demat account

An overview about demat account


With the aid of a demat account investing in stocks has become an easy task. The process of trading in stocks becomes a speedy and a fast process. By investing in shares via physical module is a pain streaking process as you need to maintain the security of the stock. To ensure proper upkeep of the securities the need for a free demat account in India has emerged. Under this scheme the shares are converted from physical to electronic form meaning that they are readily accessible.

You need to have a demat account in order to trade shares electronically. In having such an account you can buy shares and store them electronically. Pretty much on the lines of a bank account where you keep your fixed deposits and the balances are shown in the passbook. The moment you are planning to buy or sell shares it would be automatically debited or credited from your demat account. It is also possible to hold a variety of financial instruments in the form of bonds, commodities etc. Even it is possible to open such an account with holding any shares as it can even be a zero balance account.

The facilities that are provided by a demat account?

Share transfer

With the aid of a demit account you can go on to transfer shares of an investor. You can undertake this process with the help of a DIS so as to enable you to conduct share trading. For smooth conduct of the transaction all the details can be provided in the form of a slip

Loan facility

The securities that are being held in the demat account would provide you access to loans from the bank. Even the securities can be pledged in the bank in the form of collateral to obtain loans from the bank.

Rematerlization along with dematerialization

Once you have a demat account the conversion of shares from physical to electronic form becomes a necessity. Just you need to give instructions to your DP in order to execute the transactions on your behalf. By doing so they convert the physical shares into electronic form. Even a converse approach is possible where it is possible to convert electronic shares into physical form.

Freezing your demat accounts

The demat account holders have an option of freezing their accounts for a specified period of time. This can be as per their needs. This is undertaken in order to prevent any unnecessary debit or credit on to your account. In order to exercise this option you need to have a certain number of securities in your account.

Once you own such an account you can cash in on the gain with corporate securities.

The documents you need to open a demat account?

The demat account could be perceived to be in the form of a bank account where you end up holding securities instead of money. The opening of account along with other procedures are virtually the same when it comes across all organizations.

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