What is A Demat Account

Demat Account is given to the Investor while registering with broker or sub broker. Demat Account is provided with an Account number. This Account would be used for all the transactions later on. Demat Account is used to keep the shares safe which we bought in the Exchange (BSE or NSE). In earlier days before the commencement of Demat Account investors were given relevant Documents for the shares they bought. And those documents (or) materials had to be kept safe with so much care. These documents had to be given to the buyer when selling. There was a problem of misusing these documents. During those days people were finding ways to change the name on the documents and selling those shares without knowing to the actual owner of particular shares. During those days cheaters were playing role. So SEBI planned to use Demat Account in order to prevent the misusing of share Documents. This Demat account is very secure than Documents. In this way all the shares will be stored in the Demat Account in electronic form. These electronic shares will be secured by Internet password and transaction password. Shares cant be transferred to third person with out entering these passwords. Now no one can sell or transfer the shares with out the knowledge of a share holder. When we buy shares, they will be added to the Demat Account Automatically. When we sell, shares will automatically be transfered from your Demat Account to Buyer’s demat account.

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