In India stocks and securities are kept electronically in a dematerialized account instead of the investor taking physical possession of the certificates. The investor opens a Demat account when registering with an investment intermediary (or a secondary intermediary). The dematerialized account number is quoted for all transactions to allow the conduct of electronic transactions of operations. Each shareholder will have a dematerialized account in order to carry out transactions
Access to the dematerialized account requires an Internet password and a transaction password. You can initiate transfers or purchases of securities. The purchases and sales of securities in the dematerialized account are made automatically once the transactions are confirmed and completed.
India adopted the DEMAT ACCOUNT for electronic storage, in which stocks and securities are represented and maintained electronically, thus eliminating the problems associated with paper stocks. After the introduction of the deposit system by the Depositary Law of 1996, the process of sales, purchases and transfers of shares became much easier and most of the risks associated with paper certificates were mitigated.
In 1996, the negotiation of NSE began for shares held in the form of a demat account. It was the beginning of a new paperless trading environment. If an investor buys an share today, it is credited to the investor's account in two days. Today, the shares are transferred to the demat account of the investor.