When purchasing shares in India, you do not get any physical certificates. Instead, your shares are held electronically. A share market demat account is essentially a digital safe where you can hold your assets, such as shares, bonds and ETFs, securely and easily.
This guide explains how your shares are held electronically and when they will be credited.
What Is a Demat Account?
“Demat” is short for dematerialised. It means your share certificates are converted into an electronic format and stored in your Demat account.
For buying and selling, you will generally need both a Demat account and a Trading account:
- Demat Account – Where your shares are held electronically
- Trading Account – Where you place orders to buy and sell shares on the stock exchange
When you place an order to purchase a share and the trade is settled, the shares are credited to your Demat account.
How Are Shares Held Electronically?
Your shares are not held directly with your broker. Instead, they are held with a depository. A depository is an institution where your assets are held electronically. India has two depositories:
- National Securities Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
Your broker acts as a Depository Participant (DP). The DP allows you to communicate with the depository. It also creates your account, takes your instructions and helps you view your assets.
Each share has a unique code known as an ISIN (International Securities Identification Number). Your share market demat account shows how many units you hold for each ISIN. As your assets are held with the depository, they remain in your name even if you change your broker.
How Are Shares Purchased?
When buying shares, you will generally go through the following steps:
- Place Order – Select the company you want to buy, the quantity and the price. This is done within your trading account.
- Order Matched – The order is matched with a seller on the stock exchange.
- Payment – The amount is debited from your account.
- Settlement – The trade is processed by the exchange and clearing corporation.
- Shares Credited – The shares are added to your Demat account.
When Will Shares Be Credited?
In India, equity markets operate on a T+1 settlement cycle. “T” refers to the date the trade was placed. This means your shares are generally credited within one working day.
If you purchase shares on a Monday, they are generally credited on Tuesday. If there is a market holiday in between, they are credited on the next working day.
Many apps show your new shares in your account shortly after the trade, but they are often marked as pending delivery. Once the trade is settled, they are fully credited.
Timelines may differ depending on the situation. If you purchase shares in an IPO, they are credited once the allotment process is complete, which depends on the issue. We recommend checking with your broker for updates.
How Can I View My Shares?
You can view your assets through your broker’s platform. Many investors prefer to use an app for demat account so they can view their assets from their phone. Generally, you will see:
- A list of your assets and the number of units you hold
- The average price paid and the current market value
- Profit or loss for each asset
- Pending deliveries from recent purchases
You can also get a statement from your DP or the depository.
Advantages Of Holding Assets Electronically
- No risk of losing, damaging or falsifying physical certificates
- Quick and easy to buy, sell and track
- Quick settlement
- All assets can be tracked in one place (shares, ETFs, bonds and more)
- Easy record keeping with digital statements
Things To Consider
- Check your details – Ensure your name, PAN, bank account and contact details are correct.
- Nominee – Adding a nominee helps your family claim your assets if anything happens to you.
- Charges – Brokers may charge fees for opening your account, annual maintenance and transactions. Be aware of these.
- Keep your login safe – Never share your passwords or OTPs with anyone.
- Check regularly – Review your assets to ensure they are credited correctly. If they are not, let your broker know as soon as possible.
Conclusion
Using a Demat account has made investing in the share market easier and safer. Your assets are held electronically with a depository and are generally credited within one working day under the T+1 cycle. Knowing how this works will help you track your purchases with more confidence.
If you are looking to open an account, platforms such as 5paisa Alpha provide a Demat and Trading account. You can use the app to place your orders and view your assets.