What is a Demat Account?
Initially, stocks and shares used to be exchanged via physical receipts called certificates. However, this resulted in lengthy paperwork and took up a lot of time. To counter this and to take advantage of an electronic trading platform which was gaining traction in West and the Asian Markets, the process of dematerialisation (demat) of shares was initiated in 1996. Physical share certificates were converted into electronic form securities of equivalent number and price and were credited to the investor’s demat account. Thus, the advent of trading commenced this way.
In a more simplistic approach, demat accounts allow the investor to buy and sell as well as transact not only shares and stocks but other products conveniently without the need of any sort of paperwork.