Informative report on Demat account
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With the opening up of India's economy and the arrival of computerisation in a big way, the Government decided to carry out stock market reforms. This was necessary to bring in transparency and to allow foreign capital into the stock markets. It was, therefore, imperative that the stocks be held in dematerialised form as opposed to the earlier practice of printed share certificates.
A demat account was thus necessary to buy and sell shares. These accounts are either opened with Banks or with registered stockbrokers. The shares of individual Companies, listed with the Stock Exchanges, are assigned unique numbers and collectively held with that of other Companies by the individual demat account holder. On the request of the request of the individual, these are bought or sold. When existing shares are sold, the linked Bank account is credited with the proceeds. Similarly, when they are sold the linked account is debited. In both cases a mandate is required from the account holder.
A demat account was thus necessary to buy and sell shares. These accounts are either opened with Banks or with registered stockbrokers. The shares of individual Companies, listed with the Stock Exchanges, are assigned unique numbers and collectively held with that of other Companies by the individual demat account holder. On the request of the request of the individual, these are bought or sold. When existing shares are sold, the linked Bank account is credited with the proceeds. Similarly, when they are sold the linked account is debited. In both cases a mandate is required from the account holder.
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