Until the late eighties, access to capital markets was low; therefore the amount of funds mobilized through the market was relatively meager. Indian markets were overwhelmed by paper shares which were becoming increasingly difficult to maintain. There were various problems faced due to practice of paper shares such as fake and stolen shares, fake signatures and signature mismatch, duplication or mutilation of shares, and transfer problems. On top of all these risks, the system had cumbersome procedures and excessive paperwork that deterred both retail and institutional investors from entering the capital market. To avoid all such problems, government of India came up with a new system where trading should be through dematerialized form with the help of an account called Demat account.
Demat refers to a dematerialized account. If you want to buy or sell stocks you need to open a Demat account in India. It is just as opening an account with a bank. To open your Demat account you have to approach the DPs (Depository Participant). Demat account will help you to buy and sell shares without endless paperwork and delay.
Let's say your portfolio of shares looks like this: 50 of BHEL, 40 of Repower, 60 of Tata Motors and 100 of Sesa Goa. All these will show in your Demat account. So you don't have to possess any physical share-certificates showing that you own these shares. They are all held electronically in your account.
So, what are you thinking, open a Demat account and help yourself. For more details Just Give a Missed Call to IndianMoney.com on 02261816111and take our expert advice!
As you buy and sell the shares, they will be automatically adjusted in your account. The DP will provide you with periodic statements of holdings and transactions. The charges for account opening, annual account maintenance fees and transaction charges vary between DPs (Depository participants).
Practically all the trades have to be settled in dematerialized form. So a Demat account is a must for trading and investing. Look for a DP to have an account with.
Benefits
ü Immediate transfer of securities
ü A safe and convenient way to hold securities
ü No stamp duty on transfer of securities
ü Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.
ü Reduction in paperwork involved in transfer of securities
ü Reduction in transaction cost
ü No odd lot problem, even one share can be sold;
ü Nomination facility
ü Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately
Want to know these advantages in detail, Just Give a Missed Call to IndianMoney.com on 02261816111 and ask our market wizards!
ü Transmission of securities is done by DP eliminating correspondence with companies
ü Automatic credit into Demat account of shares, arising out of bonus/split/consolidation/merger etc.
Holding investments in equity and debt instruments in a single account.You Might Also Like to Read |
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