Discuss various features of demat account

Discuss various features of demat account

Investing in capital stock in physical form involves a lengthy procedure, a large amount of paperwork and the risk of obtaining false actions. To keep the complete experience secure and optimised, a demat account is needed. While trading online, the demat account is utilised to hold shares and securities in dematerialised/ electronic format. In dematerialisation, their share certificates are translated from physical form to electronic form to enhance their accessibility.

For this, a person needs a Demat account number to reconcile transactions electronically. Having a Demat account allows people to buy shares and store them securely. It is like a bank account in which people have deposits in the bank, and the debit/credit balance record is secure in a bank book. Similarly, when anyone buys or sell shares, it will be credited or debited to their Demat account, respectively. It can be used to maintain a mixture of investments such as equity, exchange-traded funds, mutual funds, bonds and government securities. A person can open a Demat account without owning shares, and he can keep a zero balance in their account.

Facilities offered by the demat account

  • Transfer of shares

A Best Demat Account is utilised to transfer participations from an investor. It can be completed using a Delivery Instruction Sheet (DIS) to perform operations with actions. A person can provide all the related details in this form for the smooth execution of a transaction.

  • Loan facility

The securities held in a particular person’s Demat account. It can give access to a person to a variety of bank loans. Anyone can pledge these securities as collateral to obtain a loan from their bank.

  • Dematerialisation and rematerialisation.

If a person has a Demat account, converting the values in various ways becomes a simple task. Anyone can give the necessary instructions to their depository participant (DP) for dematerialisation, that is, for the certificates of physical actions to change into electronic format. On the other hand, a person can get the electronic values converted back to the physical form according to their requirements.

  • Multiple access options

Due to the electronic process, a Demat account can be accessed using numerous means. Anyone can perform investment, trade, monitoring and other security-related operation using the Internet installation on a computer, smartphone or other handheld devices.

  • Corporate Actions

Having a Demat account can help anyone to take advantage of the benefits associated with stock ownership. Every time a company provides dividends, interest or refunds to its investors, all Demat account holders get the right to use to these benefits automatically. Besides, corporate actions narrate to capital stock such as the division of shares, correct shares or bond issuance is updated in the Demat Accounts of the shareholders

  • Freezing of demat accounts.

Demat account holders have the choice to freeze their accounts for a particular duration, according to the requirement. It is done to keep away from any unforeseen debit/credit on the Demat account. To take advantage of the freeze option, the account holder must have an exact amount of securities in their account.

An investor who needs to trade online required to open a Demat with a Depositary Participant (DP). The reason for dematerialisation is to reduce the need for the investor to have physical certificates of shares and facilitate seamless monitoring and monitoring of holdings.