Overview
Shares are traditionally held in physical or paper form.
This method could lead to loss/theft of certificates, forged/fake certificates, cumbersome and a time consuming procedure for transfer of shares.Therefore, to eliminate these weaknesses, a new system called Depository System was introduced in India after the enactment of the Depositories Act 1996.
A depository system is a system, which holds your shares in the form of electronic accounts in the same way a bank holds your money in a savings account. Depository system provides the following advantages to an investor:
- Your shares cannot be lost/stolen or mutilated.
- You never need to doubt the genuineness of your shares i.e., whether they are forged or fake.
- Share transactions like transfer, transmission etc. can be effected immediately.
- Transaction costs are usually lower than that in the physical segment.
- There is no risk of bad delivery.
- Bonus/rights shares allotted to you will be immediately credited to your account.
- You will receive the statement of account of your transactions/holdings periodically
Advantages of Demat Account
Secure
Your shares cannot be lost/stolen or mutilated.
Genuine Share
You never need to doubt the genuineness of your shares i.e., whether they are forged or fake.
Immediate Transfer
Share transactions like transfer, transmission etc. can be effected immediately.
Low Transaction Cost
Transaction costs are usually lower than that in the physical segment.
FD Rate
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