What Is DEMAT Account And How It Is Useful? 10 Advantage Of Having It

DEMAT Nowadays we keep hearing about it in Newspaper, TV and social platform. Today we will discuss about DEMAT, how it works, what are its benefits.

What is DEMAT?

DEMAT stands for Dematerialize i.e DEMAT account is also like a normal bank account i.e. bank account is used to transfer money and keep money safe, in the same way DEMAT  is used for transferring of shares and holding the shares safely. In DEMAT  we can hold our investment like share, bond, government securities, mutual funds etc.

Uses/Benefits Of DEMAT Account?

Before DEMAT account, shares are traded physically. this process is very time consuming and needs lots of paperwork  so NSDL(National Securities Depository Limited) launched DEMAT concept which deals all transaction in electronic form and also simplify the all process of share market by eliminate the paperwork and time consumption. there are so many  benefits of DEMAT which are below

1. We can hold  shares of different companies
2. Speedily settlement and delivery of securities
3. Less time consuming
4. Transparency increased comparison of physical delivery of stocks 
5. Loan facility
6. Secure transaction
7. Nil stamp duty on Holding transfer
8. Quick support to investor
9. Easy communication 
10. Less risk of fraud because of Demat regulator(SEBI).

DEMAT DEPOSITORY

Demat depository is place where are our share, bonds and financial securities are kept in electronic form. Depositary is responsible for secure transaction between DP’s and investor. Depositary hold all records about share holding of investor,  transaction detail, holding time etc. their are two depository work in India known as  National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CDSL).

Working of depository

Depositary works through depository participants also known as broker,  which acts intermediator between investor and Depositary. Depositary participants are registered with Depository and SEBI and regulated by SEBI.

Whenever a person want to start trading or investing in stocks, bond and other financial securities he have to open a demat account. In the process of opening a demat account first of all  you have to Select a depository participants or broker. Before selecting a Depositary participants you must see some important thing in DP.

TIPS FOR SELECTION A SUITABLE DP

• Compare AMC(Annual maintenance charges)
• Compare Account opening charge
• Check web and App interface

Types Of DEMAT

In India, there are three types of Demat.

1.Regular Demat :

These type of demat accounts for Indian residents. If you’re a Indian resident and want to trading and investment then you have to open a regular Demat account.

2.Repatriable Demat:

This is one of the two types of Demat accounts which is used by  NRIs. A repatriable account allows you to transfer your funds abroad . You need to link this account with a your bank account to repatriate your funds.

3.Non-repatriable Demat:

This is the second type of DEMAT used by NRI’s. This type of account does not allow you to transfer funds abroad. It needs to be linked to a Non-resident Ordinary (NRO) bank account.