What are the Benefits of Demat Account: Advantages & Why you need it

A paradigm shift is visible in the financial market, making everything easier with the technological development across the segments. Dematerialisation is part of such technological development providing the paperless facility to hold their se

May 15, 2024 - 13:06
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What are the Benefits of Demat Account: Advantages & Why you need it
What are the Benefits of Demat Account: Advantages & Why you need it
What are the Benefits of Demat Account: Advantages & Why you need it

A paradigm shift is visible in the financial market, making everything easier with the technological development across the segments. Dematerialisation is part of such technological development providing the paperless facility to hold their securities in the digital form. Demat account is the invention of such technological change that now become part of every investor in India.

As you know demat account is the part of stock market but need to know what are its benefit and why you need it, so that you make the right use of your demat account. Merely opening a demat account would be not enough to utilize its advantages you need to know various aspects that we are going to discuss today in this article. Before we talk about the advantages of a demat account, let's revise you don't know what is a demat account or the Dematerialisation of such an account.

What is a Demat Account?

In simple words demat account is mainly issued by 2 major depositories of India ( CDSL & NSDL). Its is digital in nature and primarily used to store your shares after purchase. Functioning is same as you common saving account where your money parks. As in the saving account any user can deposit or withdraw their money, same in the case of demat account user can deposit or withdraw their shares.

Why Demat Account is Needed?

Earlier any shares purchased from the market can be hold in physical format but SEBI changed this format and now it is compulsory to open demat account for any client who wants to trade in stock market. In other words shares purchased can be hold only in electronic form not in physical format.

Also Read: Things to Consider Before Buying Stocks for Long Term: 10 points

To be more precise for any clients who want to trade in stock market, 2 basic accounts are necessary-

  1. Trading Account- to purchase or sell in stock market
  2. Demat Account- to store your shares purchased from stock market

Your demat account is linked with your trading account you can access it with the unique login password and user ID. Hence, you need to know more about your demat account and what are its benefits and advantages for end-users.

Top 10 advantages of Demat Account:

  1. Dematerialisation of Securities

As discussed earlier basic advantage is to keep shares in electronic form rather than physical format If you have physical shares either convert them now into dematerialized or you can lose their value or it will become worthless.

Also Read: How to Convert Physical Shares Into Demat: Stepwise Procedure

And when you don’t have a demat account it would be not possible to convert and get the ownership of physical securities. In a demat account, you can hold or keep an unlimited quantity and types of securities issued by registered entities in India.

  1. Single Storage for All Securities

Clients deal in all kind of financial products i.e. they have a portfolio of equity , Debt Instruments, Mutual funds or ETF. Biggest advantage of demat account is all products varisties can be hold in single demat account. There is absolutely no need to maintain separate accounts for different products profiles. Clients can open multiple demat account with different brokers as per their needs here is a check- you cannot apply for more than 1 demat account with your pan card with same broker.

  1. Fast Settlement of Securities

As SEBI is constantly improving the settlement mechanism by launching T+1 settlement, it is quite obvious that through digital format this settlement process can be completed securely and fastly. T+1 settlement means debit or credit of shares in your demat account can be done on the next day of your transaction day.  Moreover SEBI is now planning to shift this mechanism from T+1 to transaction day. Therefore demat account is the only safest way to complete this settlement process

Also Read: Key Points to Consider While Opening a Trading Account Online

  1. Safe from Physical Damage & Theft

Demat account is totally immune form physical damage or theft as it is in electronic form. So no one can misuse any other client demat account for sure and guarantees full privacy and security to users. Hence, having a demat account keeps your securities safe from the risk of physical damage, theft and unauthorised use.

  1. Safe from Fraud & Unauthorised Use

Another advantage of a demat account is, that you have only access to your demat account (except depositaries) with the unique user ID and login details. While signing your account opening form with brokers clients generally give authorisation to access their demat account to broker but they also have no permit to forge use of any demat account. Hence, a demat account is safe from various types of unauthorized activities like fraud, cybercrimes and misuse without your concern

  1. Quick and Easily Accessible

One of the excellent blessings of having a demat account is you may get access on your demat account speedy thru diverse gadgets or go platforms. As your demat account is linked with a buying and selling account, you could access the same at one click thru the online buying and selling platform provided via your dealer. You simply want to log in with a registered user ID and password to get access on line.

Also Read:Trading Account: Types, How to Open and Documents Required

  1. Easy to Transfer the Securities

Apart from getting ownership of your bought securities, you can use your demat account to transfer the securities In earlier days it took many days to transfer the securities due to various documentation formalities that need to be fulfilled.

But now thanks to the demat account it becomes much faster to transfer the share or other securities from one demat account to another name. If you have opened the demat account in the name of minor, you can transfer shares in your name.

Also Read: Benefits of Minor Demat account: Empowering the next Generation of investors

  1. Facility to Avail Loan or Pledge

One of the major benefits of a demat account is you can get a loan against the securities you hold in your demat account. Banks or brokers easily provide loans and advances on demat accounts having securities depending on their market value and other aspects.

Banks and other financial intermediaries easily provide the loan on a demat account as the security you hold in your demat account is pledged to provide collateral security to the lender against the loan given to you. Though they charge interest and various other processing fees on such loans if you don't want to sell or liquidate your securities and you need money you can easily avail loan.

  1. Available at the Nominal Charges

Demat account is offered at very nominal charges and many brokers or depositaries offer freely if you open a trading account with them and trade in the financial market. You might be asked to pay either one-time charges to open your demat account or some brokers might ask for nominal annual maintenance charges to keep your demat account accessible without any issue.

  1. Easy to Open or Close if Not in Use

One of the most important benefits of opening a demat account is you can easily open the demat account with any broker or SEBI registered intermediaries allowed to open such accounts. Apart from visiting the representative offices and filling out the forms physically, you can now open the demat account online with the best features at the lowest brokerage in India.

And if you don't have use of a demat account or you don't want to keep multiple demat accounts you also apply online to close your demat account. However, to open the demat account you need certain documents to verify your identity and address proof. In India as per the government rules, you have to submit a copy of your PAN card and Aadhar Card to open the demat account.

How to Open a Demat Account?

If you are interested in investing in various types of securities like equities or stocks, exchange-traded funds, mutual funds, bonds or government securities then you should open a demat account. For fixed deposits, recurring deposits or SIP you need to contact with the bank.

Also Read: How to Open Demat Account: Benefits and Documents Required

To open a demat account you need to contact a broker or intermediaries and depositary participants authorized to open the demat account and offer the facility to open offline as well as online. And now you have to decide where to open a demat account with a bank also a broker, or with a discount broker or full-fledge broker who is offering more diversified investment services.

Where to Open a Demat Account?

Opening a demat account is the whole and sole decision of, however, you can take advice from people already using demat accounts or get their feedback but ultimately you have to decide where you want to open your demat account.

Also Read: Choosing the right broker: Decoding the mystery of lowest brokerage charges

Choose the right discount broker or broking company offering the maximum features along with your demat account and that is at the nominal or lowest charges. At the same time also make sure various other aspects like whether it can be linked with your trading account or you can transfer the securities from one demat account or to anyone else etc.

Final Words

Having a demat account comes with multiple benefits, you can have all your securities in one place with a quick access facility from anywhere, anytime as per your ease. Without a demat account you cannot trade or invest in the stock market, hence open a demat account right now with the right broker or company and enjoy the benefits of a demat account.

Also Read: Benefits of Investing in the Stock Market: Advantages of Share Market

Moneysukh is one of the best discount brokers in India where you can easily open a demat account online with the best features. You can also open a trading account here that will be linked with your demat account and you will also get the facility to trade or invest unlimited in the equity market, commodity market and forex market at the lowest brokerage.

Also Read: Choosing the right broker: Decoding the mystery of lowest brokerage charges

Here you can buy or sell securities in the cash market or trade in derivatives or F&O segments through the best online trading platform integrated with the most advanced trading software algorithms. You can also get free tips and recommendations to buy stock with research reports and technical analysis to make your trading and investing journey fruitful.

Also Read: Trading or Investing Which is Better and More Profitable

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Moneysukh "Moneysukh" is a well-known and experienced brokerage firm with its corporate office in New Delhi. We have a large network of branches and Authorized Persons in over 300 locations across India with regional offices situated at Mumbai, Chandigarh, Chennai, and Kolkatta. We are Member of NSE, BSE, NCDEX, MCX, and DP with NSDL and CDSL. We provide a diverse range of Trading and Investment Solutions to all types of investors and traders.