InvestorQ : What are some of the major advantages of opening and operating a demat account with NSDL or CDSL?
Ria Jain made post

What are some of the major advantages of opening and operating a demat account with NSDL or CDSL?

Anu Biswas answered.
3 years ago

As an investor you will enjoy many benefits if you open a demat account and maintain securities in electronic form. Some of the benefits provided by NSDL or CDSL are captured in the points below.

· No bad deliveries. This used to be a big hassle in the old mode of physical transfer of securities

· Reduced paper work is another big advantage and brokers don’t need full fledged teams to handle all the objections etc.

· No risk of loss, mutilation or theft of share certificates. These are electronic and fungible after all

· Elimination of all risks associated with physical certificates

· Pay - in and pay - out of securities will take place on the same day. In fact, the introduction of demat has been instrumental in crunching the time for IPOs and even regular settlements.

· Problems related to change of address of investor, transmission, etc are eliminated. A single point of contact is the DP and you don’t have to write to each of the companies separately

· Fast settlement cycles

· No stamp duty for transfer of securities

· Low transaction cost for buying and selling

· Low interest rates on loans granted against pledge of dematerialised securities by banks

· Low margin on securities pledged with banks

· Increase in the liquidity of securities held by you because of immediate transfer and registration of these securities into your account

· Instant disbursement of non - cash corporate action benefits like bonus and rights into your account

· Regular account status updates available from the DP at any point of time. If you opt for online DP, most of your problems are automatically resolved

· A consolidated account statement for all types of securities makes it easy to handle one's portfolio.