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3 Powerful Functions of a Demat Account in Digital World

Updated on December 31, 2019
PrateekJain24 profile image

Prateek Jain is a Depository services manager by proffession who is dealing in stocks and securities.

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A Demat account is needed to carry the financial instruments such as Securities, Debentures, and bonds.

In the current age of digitalization, they convert everything into a digital form.

It could be a small merchant who maintains the data of consumers in the Tally ERP system or significant corporate who deliver their goods and services in the foreign corporation which operates in different countries.

The important thing to notice is that people are more comfortable in creating and maintaining their works in digital composition as compared to traditional manual documents.

Everything that is kept in digital form can be assessed without much difficulty and we can easily draw the outcomes for decision-making purpose.

Prominent features of demat account

  1. Dematerialization of Securities
  2. Transmission of Securities
  3. Transfer of Securities

1. Dematerialization of Securities

  1. Dematerialization refers to converting physical share warrants, debentures, and other bonds certificate into the digital form for holding them in the Demat account.
  2. Under dematerialization, individuals having receipts of any company of any nature, who desire to convert them into digital form can opt for this process.
  3. Within 15 to 20 days it will convert their securities in a digital form.
  4. For converting the physical bonds, they should have a Demat detail on their name, irrespective of whether the interest is individually or jointly operated, with the same refer to as quoted in the physical certificates.
  5. The benefits of holding securities and other financial instruments like Debentures, Bonds, and Stocks of various companies are provided by Demat accounts.

In your viewpoint, what a way to hold securities will be better accessible in-:

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2. Transmission of Securities

  1. Transmission refers to the process where a legal heir or nominee of an individual gets the ownership of Bonds which were held in digital form.
  2. It keeps these Securities in the Demat version of the applicant after the death of the interest holder or owner of cares.
  3. After the death of the stake holder or all the owners, the holdings of Stocks, Debentures, and Bonds lying in their statement, will be transferred to their legal heir or nominee by following the process of Transmission of Securities.

Illustration

  • I met with a situation where customers named Mr. A is the lawful heir of Mr. X who is his father who is now deceased.
  • However, Mr. X has Stocks of many companies belonging in his Demat book in digital form.
  • After the death of Mr. X, to take charge of those securities Mr. A, who is the lawful heir of Mr. X, visited the branch where I explained to him about the transmission process.
  • Therefore, to claim the ownership of bonds existing in Mr. X statement, here Mr. A followed the same treat laid down for transmission.
  • I asked him to arrange the following documents, which are NOC (no objection certificate) from all the legal heirs, along with affidavit and indemnity, notarized by a public notary for verifying the claimant and assuring us to transfer bonds ownership to him,
  • After getting all details and taking consent from all the family members, for making claimant the sole owner of stocks of deceased. The process is got completed and Mr. A, have…

3. Transfer of Securities

  1. It refers it transfers to the process by which Securities lying in a Demat account to another Demat statement of the same person or any other party.
  2. If it does the transfer of Stocks through an online platform and tools provided by brokers, then there will be ease of doing the task with no manual and physical intervention between stockholder and broker.
  3. Whereas, if a party wants to pass on their Securities by using a guided process, then he or she has to send a an application in a pre-filled delivery instruction slip by giving their consent and printing their signatures on the sheet.
  4. Also, the investor can seek from the Registrar and transfer agents to guide them for transferring bonds deal with and provide them with the documents like delivery instruction slips by which the trading can be done.

4. Benefits of a Demat account

Everyone has to change his/her pattern of activity and always keep upgrading themselves with the latest automation in all the aspects of their practice.

Following are 5 benefits of having a Demat Account:

  1. Having a Demat account keeps all securities together in one place and eliminates the risk associated with the loss of any physical certificate.
  2. It can be easily accessed anytime by using a login ID and a unique password, from the respective broker's website.
  3. An investor also enjoys numerous new and innovative features of Demat accounts apart from those mentioned above.
  4. Demat Account and Trading book comprise varied tools which assist the interest holder to use them and draw the conclusions, to make future decisions for their transactions.
  5. Demat version is a single book for all financial instruments holding, as it holds Stocks, Debentures, Bonds and units of mutual funds, etc.

"We are living in a world where automation is involved in every aspect of life.".

5. Payments charged to the account holder

  1. The primary charges incurred by the interest holder at the stage of opening a Demat account, are a onetime non-refundable amount, that is required from the investor to open a trading record with the broker.
  2. Second, the interest holder also needs to bear the annual maintenance involves once in a year for maintaining his record with the broker, and it will continue until the account is closed.
  3. The book holder is imposed for different costs incurred for giving separate orders enjoy buying and selling of Securities online with the use of a a stockbroker trading platform.

6. Protect your online wealth

  1. Having and upholding a Demat account is a primary need for every investor to work and deal with their financial investments. As discussed above, the Demat account has many benefits.
  2. Investors must protect their unique ID and password from being exploited by others as they can misuse it.
  3. Only an updated platform is to be employed which should be modernized from time to time by the broker to avoid any risk of data loss and customer information.

7. Significance of Registrar and Transfer agents

  1. I have seen many investors who have physical share certificates of many companies which they have gained long ago before digitalization.
  2. But now because of many regulatory notifications, they are advised by their Registrar and transfer agent to convert their shares into Dematerialized form, to access them.
  3. And also sometimes the investors face many difficulties in accessing the above services because of a lack of knowledge about the handling.
  4. In such cases, if the situation has happened to you, my advice would be to just remain calm and approach your merchant with the details like physical share certificates, a hard copy, and one of your KYC documents.
  5. Then ask the merchant to explain to you the treat for Dematerialization or Transmission of Securities.

8. Conclusion

  1. These are elementary and easy processes once you know their functions.
  2. The people who are very active in the retail for buying and selling the Bonds may meet their merchant with their necessary account details.
  3. Any shareholder who needs Demat services should contact their merchant and Registrar and transfer agents as they are the two main bodies that carry out many activities in the Securities market.
  4. And in case of any query, they are always available via email and a toll-free number to communicate and resolve investor queries as soon as possible.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2019 Prateek Jain

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    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you Devika mam for showing interest in my article. Yes demat account is becoming a need for many investors because of online digital banking norms. Even government has strictly notified investors to invest into shares and mutual funds only in digital format and do not carry physical certificates. Glad to know you liked the article. Will share more useful products regarding banking and investment in near future.

    • DDE profile image

      Devika Primić 

      2 months ago from Dubrovnik, Croatia

      I had no idea of this type of an account. Your tips in having a Demat account is useful and worth a read.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      2 months ago from Jabalpur, Madhya Pradesh

      Thank you abhishek sir. This is the subject which we together seen and I learned alot about demat services and mutual funds from you only. Thanks for reading and commenting.

    • profile image

      Abhishek Asati 

      2 months ago

      Good article

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Hey Simran, thanks for reading my article and encouraging me. I am happy that you find that article worthy. Obviously demat account offers various services and their are many ways to enhance your privacy in trading.

    • profile image

      Simran Malhotra 

      3 months ago

      Hey Prateek,Just Read Ur Article,You Had Made Great Efforts In Explaining Us About Demat Account, Your Sharing This Important Knowledge Is Worthy For Us in Today's Digital World..According to me Demat Account Has Plenty Of Benefits So People Should Have It, in order to access it's great benefits and to save their Securities from frauds.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Hi Seema mam, good to see you expressed your opinion, well I am always there to discuss on any topic and share my knowledge with you. Thanks for showing your interest to know to learn it from me. I will definitely help you in giving all the relevant information I have on the subject.

    • profile image

      Seema Naik 

      3 months ago

      Hey hi Prateek, read your Demat article. While I don’t understand head & tail of it but must say you have deep insight & knowledge about it. Since I don’t understand much about it , feel I may not be the right person to make any comments on it unless I learn about it from you ,

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thank you Krishna sir for sharing your experience, I know their were many executive who don't have much expertise still ask their clients to trade to make their commission. It's an honour for me that you liked and appreciated the information provided in the article.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thank you so much Purva mam. I am really thankful to you for reviewing this article and encouraging me. It means alot.

    • hmkrishna profile image

      Halemane Muralikrishna 

      3 months ago from South India

      It is very nice to know the functions of demat accounts for dematerialization, transmission and transfers. Though I made a demat account ten years back, the executive enrolled me did not tell it that much meaningfully as you have described now. With globalization of trade and shares and exchanges worldwide, holding of demat makes life easy. Thank you Mr Prateek for such lucid description of the process.

    • profile image

      PURVA 

      3 months ago

      Good Job !

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thank you Natasha mam.for showing interest to read and learn about demat services in digital world, and surely will write more articles to help you in understanding about the topic.

    • Natasha Tungare profile image

      Natasha Tungare 

      3 months ago from India

      I literally have zero knowledge in this field. I appreciate your deep insight towards this subject. Would really like to read more

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Hi Prabhat, good to hear that you learned from the information provided in the article. As we both are working in financial institution and know the seriousness of this product in our organisation. Thanks for sharing your views with me.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thank you for your review Dharmesh sir. Really happy that liked the article.

    • profile image

      PRABHAT SONI 

      3 months ago

      Before I read I am unaware of demat and securities but after read it my information is now powerful which is very useful for me in future as well and i can explain to others in deep.

      Good job prateek keep it up

      Best of luck

    • profile image

      Dtg 

      3 months ago

      Nice write-up prateek.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thanks for your encouragement and support Bipul sir and Harish sir.

    • profile image

      Bipul 

      3 months ago

      Pratik Gud work keep it up

      valuable information shared by you.

      Best of Luck

    • profile image

      Harish bhatt 

      3 months ago

      Prateek good and very usefull information provided by you.

      best of luck next article.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 months ago from Jabalpur, Madhya Pradesh

      Thank you prantika mam for your generous view on this article. I am really happy that it helped you in understanding the basic features about demat account services.

    • Prantika Samanta profile image

      Prantika Samanta 

      3 months ago from Kolkata, India

      Thank you for sharing the article with a great deal of information on Demat account. In this digital era, we must know the several aspects of Demat account in the digital world. Good to know the benefits and you have clearly explained by citing an example and that has really helped me understand better as I find difficult to understand such financial aspects. You have provided a detailed information about Demat account and individuals like me will be highly benefitted.

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