To buy or sell stocks in India you need a demat account. Shares are held in the form of securities that can be purchased or sold. Be it a new or an existing customer opening of demat account is compulsory. With too much documents or signatures need it is worthy to open a demat account. A onetime procedure of fulfilling your customer guidelines is the only step you will need. In addition a demat account does not attract stamp duty.
In the last few years, stock market has evolved towards paperless trading. For an investor who is burdened with piles of stock certificates, demat account has proved to be a major relief. To invest in securities not having a demat account is seen as the major hindrance. No wonders to the fact that more and more securities are moving towards dematerialized type of trading.
Let us explore some benefits of opening a demat account-
Chances of robbery or theft minimize with demat account
No chances of your certificates being stolen or signature forged as shares are held in electronic form. This eradicates the earlier risk when shares were held in physical form. At the earliest it is one of the main advantages of a demat account.
Transfer of shares takes place on an immediate basis
Earlier you had to send shares to a register’s office to transfer it. The process was time consuming and even certificates were lost in the process. This does not happen with the best demat account in India as shares are transferred immediately.
On transfer of securities no stamp duty has to be paid
In paying a security transaction tax, no need to transfer physically purchase share transfer stamps and paste below a certificate as per earlier norms. The procedure was so cumbersome that one had to visit stock exchanges to purchase those stamps.
You can sell as low as a single share
Earlier an individual shareholder could not sell without odds. It was difficult to share 33 shares, apart from lots of 50, 100 or 200 shares. This trend is eliminated and you can sell any share as you want.
Nomination is possible
When you are opening a demat account you can nominate someone. Earlier when share certificates were there it was not possible. A joint account was needed and checks out with a depository participant to add a nominee in not having done so.
A single account to be operated
There is no need to buy for a separate account for buying bonds or securities. Even fixed deposits of banks can be held at a single demat account.
Right and bonus shares can be transferred immediately
Bonus or right shares can be transferred on an immediate basis and there is no need for share certificate.
In a nutshell, you can open a demat account with a financial institution or a bank. If you have a savings account with a bank they offer you attractive terms on a demat account. Though it may levy an annual maintenance fee