By Aryan Gautam (St. Angels School, Rohini)
In India, with the introduction of The Depository Act, 1996, the trading of shares on National Stock Exchange (NSE) started. Since then, trading is being done through demat account.
India is one of the fastest nations to adopt and adapt demat. Today, all the transactions of financial securities are being done through it. Therefore, it necessitated opening of virtual platform to hold securities Demat account.
Before 1996, dealing insecurities was troublesome. Shares used to be issued as certificates and sent to Registrar for dissemination. The whole process was painstaking and risks like loss of certificates, thefts, mutilation, forged and mismatched signatures, etc. were there.
Dematerialized trading of shares mitigated all the risks that were there prior to 1996. Now, the settlements and disbursement of Corporate benefits are faster and smoother. It ensures better liquidity and monetization.