DEFINITION Demat refers to a dematerialized account. Just as you have to open an account with a bank if you want to save your money, make cheques payments etc., you need to open a Demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. It is an account which is electronically maintained by the Banks or are provided by Broker agencies.

When you buy company shares, you receive share certificates. You need to preserve them safely and need to produce them for any transaction, which is time taking. In stead, if you opt for DEMAT (De-Materialization), you can convert them electronically as balance in your account. (Just like your bank account - you can deposit, keep, withdraw or transfer). This is Demat of shares. Demat accounts are maintained in banks, DPs etc. who will allot you an account number and keep the balance. When you buy shares, just give your number and the other person, on receiving money, will transfer them into your account directly. The term "Demat", in India, refers to a dematerialized account for individual Indian citizens to trade in listed fsfv fdf 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.

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