What are the Benefits of Demat Account: Advantages

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A paradigm shift is visible in the financial market, making everything easier with the technological development across the segments. Dematerialisation is part of such technological development providing the paperless facility to hold their securities in the digital form. Demat account is the invention of such technological change that now become part of every investor in India.



As you know demat account is the part of stock market but need to know what are its benefit and why you need it, so that you make the right use of your demat account. Merely opening a demat account would be not enough to utilize its advantages you need to know various aspects that we are going to discuss today in this article. Before we talk about the advantages of a demat account, let's revise you don't know what is a demat account or the Dematerialisation of such an account.

What is a Demat Account?

In simple words demat account is mainly issued by 2 major depositories of India ( CDSL & NSDL). Its is digital in nature and primarily used to store your shares after purchase. Functioning is same as you common saving account where your money parks. As in the saving account any user can deposit or withdraw their money, same in the case of demat account user can deposit or withdraw their shares.

Top advantages of Demat Account:

  1. Dematerialisation of Securities

As discussed earlier basic advantage is to keep shares in electronic form rather than physical format If you have physical shares either convert them now into dematerialized or you can lose their value or it will become worthless.

And when you don’t have a demat account it would be not possible to convert and get the ownership of physical securities. In a demat account, you can hold or keep an unlimited quantity and types of securities issued by registered entities in India.

  1. Single Storage for All Securities

Clients deal in all kind of financial products i.e. they have a portfolio of equity , Debt Instruments, Mutual funds or ETF. Biggest advantage of demat account is all products varisties can be hold in single demat account. There is absolutely no need to maintain separate accounts for different products profiles. Clients can open multiple demat account with different brokers as per their needs here is a check- you cannot apply for more than 1 demat account with your pan card with same broker.

  1. Fast Settlement of Securities

As SEBI is constantly improving the settlement mechanism by launching T+1 settlement, it is quite obvious that through digital format this settlement process can be completed securely and fastly. T+1 settlement means debit or credit of shares in your demat account can be done on the next day of your transaction day.  Moreover SEBI is now planning to shift this mechanism from T+1 to transaction day. Therefore demat account is the only safest way to complete this settlement process

  1. Safe from Physical Damage & Theft

Demat account is totally immune form physical damage or theft as it is in electronic form. So no one can misuse any other client demat account for sure and guarantees full privacy and security to users. Hence, having a demat account keeps your securities safe from the risk of physical damage, theft and unauthorised use.

  1. Safe from Fraud & Unauthorised Use

Another advantage of a demat account is, that you have only access to your demat account (except depositaries) with the unique user ID and login details. While signing your account opening form with brokers clients generally give authorisation to access their demat account to broker but they also have no permit to forge use of any demat account. Hence, a demat account is safe from various types of unauthorized activities like fraud, cybercrimes and misuse without your concern

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