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The full form of a Demat account is Dematerialised Account. It is used to store stocks and securities in digital format. A demat account is also used to also hold certificates of mutual funds, bonds, stocks, ETFs, etc. Nobody can start trading without having a demat account. According to the SEBI rules and regulations, nobody can hold shares in the physical format. It can only be stored only in a digital format. In India, we have two depositories for managing all of the country's Demat accounts.
- National Securities Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
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Advantages of Opening a Demat Account
- No Stamp duty on transfer of securities.
- Immediate and fast transfer of securities.
- Better liquidity and monetisation
- One-stop storage for all assets
- Convenient Nomination facilities.
- Convenient Transmission formalities in case of death of a holder.
- No TDS deduction for demat securities.
- Lower risk of theft
