Coming across someone who holds a share certificate and announces it with pride is no uncommon occurrence in India. It is not uncommon to hear someone go to the registered office of a company to buy shares or debentures or basically any form of security. Over the years, Demat accounts have replaced physical forms in India.
What are Demat accounts?
For the uninitiated, Demat accounts are those kinds of accounts that are used to hold shares and securities in an electronic format. That is what Demat stands for Dematerialised account or Demat for short. The purpose of a Demat account is to hold all the shares and securities bought by a person or basically dematerialized (converting physical shares to electronic). This makes share trading easier for users during online trading.
Reasons why Indians prefer (love) Demat accounts?
There are certain benefits that come with having a demat account and considering Indian economy, these benefits come in handy, and hence the preference. Here’s a look at those benefits.
- Ease in transactions
Demat accounts offer the ease to keep multiple securities under a single account. It also accordingly manages your entire portfolio and therefore becomes convenient for a trader to have an overview of all investments.
- Convenient processing of transactions
As opposed to the earlier physical transactions, transacting online is a much more hassle-free procedure. You would therefore feel no need to visit the company and invest not just your money but also time for following procedures. With demat accounts, you can buy a share today and it will reflect in your demat account in less than 2 days.
- No limitations on the number of securities
The whole purpose of investing in stocks or shares is to diversify your money. Earlier, if you have below a specified lot of transactions, you would need to pay premiums for the same but now, you have the ease of transacting in as low as just one share or security. Courtesy, demat account.
- You save on stamp duty
Earlier you would have to pay on stamp duty on agreements entered between you and your depository participant. With demat accounts, it is not the case anymore. you can save costs on the registrations and dealings as the whole process is now digitised.
- Faster communications
Demat accounts remove the need to communicate with the companies and fall into the inescapable trap of paperwork and formalities. You get to directly communicate with the depository participant and you would even get help to get through the process quickly.
- No manual work involved
Demat make it easier for you to get through the entire process. No paperwork, no excess time-consuming procedures. Everything is digitized, quicker, and much safer even. Just with a few clicks, you get to set up your shares or securities.
Wrapping this up
Ease and convenience is something everyone looks out for. Indians are known to be frugal with their money and if investments get as easier with Demat accounts, there is nothing better than that.