Demat is a form of holding or keeping securities in an electronic form. This is a legal alternative to holding the securities in paper form.
Benefits of having a Demat account
The benefits of having a Demat account are:
- Immediate transfer of securities.
- No stamp duty on transfer of securities.
- Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.
- Reduction in paperwork involved in the transfer of securities.
- Reduction in transaction cost.
- Ease in case of a change in address/bank account details etc. as update done in Demat account is communicated to all the respective companies eliminating the need to correspond with each of them separately.
- Ease in Transmission of securities as the entire process is done by DP eliminating correspondence with companies.
- A convenient method of consolidation of folios/accounts.
- Holding various types of securities like Equity, Debentures, Bonds, Government securities, Sovereign Gold Bonds, Mutual Fund Units etc. in a single account.
- Automatic Credit of Shares, Mutual Fund Units etc., arising out of split/consolidation/merger etc. into the Demat account.