In a traditional approach, investors have to rely on physical certificates or documents showcasing their investment portfolio. The emergence of Demat account has changed market dynamics in a big way. It is a convenient and safe method of holding securities, in the same way you rely on bank for holding funds. If you possess physical certificates of bonds or shares, risk of theft or damage is high. In addition delay in transfer of physical securities; chances of bad delivery and holding of fake papers are present. A Demat account can save you from all type of troubles. The safety of long term investments is assured on electronic holding of securities.
This pretty much answers the question what is demat account? With this account you can keep a track of your securities or investments and no need to handle physical securities in any form. The account holders gain access to quicker receipts of bonuses or stock splits. It is a central system where you can access and maintain your investment accounts. All securities like gold, IPO, bonds or stocks are provided at a single place.
At the same time you are going to undertake your purchases and various transactions easily. With electronic transfers you can manage accounts without any trouble. The operational efficiency of a demat account is on similar lines of a bank account. The hassle of buying or selling of shares can be managed in a single account.
Some of the major benefits of a Demat account are as follows
- Flexibility of parking all investments at a single place
- Credit of redemption receipts automatically in your account
- Direct credit of dividends along with interests in the designated bank accounts
- Online trading of shares or transfer of shares options
- As dematerialized trading of securities takes place there is no chance of mismatch of signatures
- Broker charges are reduced
- Automatic recurrence in terms of bonus, rights, merger or split
- Paper work is substantially on the lesser side.
- Investors will not face any issues with forgery or delivery problems
- You legal heir are nominated with a single nomination in your bank account
There is no in depth knowledge needed for this. Just you need to be aware on how to manage your electronic account, and things will fall into place automatically. You are saved from the trouble of redemption requests, transfer form along with any other type of paper work.
To conclude, emergence of bank account has brought considerable change in market dynamics. Just like holding of funds this account offers security in terms of holding your shares. For trading in stock market the opening of this account is a pre requisite.
For an NRI who is looking to invest in shares in India a Demat account is a must. There is no need to come over to India and open a Demat account. Just get in touch with a broker who offers NRI Demat account services. Not only brokers come over to India and open a Demat account. Just get in touch with a broker who offers NRI Demat account services. Not only brokers a host of Indian banks are offering the services in recent times.