Question

Securities are kept as electronic entries under:

• A. E-ledger
• B. E-securities
• C. Demat System
• D. None of these

Hint:

Demat accounts eliminate risks of physical certificates and make buying or selling shares faster, safer, and more efficient.

Answer 1

The Correct Option is C

In modern financial markets, physical share certificates are no longer preferred because they involve paperwork, risk of damage, theft, and delays in transfer. Therefore, the financial system introduced a process known as dematerialisation, where securities are converted from physical form into electronic entries stored inside a depositor system.
Step 1: Understanding electronic storage of securities.
Electronic securities are maintained in accounts similar to bank accounts. These accounts are opened with institutions called Depositories (such as NSDL or CDSL). The system they use is known as a Demat System. It ensures that instead of receiving physical paper certificates, investors simply receive electronic confirmations.
Step 2: Evaluate each option.
(a) E-ledger: Although ledgers are used for recording transactions, they are not specifically meant for the electronic storage of securities.
(b) E-securities: This term appears correct but is not the official system used for storing securities.
(c) Demat System: This is the correct and internationally recognized system where securities are held in electronic form within a Demat account.
(d) None of these: Incorrect because option (c) is correct.
Step 3: Final reasoning.
Since Demat accounts convert physical securities into electronic entries and securely maintain them, the correct answer is the Demat System.
Final Answer: (c) Demat System