DEMATERIALIZATION OF SHARES (DEMAT)

DEMATERIALIZATION OF SHARES (DEMAT)

Dematerialisation is the process of converting physical shares into electronic format. An investor who wants to dematerialise his shares needs to open a demat account with Depository Participant. Investor surrenders his physical shares and in turn gets electronic shares in his demat account.

In order to mitigate the risks associated with share trading in paper format, dematerialisation concept was introduced in Indian Financial Market. Dematerialisation or Demat in short is the process through which an investor’s physical share certificate gets converted to electronic format which is maintained in an account with the Depository Participant. India adopted the demat System successfully and there are plans to facilitate trading of almost all financial assets in demat format in future. Through this article, we will try to understand the demat process and its benefits from common investor’s perspective.