When you need to deposit money, you open a bank account, right? A demat account is to keep the papers and records of your dealing at share markets. The only difference between a bank account and a demat account is that the later one is to save all your shares and securities in electronic format. As no paperwork is related, keeping them safe and secure is now very easy.
According to Depository Act, 1996, having a demat account is compulsory if someone has more than 500 units of securities. Securities include shares, bonds,and debentures. While looking for the best demat account in India, you will find many, but before getting into the field, you need to do some homework. You should have some ideas about the features of demat account.
Features of Demat Account
Dematerialized trading has become immensely popular as storing all your securities in electronic format is much easier than maintaining the paperwork. You may forget where you have kept papers, or papers can be lost. With a demat account, there is no such stress. Knowing more about the features will help you to open a demat account easily-
Easy Transfer of Shares
While the investor intends to transfer share, he has to fill up a Delivery Instruction Slip (DIS) while during buying or selling shares, he needs to fill up another form, Receipt Instruction Slip (RIS). These are kind of checkbooks that you use to draw money from the bank. There isthe detailed instruction of transaction that makes things go smoothly.
Hypothecation of Loans
If you are an investor, you can easily take bank loans against the securities, like shares, bonds, debentures, mutual fund units, etc. These things are regarded as the collateral in the lending business. You can also keep these materials as a mortgage.
Dematerialization and Rematerialization of Securities
If you have a demat account, you can transform any paperwork into an electronic format for your benefit. This process is known as dematerialization. If you want such documents again in hard copy, turning them into papers is really easy and all these can happen if you have a demat account. It is known as rematerialization.
Freeze Your Demat Account
Maybe, you don’t need your demat account for a time being. You can freeze it for some period. Freezing is really beneficial for demat accounts as,during this period, you can avoid any unexpected credits or debits on your account. Besides that, you can store a particular quantity of shares in your demat account during this freezing episode.
You don’t need to submit depository slip to the participants, rather having demat account means an instruction slip will automatically be sent to the depository participant.
Hopefully, you get to know what the features of demat account are. This is really easy and convenient way to keep track of your shares and securities. If you are into trading, use technology to your benefits and go for opening a demat account before investing or trading into the stock market.