Demat Account Meaning, Importance of a demat account

 Demat Account Meaning, Importance of a demat account

What is a demat account?

The full form of demat account is dematerialized account, which is an account to hold financial securities (equity or debt) in electronic form. In Nepal, demat accounts are maintained by CDS and Clearing Limited, a company established under the company act is a company promoted by Nepal Stock Exchange Limited (NEPSE) in 2010.

This kind of account is also called a dematerialized account as it helps to keep proper track of all the investments an individual makes in shares, exchange-traded funds, bonds, and mutual funds in one place.

Importance of a demat account

1. Digitally/Electronically secure way of holding shares & securities

2. Eliminates theft, forgery, loss, and damage to the physical certificates

3. Quick/Easy transfer of shares from the comfort of home/office or on the go

4. Reduces the time of transfer of shares/securities so that purchase and sale of shares/securities can be executed faster.

5. Maintaining the records of shares/securities transfer becomes easier

6. Bonus shares get automatically updated

7. Easy access to your portfolio online through your smartphone or laptop

8. Demat account attracts lower cost as physical share certificates attract paperwork and stamp duty, which increases costs.