Demat Account

Demat refers to a Dematerialized account. If you want to buy or sell stocks you need to open a Demat account. It is just as opening an account with a bank. To open your Demat account you have to approach the DPs (Depository Participant). Demat account will help you to buy and sell shares without endless paperwork and delay. Let's say your portfolio of shares looks like this: 50 of BHEL, 40 of RPower, 60 of Tata Motors and 100 of Sesa Goa. All these will show in your Demat account. So you don't have to possess any physical share-certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they will be automatically adjusted in your account. The DP will provide you with periodic statements of holdings and transactions. The charges for account opening, annual account maintenance fees and transaction charges vary between DPs (Depository participants). Practically all the trades have to be settled in Dematerialized form. So a Demat account is a must for trading and investing.