Demat Account Benefits

Demat Account Features

Simple and cost-effective

Compared to holding of physical share certificates, demat becomes a lot cheaper and also simpler. Holding all your investments in a single demat account is much better than managing files, folios, certificates etc. Also, there is no stamp duty on electronic transfer of shares, unlike in the case of physical certificates. Demat is also much faster.

Beneficial owner

When you hold shares in demat account you are the beneficial owner of these shares. Unlike in case of physical shares, you are not the registered owner of the shares, which is the depository; NSDL or CDSL. That is why your demat account is also called a BO account.

No Bad delivery and duplicate shares

Two major challenges in the physical holding mode was the problem of bad delivery and duplicate shares. Bad delivery would lead to rejection of delivery instruction on technical grounds and brokers used to have a large team only to handle bad deliveries. Since there are no physical certificates, there is no scope for either fake certificates or for duplicate certificates.

Security via Depositories

One of the concerns that any investors may have is what happens to their shares if the depository participant (DP) decides to wind up its business. The account is opened with a DP but the shares are with the principal depository; NSDL or CDSL. So security and safety of shares is assured.

Automatic corporate actions

This is one of the big advantages of demat holdings. Corporate actions like bonus issues, stock splits, mergers are called involuntary corporate actions which are automatically reflected in your demat account. In case of buybacks and rights, you need to exercise your choice and the rest of the credits are done automatically. Lastly, in case of dividends and interest, the record date is automatically calculated and the interest and dividend amounts are automatically credited to your bank accounts.

Hold multiple asset classes

Demat account is not just about holding equity shares but a number of other financial securities too. Demat account can hold equity shares, fully paid shares, partly paid shares, corporate bonds, government bonds, closed ended funds, open ended funds, gold bonds, index ETFs, gold ETFs etc. All these can be held in a single account itself.

Basics of Capital Market

Open an Account

Basics of Demat Account

Steps to Open Demat Account

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