Demat Account
DEMAT Account
DEMAT Account Meaning:
In India’s banking terminology, the term DEMAT Account refers to a deposit made at an Indian financial institution that can be used for investing in shares of stocks and other financial assets. Securities are held electronically in a DEMAT Account, thereby eliminating the need for physical paper certificates.
Definition
Demat account is a safe and convenient means of holding securities just like a bank account is for funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus, it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.
DEMAT Account Example:
For example, a DEMAT Account became available after India adopted the DEMAT system for the electronic storing of stock shares and other securities in 1996. DEMAT is short for “Dematerialized” and such accounts require that an investor open an account with an investment broker linked to a savings or other funded account. Access to a DEMAT Account requires both an Internet and transaction password, and such accounts allow for the transfer of securities without any physical certificates changing hands. This feature helps prevent problems such as: loss, forgery or theft of the certificates and makes the process of buying and selling securities much more efficient.
Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting inincreased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments.It also helps you avoid bad deliveries caused by signature mismatch, postal delaysand loss of certificates in transit. Further, it eliminates risks associated withforgery, counterfeiting and loss due to fire, theft or mutilation. Demat accountholders can also avoid stamp duty (as against 0.5 per cent payable on physicalshares), avoid filling up of transfer
DEMAT Account Meaning:
In India’s banking terminology, the term DEMAT Account refers to a deposit made at an Indian financial institution that can be used for investing in shares of stocks and other financial assets. Securities are held electronically in a DEMAT Account, thereby eliminating the need for physical paper certificates.
Definition
Demat account is a safe and convenient means of holding securities just like a bank account is for funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus, it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.
DEMAT Account Example:
For example, a DEMAT Account became available after India adopted the DEMAT system for the electronic storing of stock shares and other securities in 1996. DEMAT is short for “Dematerialized” and such accounts require that an investor open an account with an investment broker linked to a savings or other funded account. Access to a DEMAT Account requires both an Internet and transaction password, and such accounts allow for the transfer of securities without any physical certificates changing hands. This feature helps prevent problems such as: loss, forgery or theft of the certificates and makes the process of buying and selling securities much more efficient.
Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting inincreased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments.It also helps you avoid bad deliveries caused by signature mismatch, postal delaysand loss of certificates in transit. Further, it eliminates risks associated withforgery, counterfeiting and loss due to fire, theft or mutilation. Demat accountholders can also avoid stamp duty (as against 0.5 per cent payable on physicalshares), avoid filling up of transfer