The process of changing physical shares and securities into digital or electronic form is known as dematerialisation or demat of shares. Let's take a closer look at the concept of dematerialisation (demat of shares).
The Securities and Exchange Board of India, better known as SEBI, has two depositories: Central Depository Services India Limited (CDSL) and National Securities Depository Limited (NSDL).
Why is Dematerialization (demat of shares)Needed?
It might be difficult to keep track of all the paper paperwork. Furthermore, the growing number of papers may result in the loss of an important document. It has the potential to bring down the Indian stock market and any firms linked to it. Furthermore, stamp duty is reduced by 0.5 percent when a share is transferred. Dematerialized (demat of shares) shares get credits and bonuses directly into their account, with no risk of loss in transit and lower interest rates on loans linked with Demat accounts.
Process of Dematerialization (demat of shares)
The process of dematerialization (demat of shares) begins with the creation of a Demat account.
- Choose a DP (depository participant): Depository Participants are the majority of financial institutions and brokerage businesses.
- Fill out the account registration form: To open a Demat account, you must complete an account opening form. Basic contact information is included.
- To verify your papers, you must send a copy of your income evidence, identity proof, address proof, current bank account proof, and one passport-sized image.
- Sign the following standard agreement with the DP: The rules and regulations, as well as the charges and terms and conditions of the agreement between you and the depository participant, shall be contained in a standardised agreement.
- Document authentication: All of the documentation you supplied in your application will be verified by a member of the DP staff.
- The following is how the Demat account number and ID are generated: Your Demat account number and ID will be generated once all of your paperwork have been confirmed. You may use this information to log into your Demat account online.
