Earlier, stocks and shares were issued and traded in physical paper form. But after the introduction of the depository system by the Depository Act of 1996, Demat Account came into existence in India. Then shares and securities are held electronically in a dematerialized form, instead of the investor taking physical possession of certificates. Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form. Nowadays, all trade are settled in dematerialized form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 share to be settled in physical form, trading using a DEMAT account is widely accepted. Hence, you require to have a DEMAT account for dealing in Stocks and Shares. It make the process for sales, purchases and transfers of shares significantly easier and most of the risks associated with paper certificates were mitigated. It was the beginning of a new paperless trading stock market trading environment.
Types of Demat Account
There are two types of demat accounts—Repatriabledemat account and Non-repatriabledemat account. Repatriable funds are deposited in a separate bank account known as the Non-Resident External Account (NRE account). Repatriable funds are those funds which can be transferred abroad. The investments made from these funds are maintained in a Repatriabledemat account. On the other hand, non-repatriable funds (amounts which cannot be taken abroad) are deposited in a different bank account known as the NRO account. Investments made from these funds are deposited in the Non-repatriabledemat account. Money can easily be transferred from an NRE to an NRO account. However, once the transfer is made, the reparability is lost and thus cannot be transferred back to NRE account.
Objectives of Demat Account
The main objective of holding a Demat account is to keep securities in an electronic form instead of the physical form. It offers the additional advantage of eliminating the risk of forgery, theft and manipulation of share certificates. Investors can buy, sell and transact shares without the hassle of paperwork and too many delays. Dematerialisation is a safe and secure method of transacting securities over the internet.It removes the hassles of filling up transfer forms, sending redemption requests, etc. A demat account ensures immediate transfers of securities. You can make transactions at the click of your mouse and at your own convenience. Once the trade is approved, the shares and securities are automatically transferred to demat account. Hence, the need to visit the stock market to make transactions is eliminated.
Advantages of Demat Account
- Environment Friendly – Less paperwork since securities held in electronic form
- Secure and convenient way to keep track of shares
- Quick Settlement
- No Storage Risk – Unlike paper certificates dematerialized stocks and shares can’t be stolen or damage or forged
- All in one – Trade in Equity, gold ETFs and commodity futures
In our country, there are various companies which provide Demat Account services such as Angel Broking. Angel Broking is a reputed name in the finance industry. Angel Broking is a registered depository participant (DP)which interfaces with the investor and provides depository services. Angel Broking Angel Eye is an advanced trading platform that offers single-point access to stock exchanges such as BSE, NSE, MCX and NCDEX. You may trade at any point of time through phone, email and SMS. Angel Broking also provides detailed reports from experts. Angel Eye allows you to manage portfolio in a single glance, trade efficiently, track real-time stock updates, and retrieve reports as and when required.
Why should I open a Demat account with Angel Broking?
When we talk of low brokerage charges we immediately think of discount brokers. Which is the broker that offers lowest brokerage charges in India and the lowest brokerage fees? But from my opinion, before entering into comparing brokers on charges and fees, we must first think about demat account services provided by angel broking becauseAngel Broking’s technology-enabled DEMAT account is one of the best DEMAT Accounts in the Indian market. Through Demat accounts, you can make online transactions on your own. Having a Demat account with Angel Broking helps to eliminate risks associated with physical share/stock certificates like theft, damage, forgery, etc. Dematerialization is a secure and convenient way to keep track of shares. Demat account also allows holding of mutual funds, ETF, Commodities and other valuable financial instruments. Transactions can be made through smartphones or the web. Angel Swift is the tablets and smartphones’ trading application that gives you an overview of your holding, while provisioning trade.
Opening a demat account significantly reduces brokerage charges, as stamp duty does not have to be paid. In short, it helps in quick transfers, no lot size requirements to make transactions, reduced transaction costs, and is easy and convenient.As per as my knowledge angel broking provides good demat account services.