Demat account
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A demat account is a dematerialized account for holding shares and securities in an electronic format. It is similar to a bank account where you are able to store your funds, in the same way you can hold your equity stocks and bonds in your demat account. In India, demat accounts can be opened by National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL). Under any of the two, there are Depository participants who act as a broker to execute and operate your shares and securities.
Things you can do using a demat account
Trades- You can buy/sell or transfer shares and bonds using your demat account either online or by filling a Delivery Instruction Slip (DIS). A DIS slip is similar to a cheque where you fill in the beneficiary details. Similarly, you can fill in the details of the shares, quantity and the receiver to transfer the same. It is advisable to keep a DIS book handy in case there is an urgency to sell a bond.
Loan Against Security- You can also use the securities in your demat to avail a loan without having to sell them and benefit lower rate of interest.
Monitor- You can use your demat to monitor the current value of your shares. However, the debt market is an opaque market where the values vary depending upon the trades, volumes and suppliers. Most of the times, the LTV of your bonds might not be accurately shown on your demat account. It is advisable to keep a track of the same on Smest platform.
Interest payouts & Maturity amount- Your demat account will allow you to link your bank account to the demat account where you will receive your interest and maturity amount automatically.