DEMAT ACCOUNT

The term "demat", in India, refers to a dematerialised account for individual Indian citizens to trade in listed  stocks or debentures in electronic form rather than paper, as required for investors by the Securities and Exchange Board of India (SEBI). In a demat account, shares and securities are held electronically instead of the investor taking physical possession of certificates. A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place.

Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed.

Advantages of demat

A demat account also helps avoid problems typically associated with physical share certificates, for example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. Further, it eliminates the risks associated with forgery and mutilation  due to damaged stock certificates. Demat account holders also avoid stamp duty (as against 0.1 per cent payable on physical shares) and filling up of transfer deeds. Demat account holders usually obtain quicker receipts of benefits like stock splits and bonuses.

The other advantage is the ability access stocks, bonds, ETFs, IPO, Gold ETF, etc. all in one place. Its like one centralized investment account from where you can access and maintain investment products.