Dematerialization

Answer: Dematerialisation is the process of converting securities held in physical (paper) form into electronic form and crediting them to the holder's demat account.

The investor opens a demat account with a Depository Participant (DP), fills a Demat Request Form and surrenders the certificates to the DP. The DP sends the request to the depository (NSDL or CDSL) and the certificates to the company or its Registrar and Transfer Agent. After verification the physical certificates are cancelled and the equivalent number of securities is credited to the investor's demat account. It removes the risks of loss, theft, forgery and delay in transfer.