Demat Account

Demat account Meaning

A demat account is short for a dematerialization account. It is an online account wherein securities like stocks, mutual funds, and bonds, etc., are held in electronic form. It works very similarly to a bank account wherein except to money you hold your securities. Securities bought through trading are credited to your Demat Account and whenever you sell those it is debited from your Demat Account. The transfer of securities from exchange to demat and vice versa happens electronically. 

A demat account is a must for trading and investing in India. You must have a Demat account to buy and sell:

• Stocks of listed companies in BSE & NSE
• IPO Shares
• Mutual Funds
• NCDs
• Corporate Bonds
• Government Securities etc.

Demat accounts in India are opened and managed by central depositories called National Securities Depository Ltd (NSDL) and the Central Depository Services India Ltd (CDSL). These demat accounts are opened and managed by NSDL and CDSL in India. Stock Brokers need to be Depository Participants (DPs) or members with any of the central depositories to offer depository services. The stock broker acts as an intermediary between the customer and the central depository.

Answered on 2023-02-02