InvestorQ : Is it mandatory for me to have a demat account?
Debbie Mascarenhas made post

Is it mandatory for me to have a demat account?

Answer
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2 years ago


If you want to buy and sell shares then it is mandatory to have a demat account. Today nearly 99% of the shares in India are already dematerialized and 100% of the settlements on the stock exchange happen only in demat form. One of the reasons why demat has taken off very quickly in India is the convenience compared to the physical certificates and settlement system. From the point of view of settlement, managing your portfolio and from the point of view of receiving corporate benefits like bonuses, rights, splits and dividends, the demat is a lot more convenient.
Therefore, if you want to buy and sell equities then a demat account is a must. Even when you apply for IPOs, your demat account is required as the shares allotted will be directly credited to your demat account. Of course, in case you only want to trade in futures and options then the demat account is not required since futures and options are contracts and they are not held in a demat account. However, if you intend to trade in equities then the demat account is mandatory. There is a facility of trading up to 500 shares once in physical form but that is not a very ideal scenario since prices may be at a discount. It is better to go through the proper process and get your demat account initiated.