Friday, August 5, 2011

What Is Dematerialization?

Dematerialization, in short called "demat", is the process by which an investor in share market gets physical share certificates converted into electronic form maintained in an account with the Depository Participant.

Investors can dematerialize share certificates that registered in their name and belong to the list of securities admitted for dematerialization at the depositories (institution that maintain investor's securities in the electronic form). NSDL and CDSL are two depositories in India.

There is some stamp duty for share trading with Demat but it also offers several advantages. Demat allows to hold shares of companies in electronic form that eliminates the cost of courier and other documentation. Also there is no chance of loss of share certificates in transit. It also reduces brokerage charges. Investors also get bonuses and other payments directly into his or her depository account that saves time and eliminates any potential risk.

Demat Account

How to Open a Demat Account


Opening a depository account is as simple as opening a saving bank account. Just visit any bank or brokerage house that offer the facility and fill up the required form and submit the required documents and you are done.

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