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Why Demat Account is Required in Indian Stock Market

 

Why Demat Account is Required in Indian Stock Market

What is a Demat Account?
Demat account holds the shares in an electronic form. Dematerialised account is commonly known as demat account. To execute any transaction in stock exchange, investor must have a demat account. One can open a demat account with the help of an Indian Stock broker. Demat account makes your trading, investing etc. smoother and faster as well. As per government guidelines, it is mandatory to have a Demat account along with a trading account.

Previously, there was a physical certificate for shareholding and now those physical certificates have been transformed into dematerialised (Demat) electronic form. Demat account needs no physical certifications. But if required, one can always convert their electronic holdings into physical certificates on request.

Why Demat Form is Better than Physical Certification Form?
Some of the many reasons that why demat form is better than physical certification form is listed below:
• Managing shareholdings in physical certification form is quite difficult.
• In case of physical certification form, it used to take approximately 30 days for money to appear in account as there was a long procedure between transaction and money transfer.
• As number of investors and companies are increasing day by day it was difficult to hold shares physical forms and it was obviously more hectic.
• Not to be forgotten, as everything is going online and with technology advancement it becomes mandatory to update stock exchange facilities for everyone`s convenience.

Advantages of having a Demat Account:
• Safety of shares as it eliminates the risk of fake shares, damage, losses and thefts of share certificates.
• No restriction on buying and selling limits of shares. One can buy or sell as much as shares as they want.
• Instant share transfer.
• Easy access to your shareholdings across the world.
• One can hold multiple shares via single demat account such as equity, commodity, currency, debts, mutual funds etc.
• Benefits of dividends, refunds and interest as these benefits gets credited to your demat account by the company.


Also read: Best Demat and Trading Account by Indian Stock Brokers in 2022

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