What is Demat Account
What is a Demat Account? A Demat Account ( Dematerialized Account ) is an electronic account used to hold and manage financial securities such as stocks, bonds, mutual funds, and other investments in digital form. It eliminates the need for physical share certificates and simplifies trading in the stock market. In India, NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) are the two main depositories that maintain Demat Accounts. Depository Participants (DPs) such as banks, stockbrokers, or financial institutions act as intermediaries between investors and depositories. Why is a Demat Account Required? 1. Digital Storage of Securities - Initially, shares and securities were issued in physical form as certificates or bonds. These were at risk to theft, loss, damage, or forgery. A Demat Account replaces these physical certificates with digital records which ensur es safety. 2. It Simplifies Stock M...