Giving physical shares and securities an electronic format is a process known as dematerialization. Therefore, if you want your mutual fund units, share certificates, government securities, etc. to be dematerialized, open a demat account. After opening the account, you can deposit physical assets to receive electronic shares in the demat account. You require a depository participant (DP), who can manage all of your shares and securities in electronic format, in order to open a demat account. Benefits of depository services are obtained through DP, just like any other banking service. If they adhere to SEBI’s regulations, any financial institution, including banks, stockbrokers, and financial organizations, may serve as a DP. Currently, there are two depositories: National Securities Depository Limited and Central Depository Services India Limited (CDSL) (NSDL). These depositories are registered with Securities of Exchange Board of India (SEBI).
To make investments and investment-related operations like trading and share transfers simpler, regulators like SEBI and market infrastructure organizations like NSE, NSDL, BSE, and CDSL have been advocating for the dematerialization of physical share certificates.
Since the 1990s, investors and authorities have both been concerned about the dematerialization of physical shares. When RTA advised freezing of physical shares, there was an abrupt spike in requests from our investors and clients for Physical to Demat Conversion. Your investment documentation is made simpler with a Demat Account. Maintaining the paperwork and investment records takes labor. Additionally, electronic shares reduce stamp duty by 0.5 percent.
Opening a Demat account is always a wise move because of all its advantages. Let’s look at some significant benefits.