Electronic Storage of Securities

• Demat accounts convert physical share certificates into digital form.
• All securities are held electronically rather than as paper documents.
• Each holding is represented as a digital entry in the account.
• Shares are stored with depositories like NSDL or CDSL.
• Investors access holdings using their unique Demat account number.

Role of Depository and Depository Participant

• Depositories maintain records of all Demat account holdings.
• Depository Participants (DPs) act as intermediaries between investors and depositories.
• Investors open accounts with DPs such as banks or brokerage firms.
• DPs update accounts with all share transactions and balances.
• Shares are credited or debited electronically based on trades.

Credit of Shares after Purchase

• When shares are bought, they are credited to the investor’s Demat account.
• The process is completed electronically after settlement on the stock exchange.
• Investors can view credited shares in their account statement.
• Credits include purchases, IPO allotments, and bonus shares.
• Funds and shares are reconciled automatically.

Debit of Shares for Sale or Transfer

• Shares sold by the investor are debited from the Demat account.
• The DP and depository handle the transfer to the buyer’s Demat account.
• Debits occur only after trade settlement and confirmation.
• Investors are notified of debits via statements or alerts.
• Transfers can also be made as gifts or for off-market transactions.

Consolidated Portfolio Management

• The Demat account reflects all shareholdings and securities in one place.
• Investors can hold stocks, bonds, mutual funds, and ETFs together.
• Periodic statements provide details of holdings and transactions.
• Enables easy monitoring and management of investments.
• Facilitates timely updates and reconciliation for all account activities.