Demat Account Benefits: 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.
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.
Also Read: Digitization of securities and transparency
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.
Let's explore the additional advantages that come with having a demat account.
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.
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.
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.
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.
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.
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.
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.
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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