What is a Demat Account?

In today’s world, everything is going digital. With the usage of technology, things have become much simpler and easier. The stock market is no different. The introduction of technology in the stock market has made trading and investing a hassle-free experience. Demat account is one of the prime examples of how technology has changed the whole experience of trading and investing in the stock market. In this article, you learn all the important details about the demat account.

Let us begin by learning the meaning of the open demat account.

What is a Demat Account?

A demat account or dematerialised account is one that holds your shares and securities in an electronic form. The demat account ensures that you can buy and sell shares through online mode. This account is just like your bank account. It holds your shares instead of money. Using the demat account you can make an investment not only in shares but also in bonds, government securities, mutual funds, exchange-traded funds, etc.

While talking about the demat account, you will come across the term dematerilaisation. So it is important to understand its meaning as well.

What is Dematerialisation?

The process of converting physical share certificates into electronic format is called dematerialisation. Maintaining shares and securities in an electronic form is easy. It can be assessed from anywhere across the globe. Dematerialisation ensures that the investor is no more required to hold share certificates physically and he can monitor his holding seamlessly.

There are many benefits of opening a demat account. Let us learn about a few of them.

Benefits of Demat Account

  • Demat account eliminates the risks associated with the physical holding of shares. By holding the shares electronically there is no worry of theft, damage or misplacement of share certificate.

  • The demat account has a two-factor authentication that makes it safer than physical shareholding.

  • Corporate benefits like refunds, interests, dividends, etc. are directly credited into the demat account.

  • The demat account functions electronically, hence all the processing is done in lesser time and in a more convenient manner.

  • Demat account holds all securities in a single account that makes monitoring the investments a much easier task.

  • Demat account makes transactions lesser costly because a physical share certificate attracts stamp duty. Demat account eradicates all such additional costs.

  • Demat account can be accessed online from anywhere across the world.

A demat account offers many facilities. Let us learn about a few of them.

Facilities Provided By Demat Account

  • By using a demat account you can transfer holding from one account to another. It can be done using the Delivery Instruction Slip (DIS).

  • You can pledge the shares held in the demat account and secure loan from the bank.

  • Using online facility, you can transact and monitor your portfolio from anywhere by using a computer, smartphone or any other smart device.

  • Demat account provides you the facility to freeze the account for a specific time period based on your requirement.

The above mentioned are a few of the facilities that demat account offers. To open a demat account, you need to contact a stock broker. Indira Securities is one of the leading brokers in the country and you may consider opening a demat account with us.