Trading of securities in compulsory dematerialized form :- Trading of securities at the Stock Exchanges is predominantly in dematerialised form. Practically there is no trading of securities in physical form.
Holding of different investments in one account :- Holding investments in equity and debt instruments, units of mutual funds, Government of India Bonds, Post Office Saving Schemes in a single account makes its management very easy.
No Stamp duty :- No stamp duty is levied for transfer of any kind of securities in the depository. This waiver extends to equity shares, debt instruments and units of mutual funds.
SMS Alert Facility :- Depositories now provide SMS Alert facility whereby investors can obtain alerts for any debits or credits due to corporate action in your demat account.
Faster disbursement of non cash corporate benefits like rights, bonus, etc.:- Depositories provide for direct credit of non cash corporate entitlements to an investors account, thereby ensuring faster disbursement and avoiding risk of loss of certificates in transit.
Ease in portfolio monitoring:- Since the statement of account gives a consolidated position of investments in all instruments, accounting of assets is greatly simplified.
Periodic Status Reports :- Periodic Status Report on holdings and transactions are forwarded to the shareholders from their depository participants.
Freeze or lock of accounts by the investor :- Investors can freeze or lock their accounts for any given period of time, if so desired. Accounts can be frozen for debits (preventing transfer of securities out of accounts) or for credits or for both.
Elimination of all risks associated with physical certificates :-Dealing in physical securities have associated security risks of theft of stocks, Mutilation of certificates, loss of certificates during movements through and from the registrars, thus exposing the investor to the cost and efforts of obtaining duplicate certificates etc. This problem does not arise in the depository environment.
Immediate transfer and registration of securities :- In the depository environment, once the securities are credited to the investors account on pay out, he becomes the legal owner of the securities. There is no further need to send it to the company's registrar for registration. Having purchased securities in the physical environment, the investor has to send it to the company's registrar so that the change of ownership can be registered.
Faster settlement cycle :- The settlement cycle follow rolling settlement on T+1 basis i.e. the settlement of trades will be on the next working day from the trade day. This will enable faster turnover of stock and more liquidity with the investor.
End of problems related to change of address of investor :- In case of change of address, investors are saved from undergoing the entire change procedure with each company or registrar individually. Investors have to only inform their DP with all relevant documents and the required changes are effected in the database of all the companies, where the investor is a registered holder of securities.
Elimination of problems related to transmission of demat shares :-In case of dematerialized holdings, the process of transmission is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting documents to the DP whereas, in case of physical securities the surviving joint holder(s)/legal heirs/nominee has to correspond independently with each company in which shares are held.
Nomination facility :-You can register nomination with your DP for the Demat account. This is valid for all holdings in the respective demat account. This entitles the nominees to receive possession of your holding without any hassles . This facility is not available in case of physical shares.
Instant credit of dividend into your Bank Account :-You can file ECS mandate for credit of dividend into your Bank Account , in respect of your holding in the Demat account.
Convenient method of consolidation of folios/accounts:-You can consolidate your holding in different names into one account very easily, if your holding is in Demat form. You just have to give a transfer instruction to your DP.
Additional Liquidity:-You can sell your odd lot shares very easily. Marketable lot for shares in Demat form is just one share.
All this makes it most essential to keep all investments in Demat form get relieved from all hassles.
