History of Demat Account
Earlier in 1996, shares and securities were issued and traded in physical form. These holdings were
tedious to handle, expensive to bear, not easy to transfer, and highly prone to thefts and damages.
To address these issues, SEBI came up with the depository Act, in which the investors had the option
to hold shares either in physical or electronic form. This Act made procedure of investing, holding,
monitoring, and trading much faster and cost effective.
Having a Demat account is nothing but holding shares, bonds & mutual funds in electronic mode.A Demat account is opened by the investor while registering with an investment broker (or sub-broker).
Features of Demat Account
1. Easily Transferrable: Now investors can easily transfer their shares and securities through a
single DIS slip or a CMR copy.
2. Pledging: Investors can now easily pledge their holdings against loan and make use of them
further for trading.
3. Corporate Actions: If the company offers dividends, interest to their investor, or refunds;
these benefits will automatically reflect in the investor’s Demat Account. Additionally,
corporate actions such as bonus issue, stock split, or right share will get updated
automatically in the holder’s Demat Account.
Advantages of a Demat Account:
1. Investors can easily own shares
2. Less transaction cost
3. No paper work for trading purpose
4. Safer than physical shares
5. Can sell as low as one share
6. Investors can make a nominee now
7. Single platform to trade
8. No Stamp duty on Transfer of securities
9. Automatic credit in Demat account
The depository system has helped in reduced expenditure of new issue due to lesser printing and
distribution cost. It has improved the efficiency of the registrars and transfer agents. Demat account
has proved to be simple, less tedious and extremely lucrative.
Team broking advisor