Published Oct 12, 2024
In 2016, the demonetization policy changed the way we buy and sell things. It was a step towards making India a cashless economy. Similarly, 20 years before demonetization, India witnessed the dematerialization phase.
History
In 1996, a significant step was taken to free the stock market of physical share certificates. At that time, shares were sold in physical form. If you wanted to buy a share, you paid cash to the trader and received a certificate. Imagine the amount of paperwork each investor had to manage! Encashing these stocks was also a time-consuming process. The dematerialization policy aimed to convert physical certificates into electronic form and simplify the entire process.
What is a Demat Account?
Just like a bank account holds money, a Demat account holds shares, mutual funds, bonds, government securities, and exchange-traded funds (ETFs). Every time you buy a share, it is credited to your Demat account, and vice versa. It is mandatory for every investor to have a Demat account.
Role of a Depository
India has two depositories: NSDL and CDSL. They maintain the details of all Demat accounts in India in electronic format. You can open a Demat account with either of the two depositories. They facilitate the buying and selling of securities.
Role of a Depository Participant (DP)
Once you have selected a depository, you can open a Demat account with any of its DPs. A DP is like a retailer. For example, if you want to buy Nestlé’s Maggi or Cadbury’s Dairy Milk, you wouldn’t visit the offices of Nestlé or Cadbury. Instead, you would buy these products from a local supermarket or grocery store. Similarly, to transact in securities, you can open an account with a DP. This could be an NBFC, broker, or bank. Stocko is a reputed DP that facilitates online transactions in the stock market.
How to Open a Demat Account?
You can now operate your Demat account online. You are liable to pay an annual maintenance fee and a transaction fee.
Benefits of a Demat Account
The dematerialization policy has proven to be a boon for all investors. With these benefits and the ease of transactions, investing has become much more accessible, even for beginners.
Related Articles
South Asian Stocks Ltd. : NSE Member Code 09073, BSE Member Code 6329, MCX Member Code : 55215 , NCDEX Member Code : 1233 NSDL : IN-DP-474-2020 . SEBI Registration No. INZ000164738
Compliance Officer: NSE,BSE,MCX,NCDEX,NSDL : Mr RK Jain , 011-40409999 support@stocko.in
Registered Office : 3rd Floor, Building No.5, Local Shopping Complex, Rishabh Vihar, Near Karkarduma Metro Station. East Delhi – 110092
For any complaints related to South Asian Stocks Ltd email at complaints@stocko.in
Please ensure you carefully read the risk Disclosure Document.
Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective communication, Speedy redressal of the grievances