Demat Account Features You Must Know

Prior to 1996, stocks were issued physically and traded on the market. However, the Securities and Exchange Board of India (SEBI) introduced the concept of Dematerialisation in 1996. As a result, the securities market changed drastically, as investors could trade from anywhere with an internet connection.

Demat account facilitates, simplifies, and reduces the cost of holding, investing, monitoring, and trading securities. By law, an investor may hold either physical or electronic securities, and it is not mandatory to convert physical securities into electronic ones. However, monitoring physical certificates is more difficult than monitoring Dematerialised shares. Moreover, purchasing or selling shares in person is a time-consuming and tedious process. It is for this reason that a Demat account is recommended. In this article, let’s discuss Demat account features and how they benefit investors.

What is a Demat Account?

A Demat account, also known as a Dematerialised account, allows users to store their financial securities electronically. The functions of a Demat account are similar to those of a bank account. One main difference between a bank account and a Demat account is that a bank account holds the money electronically. However, a Demat account holds all the shares and other securities electronically. 

Online trading in the stock market requires using a Demat account for trading, investing, holding, and other procedures. Investors can buy and sell shares, stocks, mutual funds, and government securities without completing any paperwork.

Features of Demat Account

When you open Demat account, it offers various features to make your trading journey hassle-free. Here are the key ones:

• Transferring shares is easy: Investors can transfer their shares quickly using an electronic Delivery Instruction Slip (e-DIS). The user can include all the necessary information on these slips to ensure a smooth transaction.

• You Can Freeze Demat Accounts: Those who own Demat accounts can temporarily freeze their accounts if necessary. This option may be helpful if one wishes to prevent unauthorised debits or credits from being made to a Demat account. A certain amount of securities can also be frozen in the account.

• Obtaining a loan by pledging: There are a number of brokers that offer loans secured by securities that the borrowers hold in their Demat accounts. When applying for loans, account holders use their holdings as security.

• SPEED E-Facility: National Securities Depository Limited lets users submit instruction slips electronically rather than manually. As a result, the process is faster and more convenient.

• Multiple Accessing Options: Since Demat accounts are managed electronically, they can be accessed in a variety of ways. These accounts can be accessed via computer, smartphone, or other Internet-connected device.

• Corporate Benefits: Dividends, credits, and interest offered by corporations to their investors are automatically available to holders of Demat accounts. In addition, Demat accounts are automatically updated with information regarding company actions such as bonuses, rights shares, and stock splits.

Benefits of Demat Account

With a Demat account, you get to avail of the following benefits:

• Easy to hold: Maintaining physical share certificates is a laborious task. The benefit of having a Demat account is that it can be used for holding, managing, and securing all of the investments you own at the same time.

• Speed up the process: Due to the absence of documentation, the time needed to complete a transaction has decreased. Using a Demat account, an account holder can buy and sell securities more quickly and efficiently.

• Cost Savings: A number of additional expenses were associated with physical certificates, including stamp duty, handling fees, and other fees. With a Demat account, these extra charges are eliminated.

• Lower Risks: Trading physical certificates is risky due to losses, thefts, and damages. There were also risks associated with fake securities and faulty deliveries. With a Demat account, holders can keep all their investments electronically, eliminating these dangers.

• Odd Lots: Only fixed quantities could be bought and sold before the advent of Demat accounts. Due to this, odd lots became a problem. However, this problem has been resolved by Demat accounts.

Conclusion

With the introduction of Dematerialisation, the trading industry became more accessible, efficient, and safe for investors. With a Demat account, it is easier to hold, monitor, and trade securities. Investors can benefit greatly from these accounts, from the convenience of online access to the ease of transferring shares. Investors are able to trade shares with greater ease and efficiency today because of the online share trading app, which provides speed and accessibility. These apps provide real-time market updates, instant trade execution, and secure transactions. Hence, they enable investors to make informed decisions and manage their portfolios with ease.