Answer: Dematerialisation is the process of converting physical share or debenture certificates into electronic form.
The investor opens a demat account with a Depository Participant (DP), fills in the Demat Request Form (DRF) and surrenders the physical certificates to the DP. The DP sends the request to the depository (NSDL/CDSL) and the certificates to the issuer company or its Registrar and Transfer Agent. After verification, the company cancels the physical certificates and confirms to the depository, which credits the securities to the investor’s demat account. Dematerialisation removes problems of physical certificates such as loss, theft, forgery, bad delivery and stamp duty on transfer.