The biggest benefit of demat account is that it acts like a bank and holds not only shares in the account. In fact debt instruments like bonds, etc. can be held in a single account. Dematerialisation of share has been a silent revolution in India. Just as like money lies in a your bank and you have a passbook and internet access to view your transactions and balance, the concept of dematerialization is similar. In Demat account you have instruction slip as well as online view and transaction password with help you can sell your stock or transfer your stock to another person DP account. It has made share trading and holding simpler and safer for all.
One can hold shares, ETFs, bonds, MFs in the demat account and the list is expanding every year. With help of Demat account you can view your wealth in single click. As well as all corporate action will take place online without any further action required form your side. Advantages of Demat account is so many but will try to cover few basic and important benefits of Demat account to investor point of view.
No Risk of Physical Damaged of Certificate – as all documents in electronics form no risk of physical Damaged or Theft. In addition all corporate action directly credited into your linked bank account
Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. are mostly eliminated)
Immediate transfer of securities – earlier days we need to sign and send to physical share to registrar. Registrar matched sign and sends back new physical share to new buyer its take approx. 10 – 15 days time. With help of Demat its can be transfer with in 24 hr to new buyer demat account.
Traders can work from anywhere : with Electronics transfer your presence at broker office not required as soon as you sell delivery of your stock your broker debited that stock from your demat account and transfer to Depository to credit buyer account and Exchange give money to your broker he will transfer fund into your Bank account. All process online done within 24-48 hr without physical presence required (e.g. even from home) not required to visit broker office.
Easy to maintain Physical Shares: with Demat account process you can easily maintain physical shares as you can actually know value of your stocks in finger of your tip. As well as you can get latest update about your stocks company information’s. Company corporate action also you will get update and received credit in your Demat linked bank account.
Change in Address in one place and get updated in every company’s registrar records: Before Electronic mode start share holder used to send every company registrar office if they changed their communication address. Which now it’s like one click process you just need to change address in one place every company registrar will get your new update by Depository.
Reduced transaction cost: With Electronics transfer cost of transaction cost reduces drastically. As its online process only transfer charges application no additional cost involved.
Even one share can be sold no minimum lot required to share certificate: In old days if you required selling stock then you have only in lot which physical share mention. After it’s converted into Demat form you can sell one single share also if you wish.
Reduced paperwork for transfer of securities
Easy and convenient way to hold securities
Transmission of securities is done by DP, eliminating the need for notifying companies.
Automatic credit into demat account for shares arising out of bonus/split, consolidation/merger, etc.
A single demat account can hold investments in both equity and debt instruments.
No stamp duty on transfer of securities
Elimination of risk by loss, theft, mutilation etc.