The demat account were introduced in the year 1996 and prior to that shares were traded in physical form. A main feature of the best demat account in India was you can hold the shares in an electronic form. In fact there are some benefits of a demat account
In case of physical securities risk arise due to loss by theft, damages. Further bad deliveries could pose a risk. By opening up a demat account all these risks are cut down as an option is provided where you can hold all the securities in an electronic form.
To maintain physical securities is a tedious job. Coupled with the fact when you need to keep a track of their performance this seems to be another difficult task. Through a demat account you can go on to handle and maintain all accounts in an electronic form.
Reduced costs and reduction in time
Once you maintain physical securities it would meaning additional cost in the form of stamp duty, handling charge along with other expenses. The moment you have a demat account all these expenses are trimmed.
Since there is elimination of paperwork, the time that is needed to execute a transaction is reduced. By this reduction of time an account holder is able to undertake more purchases and sale of security holdings and that too in a short span of time with superior levels of accuracy.
For sure demat accounts are a must in the domain of financial planning. They are simple and free from hassles
With physical securities buying or selling of securities was possible only in specified quantities. Even the convenience of dealing with odd lots or a single security was not even available. By demat account these issues are taken care off.
The reasons on why a demat account is a must
To convert physical securities into electronic form is optional as the investor can hold them in physical or electronic form. At the same time montitoring of physical securities is a lot difficult once you compare it with the dematerialized ones.
Even it is difficult to sell shares in physical form. The name of people who are dealing with physical shares is a lot less once you compare it with the electronic counterparts.
The main feature of a demat account is easy transfer of shares, as through a DIP it can be done. On this slip all the details necessary for proper execution of the transaction is provided. There are some lenders who go on to provide loans by the number of securities that are held in a demat account. By these securities you can use it as a form of collateral .
Even an option exists where you can freeze the account for a certain point of time. This is an option if you can exercise if you expect any form of debit or credit on to your account. You can avail this option for a specific quantity.