In 1996, demat accounts had its inception in India and prior to that shares were traded in physical form. The main feature of the best demat account in India is that shares are held in electronically and not in physical form. In hindsight it ensures that the entire process of holding and trading in securities is reduced to a considerable level. There are various benefits of a demat account and let us explain them as follows
With physical security there is a possibility of theft, loss or even frauds occurring. Fake securities or bad deliveries could even pose to be a risk. All the risks are a thing of the past when you open up a demat account where you are presented with an option of holding all the securities in electronically form.
To maintain physical share is a tedious job. Coupled with the fact when you need to keep a track of their performance this is another major challenge. With the aid of demat accounts it is possible to link up and hold all the accounts in electronic form. The best part is that you only need a single account to keep updates.
When it is a case of physical securities buying or selling of securities was only possible in desired quanta. The task of dealing with a single security or to even be dealing with odds is not available. By demat accounts such issues are dealt in an automatic manner.
Reduction in time and costs
Physical certificates end up taking a lot of extra money in the form of handling charges, stamp duty and even additional expenses. When you have a demat account all these expenses are automatically eliminated.
Once there is a reduction in the amount of paperwork the time needed to complete a transaction is also reduced. This reduction on the time front ensures that an account holder is able to make a lot of purchases. The reason being sale of security takes place with greater efficiency and a shorter purchase time.
Demat accounts are lucrative , easy and an attractive option. In the modern age of today they are a must in terms of financial planning.
The reasons why there is a need for a demat account
Though the conversion of physical shares into electronic form is optional as an investor is able to hold shares either in physical or electronic form. But the difficult aspect is to monitor the physical securities as compared to the electronic counterparts.
In addition it would be really difficult to sell any type of shares in physical form. There are a number of agents who deal in trading physical shares and there are buyers who are willing to purchase such shares. This is reasonably less as compared to individuals who are trading of shares in an electronic form.
If any corporate or companies goes on to provide dividends to the clients, they are automatically culminated into the demat account. All updates emerge automatically in these accounts.