हिंदी

Demat System

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Estimated time: 10 minutes
CBSE: Class 12

Meaning

  • Demat account is also called a dematerialised account.
  • Dematerialisation means converting physical shares and securities certificates into electronic forms.
  • Main purpose: easy to manage securities and access them from anywhere in the world.
  • Digitalisation of trade has made the share certificate process more accessible and less time‑consuming.
  • Demat account speeds up this process and stores security certificates in digital format.
CBSE: Class 12

Use of Demat Account

  • In online trading, the shares and securities you buy are held in your Demat account.
  • Investments in shares, government securities, exchange‑traded funds, bonds and mutual funds are stored in one place in digital format.
  • Digitisation of Indian stock trading was effectively enabled by Demat.
  • Demat is governed by the Securities and Exchange Board of India.
  • Storing securities in electronic form reduces threats of theft, risks, malpractices and damage.
CBSE: Class 12

Advantages of Demat Account

  • No stamp duty is charged when securities are transferred.
  • Transfer of securities is faster and more immediate.
  • Wrong deliveries are eliminated.
  • Risk of loss, theft, damage and mutilation is eliminated.
  • Helps in disbursement of corporate benefits like rights, dividends, bonuses and faster settlement.
  • Eliminates mismatches in personal information such as bank accounts and addresses.
  • Nomination facilities are more convenient.
  • Transmission formalities on death of the account holder are completed more conveniently.
  • No TDS (tax deduction at source) on Demat securities.
  • Account information and Demat account statements are sent regularly to the owner.
CBSE: Class 12

Key Points: Demat System

  • Demat account is a dematerialised account for electronic holding of securities.
  • Dematerialisation converts physical certificates into electronic forms for easy management and access.
  • Demat speeds up the share certificate process and stores all securities digitally.
  • All investments in shares, government securities, ETFs, bonds and mutual funds are held in one Demat account.
  • Demat enabled digitisation of Indian stock trading and is governed by SEBI.
  • Electronic holding reduces theft, risks, malpractices and damage.
  • Demat gives benefits like no stamp duty, faster transfers, correct deliveries, convenient nomination and transmission, no TDS and regular statements.
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