A shareholder could hold securities either in the form of physical paper certificates or in electronic form. A demat account assists and shareholder hold securities in the electronic form. The conversion of securities in to the electronic format from a physical format is called 'Dematerialization', referred to as Demat in tiny. These securities in electronic format are held on the shareholder’s behalf by an entity called a Depository. This depository interfaces with shareholders through its brokers called depository participants (DPs).
Shareholders are obligatory to open an account, called the demat account, with depository participants to have their securities held in the electronic format. Holding securities in an electronic form gives many benefits over holding them in the form of physical certificates. The holding of securities in electronic form has been credited with transforming the Indian share markets.
What is the hottest argument concerning several demat accounts all regarding?
The scam, referred to as the Demat IPO scam, is about a few shareholders who begin many accounts in their name with diverse DPs. They did this so that, they Can make several requests for Stocks in a share IPO to safe more Stocks in the allotment process. In the retail section, allotment is made on a proportionate basis. Therefore, the chances of upper allotment raises if the number of Stocks applied for are high.