Features and Benefits of Opening a Demat Account

If you are new to the stock market, there is a high possibility you will come across the term Demat account. Let’s also discuss the features and benefits of the Demat account.

A Demat account is an electronic facility that opens with either one of the depositories from the NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited). The depositories help in storing the securities like shares, bonds and government securities in an electronic format. The function of a Demat account is similar to that of a savings account. The savings account tracks money movement, and the Demat account tracks the movement of shares. 

For example, 

When you purchase shares in the stock market, the shares get credited to your Demat account. When the shares are sold, the same gets debited from your Demat account. 

Features of a Demat account:

Demat account has many user-friendly features which aid in making financial transactions easier. The features include:

  • Electronic transfer of securities

A Demat account helps in the electronic transfer of the funds owed by you quickly. The entire buying and selling process of shares of the companies is executed faster than ever. Additionally, the transfer of securities can also be done with the help of DIS (Delivery Instruction Slips).

  • Ability to be pledged:

The holdings of a Demat account can be pledged for taking personal loans for an amount ranging from 1 lakh to 25 lakhs. This is allowed by both NSDL and CDSL.

  • Ability to directly receive the dividends

With a Demat account, you can directly receive the stock dividends into their account. The same is true for bonus issues released by the company.

Benefits of Demat accounts:

  • Reduced risk

The risk is more with the physical share certificates due to the possibilities of theft, loss, forgery or mutilation. The Demat account eliminates these risks.

  • Easier access

The electronic nature of the Demat account makes it a convenient option to operate and watch the holdings from anywhere in the world at any given time. The information is stored on a central cloud server which is accessible with the internet. 

  • Lower costs

The concept of stamp duty charges, registration charges or handling charges is not applicable with the introduction of Demat accounts. This results in a cost reduction in owning the shares of a company

  • Faster transactions

Earlier, a transaction took many days to clear and settle a stock market transaction. But with the Demat account, each buying and selling transaction is immediately settled and cleared smoothly

  • Liquidity

An essential aspect of trading and investing in the financial market is liquidity. Demat services make it easy to buy and sell swiftly

  • Operating with a single account

A Demat account offers flexibility to you for holding and tracking all the investment instruments through one single account

Whether you are a beginner or a professional, every individual investor, like you, benefits from introducing a Demat account. Though the documentation may feel like a hassle when done by the investor himself, this is a one-time investment for an overall smooth trading experience.

Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai – 400 025, India, Tel No : 022 – 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.