There is bound to be benefits along with limitations to everything. What is a demat account and this is applicable to this concept as well. Just you have to be sure that you need to be aware of these intimacies and not blind folded by any of these concepts. This is taking into consideration that you need to open a demat account for yourself.
Now taking a step behind , let us figure out what a demat account and the concept of dematerialization. You have to take into consideration on how this concept worked in the past and how it stands today. The struggles at that point of time, how you could cope through it and how digitalization helps to overcome it. In fact a lot of grey areas associated with a demat account has been solved.
The demat account in the old days
By now you might have understood that shares have to be stored in an electronic form. In fact there are a host of benefits with a demat account that soothes your trading experience. The entire exercise of such a discussion is to avail the benefits of a demat account.
In this era of digitalization things have gone on to become easy. Earlier the files were kept in a physical form and for the regular traders this was a major hassle. They have to take into consideration that the shares were in saleable condition. Even it has to be kept in an environment that is safe from any form of robbery or theft.
The foreign investors did have their own concerns and this was one of the major loopholes associated with this system. For any stakeholder in the market this went on to create a loss like situation.
The demat account in modern times
In the month of August 1996, something unique was presented to the traders of the Indian stock market. NSDL went on to established as part of the depositories act. But still it faced a lot of road blocks ahead. The NDSL faced a challenge where they had to convince investors to keep their shares in electronic form and not in the form of physical files. But no one was aware that the benefit of dematerialization did arise to everyone. In fact all of us are reaping in the benefits of demat account till date. It has to be stated that demat account are making the task of investors and traders easy.
Demat account and its benefit to investors
Without the intervention of anyone transaction of shares tends to happen automatically. Not only it has enhanced the overall volume of trade but even it has gone on to simplify the trust of the traders in the overall operations of stock trading. Since it is intangible in nature there is no risk against theft or loss of any kind. Earlier in order to change the name of your shares you had to submit an application to the register of companies.