Best Demat Account for Beginners In India | Best Demat Account For Trading - LKP Securities
Free Demat & Trading eKYC APPLY e-IPO Fund Transfer

home | Knowledge Centre

Knowledge Centre

Equity & Derivatives

What is a demat account?

To understand the concept of demat let us first understand how your bank account operates. When you deposit cash or deposit a cheque in your bank account, the balance in your bank account increases. When you withdraw cash or when you issue a cheque, the balance in your bank reduces. Effectively, your bank is a repository of your cash balance. Similarly, the demat account is a repository of all your shares and securities owned. Effectively, you hold your shares and other securities in dematerialized electronic form. But why is a demat account so important?

Shifting from physical shares to demat:

Prior to 1997, Indian investors held their shares in the form of physical share certificates. When you bought shares, the broker would give you the contract note with the share certificates along with the transfer deed. Then the share certificates along with the transfer form duly executed will be sent to the company’s registrars. The registrar will review the application and then include your name in the register of shareholders and issue fresh share certificates to you. But this system had a lot of flaws. Share certificates would get lost in transit, certificates would get defaced and mutilated over a period of time, the signatures may not match or there could be bad delivery due to other technical reasons. Storing and maintaining these physical certificates was also a cumbersome task. Demat overcomes all these problems. Over 99% of the shares in India now exist in the demat form.

So, what exactly is a demat account?

The word demat is an abridged version of dematerialization. When these shares were converted into a mere credit entry into your demat account and the share certificates were destroyed, it became known as demat. If you were holding physical share certificates then you had to approach your Depository Participant (DP) with a Demat Requisition Form (DRF). The DP will interface with the registrars and the shares would be dematerialized. Physical shares that were being sent for transfer could be accompanied with a Transfer-cum-demat (TCD) form so that the ownership would be changed and directly credited into your demat account. Nowadays all purchases and sales of shares only happens through the demat account in non-physical form.

What advantages does the Demat Account proffer?

Firstly, demat overcomes your problems of loss in transit, theft of certificates, duplicate certificates etc. Secondly, for change of address intimation, you just need to intimate your DP once. You do not need to write separately to the registrar for each company’s shares held. Thirdly, all corporate actions including splits, bonuses and dividend payments are automatic. Last, but not the least, demat makes stock markets accessible to even small investors. Let us understand a little better! When trading was happening in physical certificates, there were minimum lot sizes in which stocks could be traded. That kept small investors out of the equity markets. With the advent of Demat you can even buy or sell 1 share of Infosys or 1 share of Reliance Industries. That is how simple it is.

Demat is an all-encompassing account:

You can hold a variety of assets in a single demat account. You can hold equity, mutual funds, corporate bonds, gold bonds and even ETFs in your demat account. Today even commodities are held in demat, although you need to have a separate demat account for the same.

Registered Office: 203,Embassy Centre,Nariman Point,Mumbai - 400021.
Tel: +91 22 4002 4785/4002 4786 Fax: +91 22 2287 4787
Single SEBI registration number for NSE/BSE/MSEI : INZ000216033 CIN L67120MH1994PLC080039 and Maharashtra GSTN No. 27AAACL0963A1ZZ
Research Analyst registration number: INH00001758
DP registration number: IN-DP-CDSL-206-2003
PMS registration number: INP000005299
In case of grievances for Securities Broking /DP write to us on
For linking your Demat/trading account with Aadhaar, submit the self-attested copy
of your Aadhaar Card along with a written request signed by all the holders.
SEBI Complaint redressal system Advisory for investor

For Call & Trade / Support Desk Call :1800-1020-198 Customer Desk No : 022-41507346 Whats App Us :7208914888 Privacy Policy & Disclaimer | FAQs | Sitemap
Arbitration Mechanism on the Stock Exchange
Copyright © 2010 LKP
Designed , Developed & Content Powered by Accord Fintech Pvt. Ltd.

Download GetSetGrow@LKP App

Filing Complaints on SCORES- Easy & Quick :

  • A. Register on SCORES portal
  • B. Mandatory details for filing complaints on SCORES:
    • 1) Name
    • 2) PAN
    • 3) Address
    • 4) Mobile Number & Email ID
  • C. Benefits:
    • 1) Effective Communication
    • 2) Speedy redressal of the grievances

Attention Investors

  • Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  • Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  • Pay 20% upfront margin of the transaction value to trade in cash market segment.
  • Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
  • Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. .......... Issued in the interest of Investors