When we invest in securities (like shares, debentures, mutual fund units, bonds etc) of a company we receives certificate as a proof of ownership. This is the Physical form of holding shares. If we choose to keep share in computerized form, then all the details related to the shares are kept in electronic form. This form of keeping shares called dematerialized form.
To have shares in dematerialized form we need to open a DEMAT Account where all the details of our securities are kept in electronic form. We can also trade (sell or purchase) securities through DEMAT Account.
How to Open a DEMAT Account ?
SEBI has appointed two depositories who act as intermediary between the shareholder and company. They keep all records of securities in dematerialized form. It is like a bank which keeps funds of a investor. But here instead of funds it keeps records of securities and also facilitate trading of securities.
The two depositories are National securities deposit Ltd. (NSDL) and Central Depository Services (India) Ltd. The Depositories act through Depository participants. Depository participants are the agents of Depositories. DEMAT Account can be opened with Depository participants. It is opened same as a bank account. For example ICICI bank has registered with NSDL as depository Participants.
WHAT IS DEMAT ACCOUNT ?
Published On - June 25, 2015
