Dematerialization is the process of converting physical financial instruments such as share certificates, mutual funds into electronic form. View the presentation to learn more!
2. WHAT IS
DEMATERIALISATION
• Demat stands for dematerialisation. Dematerialisation is the process of
converting physical financial instruments such as share certificates, mutual
fund investments, and bonds into electronic form.
• A demat account is similar to a bank account. When you receive your
bank statement, you will see 2 columns – deposits and withdrawals of
money and balance money in the account on the last day of the
statement. Similarly, a demat statement will show the investments you
have bought, sold and the balance investments held on the last day of
the statement. (C) Axis Bank Ltd.
3. DEMATERIALISATION
OF SHARES
(C) Axis Bank Ltd.
• An Investor who needs to dematerialise his shares needs to open a demat
account with Depository Participant, a market intermediary through which
investors can avail the depository services.
• This physical shares are then surrendered by the investor and in return he
gets electronic shares in his demat account.
4. ADVANTAGES OF
DEMATERIALISATION
ADVANTAGES OF
DEMATERIALISATION
Holding your investments in demat form is easy and
convenient
You don’t have to face the problem of losing
investment certificates or receiving forged
certificates
Transferring securities becomes easy
You incur lower costs associated with transactions
when compared to physical buying and selling of
securities
You receive bonus shares and share splits
automatically
(C) Axis Bank Ltd.
5. How to Open a
Demat Account
(C) Axis Bank Ltd.
How to Open a
Demat Account
Fill Form: Fill in an account opening form for broking
service and for opening demat account
Sign DP Agreement: Sign a DP agreement and
Power of Attorney permitting the DP to transfer
shares in and out of your account when you buy
and sell
KYC Requirements: Complete the KYC requirements
for which you need to provide your identity and
address proof and cancelled cheque of your bank
account which you want to link to your broking and
demat account
Once the account is opened, the DP will give you a
client id (very similar to a bank account number)