The Indian stock markets saw a major change in 1996 with the introduction of Demat accounts. By switching to an electronic trading system, the problems caused by physical shares—such as theft, loss, fraud, and stamp duty costs were removed.
Here, we will explain the benefits of a Demat account:
Reduced risk of loss of documents:
Physical bonds and shares have a significant risk of document loss. Now, that you have a permanent digital record of your shares, storing shares online is a much better and safer solution.
Easy Share Transfers:
While transferring your financial securities, no stamp duty is necessary. Shares are transferred quickly, saving investors a significant amount of money and time.
Loan Facility:
Apart from using a Demat account as a security deposit for your funds, you can use the securities kept in Demat account to obtain different bank loans.
Cost-Effective:
Cost savings are one of the obvious advantages of online transactions. Similarly, opening a Demat account online can relieve you from costs like stamp duty and other handling fees required for physical bonds.
Internationalization India:
Demat Accounts play a significant role in providing easy access to the Indian stock market for overseas investors. The overall Indian economy has also benefited from the rise in foreign cash on the securities exchange.
Elimination of Odd-lot Issues:
The fact that a Demat account has eliminated the odd-lot problem is its greatest benefit. Before the introduction of Demat accounts, physical shares were only sold in lots, but now you can even purchase and sell only one share.
One-stop storage for all assets:
A Demat account contains all your financial assets, including shares, as well as debentures, bonds, exchange-traded funds, and more. The feature that all the assets are accessible under one roof, making maintenance and tracking simple, is a significant benefit of a Demat account.
Freezing Demat Account:
User has the option to freeze their Demat account and can also freeze all or a portion of the securities of the account for a specific time.
Avoiding forgery:
The risk of fraud is significant while dealing with physical shares or bonds. However, managing a paperless Demat account gives you complete access to all relevant information and authentic data, preventing forgery or impersonation.
Easy dematerialization/rematerialization of securities:
Any security can be easily converted from its physical form to an electronic one (dematerialization). They can revert to their physical form if necessary (rematerialization).
About SMC Global:
Established in 1994, SMC Global Securities Limited is one of India’s trusted and award-winning financial services companies. It is present across 450+ cities in India through a strong network of 2680 sub-brokers and 94 branches. It also has an experienced and well-qualified team of around 4000 employees to serve the financial and investment needs of about 2.0 million customers.
SMC offers the best Demat accounts to ensure that clients have a pleasant trading experience. SMC is a well-diversified financial services company in India offering services across brokerage (across the asset classes of equities, commodities, and currency), investment banking, wealth management, depository services, insurance broking, clearing services, mortgage advisory, and real estate advisory services to corporate, institutional, high net worth individuals and other retail clients.