Dematerialisation of share has been a silent revolution in India. Just as your money lies in a bank and you have a passbook and internet access to view your transactions and balance, the concept of dematerialization is similar. It has made share trading and holding easier and safer. Just like a bank, the details are securely stored with depositories and the data is sufficiently backed up in view of its value and sensitivity. Therefore the user is free of worries like fire and theft.
Demat has also made ‘bad delivery’ a thing of the past and also facilitated quick electronic delivery. Further, corporate actions like bonus etc are automatically taken care of by the system and credited to the account on the due date without manual intervention. Finally, one can hold shares, ETFs, bonds, MFs in the demat account and the list is expanding every year.
The downside, of course, is that because this is technology driven some investors can get misled. Besides, unlike paper shares, there is a direct periodic holding cost payable to the demat service provider. But in today’s world, technology has to be befriended in all spheres and the benefits are many. Incidentally, even issuing companies benefit with lower printing and distribution costs and efficient service to investors with the additional advantage of zero stamp duty. By demat of shares, forgery too is effectively taken care of.