Question

Write any four benefits depositary.

Hint:

Remember: Depository benefits include elimination of physical certificates, instant transfer, no lock-in period, and reduced transaction costs. It makes investing safer, faster, and cheaper.

Answer 1

Step 1: Understanding the Concept:
A depository system offers several advantages over the old physical certificate system.
Step 2: Detailed Explanation:
1. Elimination of Risks: There is no risk of physical loss, theft, mutilation, or forgery of share certificates.
2. Immediate Transfer: Electronic transfer of shares happens instantly upon settlement, unlike the weeks it took with paper.
3. Reduction in Transaction Costs: No stamp duty is payable on the transfer of shares in electronic form.
4. Automatic Corporate Actions: Benefits like bonus shares, stock splits, or rights issues are automatically credited to the Demat account without the investor needing to do anything.
Step 3: Final Answer:
The benefits include safety, speed, cost-effectiveness, and ease of managing corporate actions.