Advantages of a Depository Service

Depository Services Meaning

Dematerialisation has revolutionized the way Indians have started trading as earlier one was juggling with a bunch of papers and praying to God that those stocks certificates do not get lost in the postal transit. One has to just walk in to any of the depository services to get their account activated and these days it comes in a bundled offer in form of a demat account and online trading account. These depository services hold your shares in electronic form.

Depository Services in India

depository services in India ranges from icicdirect, Indiabulls, sharekhan, Religare, SMCglobalonline, RKglobal etc and we have named only a few as these days a large number of brokerage houses are in this segment of online trading and providing depository services.

Benefits of trading in demat form

• Trading in demat segment completely eliminates the risk of bad deliveries as one gets these shares in electronic form.
• In case of transfer of electronic shares, you save 0.5% in stamp duty. This was the amount of stamps which were required to be placed on each physical share sent for the transfer.
• One is at peace of mind as it avoids the cost of courier/ notarization/ the need for further follow-up with your broker for shares returned for company objection.
• No tension is the new mantra for trading in dematerialisation. One need not fear as certificates do not get lost in transit and it saves substantial expenses involved in obtaining duplicate certificates, when the original share certificates become mutilated or misplaced.
• Increasing liquidity of securities due to immediate transfer & registration
• Reduction in brokerage for trading in dematerialized shares.
• Receive bonuses and rights into the depository account as a direct credit, thus eliminating risk of loss in transit.
• Lower interest charge for loans taken against demat shares as compared to the interest for loan against physical shares. RBI has increased the limit of loans availed against dematerialized securities as collateral to Rs 20 lakh per borrower as against Rs 10 lakh per borrower in case of loans against physical securities.
• RBI has also reduced the minimum margin to 25% for loans against dematerialized securities, as against 50% for loans against physical securities.

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