Do you know what is a demat account? A demat account is essential for holding the shares and securities in dematerialized form. It is considered a vital account that incorporates all the essential benefits for trading on the stock exchange. A depository maintains a Demat account, and the investor can perform different functions only with the permission of such a depository. Demat account has become more critical after the securitization of shares.
Functions
All the essential functions related to holding, transferring, binding and selling security are carried through the platform of the Demat account only. This Demat account has been able to assist The functioning of the stock exchange smoothly without any Hustle. The list of the different types of advantages which can be obtained has been given in the following way
Easy transfer of shares
Until and unless the shares were not dematerialized, the company’s Law provided an elaborate procedure for transferring the physical shares from one shareholder to another. But after the dematerialization of the securities and the advent of the demat account, transfer of the shares has become very easy. The investor is only required to showcase his intention of buying or selling some securities.
The depository tries to find a corresponding buyer and seller for accomplishing the transaction initiated by the investor. After the settlement cycle of two days, the amount gets debited from the buyer’s account, and the shows get credit to the buyer’s Demat account. It provides a straightforward procedure to transfer the shares without indulging in any long term factors.
Easy to hold
The cost of maintenance of a Demat account is nominal. It is regulated by the Sebi, the security and exchange board of India. The main intention behind developing a demat account is to promote financial literacy in the country.
The intention behind providing a low maintenance cost is to encourage people to start forming a demat account with any investment banker. The Demat account maintenance is very convenient, and it does not charge frequent charges for maintenance. This facility has promoted the development of so many Demat accounts in recent years.
Easy to close
It is not only easy to open a demat account, but it is equally easy to close and decrease the Demat account also. A demat account can be opened and closed at any time. It does not require a very elaborate procedure in the first place. This provides a hassle-free materialization and dematerialization of the shares.
It is straightforward to maintain this account because it does require any formalities to be complied with. India’s Securities and Exchange Board has made this procedure extremely easy to promote people to start investing in this type of account.
Conclusion
It can be concluded that these particular types of benefits are enough to promote the opening of Demat accounts for every investor. investing in the stock market of a country usually leaves a more significant impact on the entire country. This helps in growing the gross domestic product of the nation. It has been correctly said that the Demat account is a first step towards the achievement of greater financial inclusion in the stock market. Brokers like 5 Paisa can be your best companion for helping you trade.
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