By now you must be well-versed with what a demat account is and how it has completely revolutionised and transformed how shares and securities are bought and sold in India. Ever since 1996, when a demat account was launched, it has become the indispensable corner stone of all investing and trading in India.
Before 1996, possessing shares as physical certificates could be quite problematic. Some of the risks or hazards included loss of certificates, damage to the certificates, or them being misplaced. Physical certificates were also vulnerable to theft and forgery. Dematerialization of shares has effectively eliminated all these risks and threats to ensure a safer trading and investing experience.
Having a demat account enables one to hold shares easily without any hassles. Investors can now easily trade in securities, view their transaction history, analyse their holdings and do even more, in the click of a button. It is also easy now to modify or change the linked address, linked phone number, linked bank details, and any such account-related changes for every company stock from the comfort of one single demat account.
In case of physical certificates, they have to be sent to the issuing company or the Registrar and Transfer Authority to get the ownership of shares transferred. This entailed a very costly procedure with delays and loss of certificates. With a demat account, you can transfer shares at the click of a button. Demat account has made share trading a seamless, streamlined, and cost-effective process.
If an investor wished to transfer physical share certificates, they had to pay stamp duty, making it a very cumbersome and costly procedure. Dematerialization of shares has ensured a smooth transfer of shares online, thus eliminating stamp duty and reduced other applicable transaction costs.
Trading shares through a demat account considerably reduces the time taken for buying and selling of stocks. Introduction of demat account and dematerialization of shares have introduced intra-day trading on online trading platforms. Investors can also change their registered personal details in all the stocks through the single point of a demat account. This has reduced the time taken to trade in securities and manage the portfolio.
Before the advent of demat accounts, there were various restrictions on the selling of shares. Traders could not sell their shares in odd-lots, which caused a lot of problems. However, trading through a demat account has eliminated all these restrictions. Shareholders can now sell their shares in any number with the click of a button from the comfort of their online accounts.
The investment options have diversified over the years and include options like mutual funds, government bonds, government securities, Exchange Traded Funds, etc. A demat account allows you to store all the different types of investments in their electronic format.
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