Why you should consider opening a Demat account

Why you should consider opening a Demat account

Written by thetechw, In Finance, Published On
August 26, 2022
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Motives For Opening a Demat Account There are a tonne of reasons to register a Demat account once you start counting. You shouldn’t be denied access to its special features and amenities. The following are the top 5 justifications for opening the account:

  1. Requirement in Stock Exchanges

No investor would be permitted to trade on the Exchanges without a Demat Account, according to official SEBI (Stock and Exchanges Board of India) regulations. The BSE (Bombay Stock Exchange) and NSE (National Stock Exchange), two of India’s largest stock exchanges, are both governed by this SEBI rule. All physical shareholding certificates must be dematerialized to be sold or purchased on the Exchange. This action was done to streamline the online trading procedure. As a result, you should register a Demat account as soon as possible to earn from stock market trading.

  1. Allows for simple and practical storage

Using Demat Accounts, shares and security certificates may be converted from their physical form to an electronic one. You may quickly purchase, sell, or transfer your certificates using the electronic form of shareholdings. Investors once had to expend considerable effort to purchase shares and then carefully store them. Additionally, it took a long time because there were no direct means to purchase shares or bonds. After all, the stock market only permitted brokers. Demat Accounts have provided a solution to all of these issues. 

  1. Saves time and money

Investors had to devote a lot of time and effort to the stock market before the advent of dematerialization by NDSL. Employing a broker, speaking with him to locate the best offers, physically completing the purchase requirements, and then waiting for the delivery of the actual share certificate were all parts of the process. Due to the fees associated with the brokers, this practice is also utilized to raise investment costs. You may register a Demat Account, nevertheless, to protect yourself from all of these hassles. Perhaps this explains why there were 87.8 million Demat Accounts in India overall during the 2021–22 fiscal year.

  1. Removing trade restrictions

Demat Accounts can assist you in lowering trading restrictions brought on by manual and offline methods by providing quick and simple access to shares and assets. Using the internet’s quick service makes it much simpler to conduct stock market trading operations. You do not need to rely on brokers or sub-brokers to assist you in it. You only need to create a Demat Account and consult with a reputable and well-known Depository Participant (DP). In India, there are more than 1000 depository participants, including banks, non-banking organizations, and other financial organizations.

  1. May be utilized to obtain a loan

Banks will readily grant you a personal loan if you use the stocks and shares in your Demat Account as security. The nicest aspect of this is that you aren’t required to provide the bank with the certificates. By providing the statement from your Demat Account, which contains all the information about your shareholdings, you may simply obtain a loan. Most banks provide loans against equities kept in Demat accounts in amounts ranging from 1 lakh to 20 to 25 lakhs. If you create a Demat account and accumulate a sizable stake in it, you may also take advantage of this special benefit.

You must adhere to share market courses before putting up your first step in the stock market.

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