 shares to be settled in physical form , nobody wants physical shares any more .
- So a Demat is a must for trading and investing.
Why Demat ?
- The Demat account reduces brokerage charges , makes pledging / hypothecations of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity , avoids confusion in the ownership title of securities , and provides easy receipt of public issue allotments .
- It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit , Further, it eliminates risks associated with forgery , counterfeiting and loss due to fire, theft or mutilation .
- Demat account holders can also avoid stamp duty ( as against 0.5 per cent payable on physical shares ), avoid filling up of transfer deeds , and obtain quick receipt of such benefits as stock splits and bonuses.
Demat Advantages ;-
The benefits are enumerated below –
A safe and convenient way to hold securities ;
Immediate transfer of securities;
No stamp duty on transfer of securities
Elimination of risks associated with physical certificates such as bad delivery , fake securities , delays , thefts etc.
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
No odd lot problem , even one share can be sold;
Nomination facility.
Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;
Transmission of securities Is done by DP eliminating correspondence with companies;
Automatic credit into Demat account of shares , arising out of bonus / split / consolidation / merger etc.
Holding investments in equity and debt instruments in a single account.