What is a depository and what is the function of a depository?

What is a depository ?

 What is Depository in Demat Account and what is the function of Depository and what are the documents required to open an account?

 Friends, today we are telling you about Depository, what is Depository and what are its functions. If you have ever bought shares from the share market or you have heard about it from any of your friends, then you must have also heard about Depository.  You must have heard what is the function of depository in share market and why demat account is opened in depository, we are telling you all the important things about it.  To avail the benefits of depository, you have to open a demat account.

What is called depository?

 In the stock market, Depository works like a bank. As we all know, you keep all your money in banks and the bank provides you complete information about your account. You can deposit money whenever you want and withdraw it whenever you want.  In the stock market, the responsibility of buying and selling shares and keeping them in the account is of the depository. For this, investors have to open an account in the depository which is called demat account.  In this account, the depository keeps the complete information of the shareholder with itself. The depository keeps the financial securities de-materialized in a form. When a company gives dividend to its shareholder, it comes directly into the demat account of the shareholder.  For this, the depository provides all the bank details of the investors to the company.

demat account :

 Demat account is an account in which shares purchased by you are deposited. Along with this, mutual funds, ventures, units and securities are also in this account. Demat account works like a bank account in which your money is not kept but is kept in the account of a company.  When you want to sell the shares of a company, they are transferred to the account of another investor from here, just like you transfer money from a bank account.  Earlier, this process was very difficult. Earlier, when you bought shares, the company used to give you its documents and when you had to sell shares, you had to deposit all the documents in the company and this process took a lot of time, but since the depository started  Since we have started the process of Demat account, this work has become very easy.

 Documents required to open demat account :

 To open a demat account, you need some important documents which are as follows.

  •  Aadhar card
  •  PAN card
  •  bank account passbook
  •  3 passport size photographs

What does the Depository work?

If you have to buy shares for the first time in the stock market, then your demat account is opened for this. When your demat account opens, the depository demat account for the purchase and sale of your shares, this process is done under electronic transaction. When your demat account opens, today you become a member of the depository, then the depository keeps a complete recorder of your share and debt security. Ownership record maintenance and trading of shares rests with the depository. Two depositories named NSDL and CDSL are currently working in the country.

How many depositories are operating in the country :

 At present, two depositories are working in the country, whose names are NSDL and CDSL, about which we are telling you in detail.

 1- NSDL

 It is considered to be the oldest and most reliable depository of India. It was started in November 1996, whose full name is National Securities Depositories Ltd.

 2- CDSL

 This is the second depository of India which is related to BSE i.e. Mumbai Stock Exchange. It was started in February 1999. Its full name is Central Depositories Services Ltd.

 So friends, these are the two big depository companies of the country. When you open your account in the depository, that account is called Demat account. Our broker decides in which depository he opens your account.

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