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Business News/ Markets / Stock Markets/  Demat account offers more than just facilitating buying, selling of shares. Here are 5 main benefits
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Demat account offers more than just facilitating buying, selling of shares. Here are 5 main benefits

Rising awareness and regulatory efforts are driving Indians towards stock investing over bank deposits. Retail participation is increasing, leading firms to raise funds through the stock market. Demat accounts provide benefits like access to IPOs and loans against securities.

Demat accounts offer features for easy tracking and management of investment portfolios. Investors can monitor their holdings, view transaction history, and receive updates on corporate actions conveniently. (iStock)Premium
Demat accounts offer features for easy tracking and management of investment portfolios. Investors can monitor their holdings, view transaction history, and receive updates on corporate actions conveniently. (iStock)

In recent years, there has been a noticeable shift in the investment landscape among Indians. Moving away from traditional bank deposits, many are now venturing into stock investing, as reflected in the increasing retail shareholding in Indian stocks. 

Maximize your investment returns Open Demat Account

This uptick in stock investments is attributed to the rise in awareness about stocks, facilitated by regulatory efforts and a willingness to take on some level of risk, which are encouraging young Indians to explore stock market investments.

Also Read: Digitization of securities and transparency

Unlock your financial freedom Open Demat Account

The surge in retail participation is emerging as a significant driver for the Indian stock market, prompting many firms to actively raise funds through the stock market route.

In order to dip your toes into the world of stock investing, having a demat account is a must. This account offers more perks than just facilitating the buying, selling, and holding of shares.

Start your investing journey today Open Demat Account

Let's explore the additional advantages that come with having a demat account.

Main benefits 

Access to IPOs and Corporate Actions: If you have a demat account, you can participate in Initial Public Offerings (IPOs) and receive dividends, bonus shares, and other corporate actions directly into your accounts.

Streamlined Transfer Process: Any number of securities can be transferred / delivered with one delivery instruction. Therefore, paperwork and signing of multiple transfer forms is done away with.

Also Read: What is a demat account and how does it work? MintGenie explains

Nomination Facility: Investors can nominate beneficiaries for their demat accounts, ensuring smooth transmission of assets in case of unforeseen events.

Portfolio Management: Demat accounts offer features for easy tracking and management of investment portfolios. Investors can monitor their holdings, view transaction history, and receive updates on corporate actions conveniently.

Electronic Storage: Demat accounts provide a secure and convenient way to hold securities in electronic form, eliminating the need for physical share certificates. 

Offering agencies

In India, Demat account services are primarily provided by two depository bodies known as NSDL and CDSL. These services are further facilitated by numerous “depository participants," such as banks, which act as intermediaries.

Also Read: How to start investing in the stock market — A step by step guide

FAQs

What is the pay-in and pay-out in a demat account?

Pay-in refers to the process of depositing securities or funds into your demat account. One can add funds with a minimum of 100, and the maximum may vary depending on the broker. Pay-out involves withdrawing securities or funds from the demat account to the registered bank account. 

Is a demat account required to participate in IPOs?

Yes, having a demat account is typically required to participate in Initial Public Offerings (IPOs), as shares allotted during an IPO are credited directly to the investor's demat account. 

What are the charges for maintaining a demat account?

Charges for maintaining a demat account vary depending on the broker. Typically, they include an annual maintenance fee, transaction charges, and other applicable taxes or fees.

Will broker sell shares if the account isn't opened regularly?

No, the broker will not sell shares if one doesn't regularly open the demat account. However, it's essential to stay informed about any communication from the broker or depository participant regarding account maintenance to avoid any potential issues.

Can securities in demat mode be pledged?

Yes. Securities held in demat mode can be pledged. Moreover, procedure for pledging securities in demat form is very convenient, both, for the pledgor and the pledgee.

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Published: 04 Mar 2024, 06:26 PM IST
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