Dematerialization first began in 1966 and the concept of demat, which is short for ‘dematerialization of share’ has been silently growing in the country. It functions similarly to a bank, just as accounts can be opened in banks to save money, customers are given a passbook and online access to make transactions and check balance, the same is done in case of dematerialization. In this case, the data is kept in depositories and backed up as well depending on its importance. This service has made the trade and ownership of shares more secure and simple.
To open Demat account, first conduct a thorough research and compare which bank is offering the best Demat account features and benefits. Once the decision is made send in the application along with the necessary documents. Once the documents and application are approved and processed, the Demat account is opened at the cost of a small maintenance fee. The documents that need to be provided include identity proof and address proof. Submitting a copy of the PAN card is best. One also has to submit their photograph at the same time.
To open Demat account, a minimum balance is not essential. Although it is best to make sure that the documents provided are correct to avoid any delay. Here are a few advantages of holding a Demat account-
• Dealing with shares via a Demat account is not only convenient but extremely easy as well.
• Because all the data is securely stored, one does not have to worry about lost investment certificates or for that matter even fake certificates.
• It is quite simple to transfer securities via a Demat account.
• As compared to the cost incurred via physical purchase and sale of securities, costs incurred are much lower when such transactions are made through a Demat account.
• Bonus shares as well as share splits are stored in the account automatically.
• The banks offering the best demat account features, also manage bonds for customers. Thus, one can manage majority of their investments through a single account.
• Through a Demat account single shares can now be transacted as well. Earlier, this was not possible and shares could only be transacted when in lots.
• Thefts, faulty deliveries and the risk related to false shares will be completely eliminated for those who hold a Demat account. It also involves less paperwork and timely delivery.
One can effectively trade through a demat account, but deal with a bank that is reliable and offers the best features in share sale and purchase.