Benefits & Importance Of Dematerialization

Benefits Of Dematerialization

Dematerialisation is the process of converting physical shares into electronic format. It is the primary requirement to open a demat account before transacting in the Indian financial market. The demat account eliminates all the risks that were associated with the holding of shares or securities in the physical form. In this article, you will learn about the importance of demat account or dematerialisation.
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  • 23 Feb 2023
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Benefits Of Dematerialisation

  • Convenience

The introduction of a demat account has eased the process of trading and investing in the Indian stock market as it enables you to carry out the transactions electronically. There is no need for you to be physically present at the broker’s place to settle a transaction. Moreover, the investor can have access to the demat account using a computer or smartphone. In addition, you can convert your physical holdings into electronic format to become the legal owner of your shares.

  • Fund Transfer

By linking your demat account with the bank account you can easily transfer funds electronically. This saves you from the hassles of drawing a cheque or transferring the funds manually.

  • Safety

Dematerialisation account or demat account is the most secure and safest way to carry out transactions by electronic means. All the risks like theft, damage, loss of share certificate, etc. that were associated with holding shares in physical form are completely eliminated.

  • Nomination Facility

Demat account provides you the facility to grant the right to operate your demat account to the nominee in your absence. With this facility you can carry out transactions in your demat account with the help of a nominee when you are not in a situation to do it yourself.

  • Paperless

One of the main benefits of using a demat account is that it excludes the need for paper. Since the demat account is about holding shares or securities in electronic form, the need for the paper is almost zero. In addition, the demat account has also proved to be very useful for the companies in reducing their administrative costs and hassles. Furthermore, cutting down paper usage is also good for the environment.

  • Avail Loan Facility

The demat account helps you in availing loans against the holdings in dematerialized form. The securities and shares held in the demat account can be kept as collateral and loan can be taken against them.

  • Monitoring

With the help of a demat account, you can monitor your portfolio from your home, office or anywhere across the globe. The flexibility to be able to monitor the portfolio performance enhances the chances of you making more profits because of increase in participation and interest.

  • Ease In Receiving Corporate Benefits

Demat account eases the process of receiving various corporate benefits like dividends, interest, refunds, etc. All the benefit amount gets directly credited into the demat account. Moreover, other benefits like stock split, bonus shares, rights shares, etc. get directly updated into the demat account.

  • Eliminates the Problem of Odd Lots

Before the introduction of a demat account, the shares and securities could be traded in a specified quantity only. It was not possible to sell the desired number of shares you want. However, with the introduction of the demat account, the problem of odd lots is completely eliminated. Now can you purchase or sell any desired quantity.

  • Multiple Purposes

In the demat account, you can not only hold shares or equities but also debt instruments. You can even purchase, hold and sell mutual fund units through the demat account. In fact, you can even purchase government bonds, exchange-traded funds, etc. in the demat account.

The above mentioned are a few of the benefits of dematerialisation. If you are keen on planning your finances and opening a demat account, you may consider Kotak Securities. We are the leading and most reputed broking firm in the country. For us, customer satisfaction is a priority. To know more about us, you can drop us an email or walk into our office or just call us.

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