Facts and myths regarding the demat account

Business

Before getting to know about the facts and myths relating to a dematerialization or demat account, it is very important to know carefully what a demat account actually is. A Demat account is an account where all your shares and securities are held electronically in an online form in an electronic account. This account is different from other traditional accounts which are held in a physical manner. As an investor, choosing your demat account carefully is very important since only then will you be able to receive maximum and best returns on your investments.

While demat account opening includes certain factors should be kept in mind necessarily. The important facts which one must know to profit in the long run of investing are listed below.

  1. One must be aware of the varied features which a demat account has to offer to its holders. One of the most important and major features which you must know and carefully understand is the DIS and RIS which is known as the delivery instructions slip and the receipt instructions slip respectively. Both these features are required during the selling and buying of securities and shares. This consists of all the detailed information and instructions which is required to be known while transaction. The account also offers a feature of loan against securities. Few of the best demat account in India holds shares, bonds, debentures or even mutual fund units can be used together to avail a loan.
  2. Another important factor to be known is depository. The depository is a kind of a bank where all the shares and securities are kept or held in an electronic form. The best demat account in India are held in two types of depositories which areĀ National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). These depositories grant permission to the investors to use certain services through the depository participants which in this case are the banks holding your account. The depositary demat account include non- resident Indian (NRI), resident individual and Hindu undivided family amongst many others.
  3. Re-Materialization and Dematerialization is another very essential feature. The stocks can be held in a physical form as well as an electronic form. The process of converting the physical stocks into an electronic form is known as Dematerialization and this is essential for any demat account. This process makes transferring securities to other accounts comparatively easier without involving stamp duty. The opposite of dematerialization is re-materialization which is vice versa meaning conversion of electronic securities into physical form. This process involves certain amount of tariff or remat charges which you should know during submission of your remat request. Mostly commodity customers can refer re-materialization to claim their securities.
  4. A demat account can be opened individually under a single name, but there are even options for joint account openings. A maximum number of three people can together open one single account with one main holder and two other joint holders. Having a nominee for your demat account is beneficial so that during unavoidable conditions such as demise of the main holder, the holdings can easily be transferred to the nominee of the account.