Features and Benefits of Demat Account

India introduced Demat accounts in 1996. Before that, shares and securities could only be physically issued and traded. Creating a free Demat account allows investors to electronically store their securities in their Demat accounts. The entire process of trading, investing, holding and monitoring is made easier and more cost-efficient.

Benefits of a Demat Account

These are just a few of the many benefits of a Demat account.

1. 1. Lower risks
   2. Simple holding
   3. Odd lots
   4. Lower costs
   5. Reduced time

These are the details of these benefits: 

• Lower risks:

  Theft, loss, and damage to physical securities can make them very dangerous. Bad deliveries and fake securities are additional risks. Demat accounts offer holders the opportunity to hold all of their investments electronically, eliminating these risks.

• Simple holding

  It is tedious work to maintain physical certificates. It is also difficult to keep track of their performance. It is easier for demat account holders to track and hold all of their investments from one account.

• Odd Lots:

  Physical certificates were only valid for specific quantities. It was not possible to deal with a single security or odd lots. This problem is eliminated by Demat accounts.

• Lower costs

  Additional costs for physical certificates included stamp duty, handling fees, and other expenses. Demat accounts eliminate these extra costs.

• Reduced time

  The time it takes to complete a transaction is reduced by the absence of paperwork. This reduces the time required to complete transactions and allows account holders to purchase and sell more security holdings faster and with greater efficiency.

Demat accounts can be very lucrative and easy to set up. They are essential for financial planning in today's world.

Demat accounts are essential for your financial security.

An investor can hold physical securities in electronic or physical form. Therefore, the conversion of physical securities into electronic form is not required. Monitoring physical certificates can be more difficult than dematerialized ones.

It is also difficult to sell or buy securities in physical form. The number of physical share agents and buyers who are willing to buy physical shares is significantly lower than those transacting in dematerialized securities.

Demat account features

• Transfers are easy:

  Investors have the option to transfer their holdings by using a delivery slip (DIS) and receipt instruction slips (RIS) to buy or sell shares. These slips enable users to enter all details necessary for the smooth execution of a transaction.

• Dematerialization & rematerialization of securities faster:

  Demat account holders may give instructions to their depository participants to convert physical certificates to electronic forms. If necessary, electronic securities may also be converted to physical form.

• To obtain a loan, you can pledge your support

  Many lenders offer loans against securities held by borrowers in their Demat accounts. Account-holders can use these holdings as collateral to obtain loans.

• Freezing Demat accounts

  If necessary, Demat account holders may choose to freeze their accounts. This can be useful if you want to avoid unexpected debits or credits into your Demat account. You can also freeze securities that are already in your account.

• Multiple accessing options

  The electronic operation of Demat accounts means that they can be accessed via multiple methods. These accounts can be accessed via the Internet with a smartphone, computer, or other smart devices.

• SPEED E-Facility

  The National Securities Depository Limited allows users to electronically send instructions slips to the DP instead of physically submitting them. This makes it easier and more efficient.

• Corporate benefits and actions

  Demat account holders can automatically receive dividends and refunds if the companies offer these benefits to their investors. All shareholders have access to the Demat account, which automatically updates corporate actions such as bonus issues, right shares, or stock splits.

Shares: Dematerialization & Rematerialization

• Shares dematerialized:

  Conversion of physical securities (shares and stocks, mutual funds units, bonds, debentures, etc.) into electronic form is known as a href="https://www.angelone.in/knowledge-center/demat-account/what-is dematerialization"> dematerialization. dematerialization is the process of converting physical securities (shares, stocks, mutual fund units, bonds, and debentures) into electronic form.
  Dematerialization offers convenience, security, and flexibility. Having share certificates in physical form was risky. There were risks such as certificate forgeries and loss of valuable share certificates. This could lead to delays in certificate transfer. These problems are eliminated by dematerialization, which allows customers to convert physical certificates into electronic formats.

• Rematerialization of shares

  Rematerialisation is the process of converting electronic securities holdings (shares, stocks and mutual fund units, bonds, and debentures) into physical form. Rematerialization is the process of converting electronic securities (shares, stocks, mutual fund units, bonds, and debentures) into physical forms (certificates).

• These are the steps involved in rematerialization:
  1. The account holder must fill out a Remat Request Form, (RF), and submit it to the Depository Participant.
  2. After verifying the request, DP forwards it to the depository and issues a signed acknowledgment slip to the holder
  3. This request is then confirmed by the depository (NSDL/CDSL) to the Share Transfer Agents of the company.
  4. The Share Transfer Agent then prints the certificates and sends them to the holder.
  5. The DP sends a rematerialization notification to the account holder

Rights of a shareholder who has dematerialized shares

Shareholders of dematerialized shares have the right:

1. Receive rights, shares, bonuses, etc. If declared and approved
2. Get annual reports and any other periodic reports
3. As soon as dividends are approved, you will receive them.
4. Notifications, postal ballot forms, and explanations of general meetings are available.
5. Participate in and vote at general meetings
6. For inspection, demand a copy of the statutory registers or documents during business hours.
7. Poll on any general meeting resolution

Demat shareholders enjoy the same rights as those who hold shares in physical form.