Demat Account – Wise decision for the wise

Demat Account – Wise decision for the wise

Not every human is into savings. But the wise do save for the future. Previously, people in our nation considered Gold and Real Estate as the only means of Investment. But in due time, a lot of new players entered the game. Though it was tough initially, gradually they picked up surpassing the previous competitors and gained a place in people’s hearts. Yes, you’ve guessed right- it’s the Stock Market- the one who was kept away, has become the mammoth in today’s Investment culture.

Previously to open an account was a bit difficult, plus ignorance and lack of knowledge were hindering factors to enter Stock Markets. But today, everything is at the fingertip and one could easily enter with the help of the right Financial Planner.

Earlier, people used to own Physical Shares which had its own disadvantages like:-
• Storage was difficult
• Losing shares due to theft and other disasters like flood, fire, earthquake etc.
• Transferring used to be slow and less efficient, as everything had its time to get done.
• Stamp duty and transaction costs
• It was just meant for Equity shares and not for Mutual Funds- was time-consuming to check

Since the above procedures weren’t feasible for a longer run, a new and efficient method was implemented.

What’s Demat?
Dematerialization (Demat) is the process of converting physical shares and securities into electronic format. One can dematerialize his physical securities like share certificates, bonds, mutual fund units and other, with a Demat account. Once opened, he can have electronic shares.

A Demat account has to be opened with a depository participant (DP) who holds and maintains an Investor’s shares and securities in electronic format. In simple terms, let’s assume DP is equal to Bank (Both function in totally different scenarios). The banks deal with Funds of the individual. Similarly, depositaries deal with the investor’s securities. NSDL and CDSL are the two depositories registered with SEBI

Advantages of Demat Account:
• Easy to Hold
• Immediate updates
• Lower costs
• Lower delivery risk
• Safety and security guarantee

The Dematerialisation Process
• Open the DP Account-find the right Depository Participant offering the service. It could be a bank, Intermediary or a Stock Broker like Hedge Equities.
• Fill up the Account Opening Form-submit document copies of Aadhar, PAN, Address proof, KYC form, canceled cheque, and bank statements.
• Fill up DP request form-deposit along with share certificates with ‘Surrendered for Dematerialisation’ written on them.

Remaining will be taken care of by the DP Participant-
• Processing the Request- Converting Physical securities into electronic format by sending certificates to authorized personnel (company, bank, and transfer agents).
• Once approved, physical shares will be destroyed and DP participant will be notified.
• After completion of the above step, the account will be credited with the electronic holdings you possess (15-30 days normally required).

Dematerialization is only possible if one has a demat account. Follow the link to know more on a demat account and how to open one (link to our DP Page to be provided). Enjoy trading in a better and simple manner for a stress-free journey towards Financial Freedom.