What type of account holds shares in electronic form and records transfers of those shares?
A dematerialised account, or demat account, holds and transfers shares and other securities electronically. An investor opens it with a depository participant. Investors…
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What type of account holds shares in electronic form and records transfers of those shares?
Answer and explanation
Correct answer A
A dematerialised account, or demat account, holds and transfers shares and other securities electronically. An investor opens it with a depository participant. Investors place buy and sell orders through a separate trading account. NRE, NRO and current accounts are bank accounts.
Option feedback
Option A
Correct. A Demat (Dematerialised) Account holds shares and financial securities in electronic form with a depository (NSDL or CDSL) under the Depositories Act, 1996.
Option B
Incorrect. An NRE (Non-Resident External) account is a bank account. A demat account holds securities electronically.
Option C
Incorrect. An NRO (Non-Resident Ordinary) account is a rupee bank account that can hold income earned in India. A demat account holds electronic shares.
Option D
Incorrect. A Current Account is a commercial demand-deposit bank account used for business cash transactions, not for holding dematerialised shares.