Question

Aims and objectives of demat account

Answer 1

A Demat account is dematerialized account in which the shares and securities are held electronically. Usually, an investor opens a Demat account when he registers with an investment broker or sub-broker.

Aims and objectives of demat account are:

1. To hold all the shares in electronic or dematerialized form.

2. To hold the certificates of an investor's financial instruments like bonds, government securities, shares, mutual funds and exchange traded funds instead of giving the physical possession of certificates to him.

3. To provide a safe way to keep the investments.

4. To offer a convenient way to keep track of one's investments.

Answer 2

A demat account is used to hold securities electronically after the securities are dematerialized or purchased. In India, two depositories - NSDL and CSDL - are given the rights to issue demat accounts.      

Aims and Objectives:

* To lessen the risks of physical securities due to damage, loss, or theft.

* To maintain and track all investments using a single account.

* To reduce additional costs associated with physical certificates such as handling charges and stamp duty.