1.18What is a Demat account?
A Demat (dematerialised) account holds your shares in electronic form, the way a bank account holds money.
Earlier, shares were paper certificates that could be lost, stolen or forged. Demat accounts made shares electronic, safe and quick to transfer. Today, shares of listed companies must be held in demat form to be traded.
Like a digital locker (similar to DigiLocker) that keeps your valuables safely, but for shares.
Your demat account is held with a depository (NSDL or CDSL) through a Depository Participant (DP), which is usually your broker. When you buy Infosys shares, they are credited to your demat account. When you sell, they are debited.
Holds money
Holds shares, ETFs, bonds and mutual fund units
- Annual maintenance charges (AMC) may apply.
- Set up a nominee so your family can claim the shares if something happens to you.
- Demat = electronic locker for shares.
- Held with NSDL or CDSL through a DP.
- Required to hold and trade listed shares.
Q1. What does a demat account store?Show answer
Shares and other securities in electronic form.
Q2. Name the two depositories in India.Show answer
NSDL and CDSL.
Q3. Why add a nominee?Show answer
So the holdings pass easily to your family if you die.