Study the following case/situation and express your opinion.
| Mr. Satish holds 100 shares of Raj Company Ltd. in physical mode and wishes to convert the same into electronic mode: |
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| Mr. Satish holds a Savings Bank Account with SBI Can he deposit his shares in this account for demat? |
| What type of account is needed for the same? |
| Is the RBI which will be the custodian of shares of Mr. Satish after demating? |
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Start your 14-day free trial to unlock the full solution →Shares cannot go into a savings account; Mr. Satish needs a demat account, and the depository (not the RBI) holds his shares.
Can he deposit the shares in his SBI savings bank account for demat? No. A savings bank account is meant for holding and operating money, not securities. Physical shares cannot be dematerialised into a bank savings account, so this is not possible.
What type of account is needed? Mr. Satish must open a demat (dematerialisation) account. This is a special account used to hold securities in electronic form. He can open it with a Depository Participant (DP), such as a bank or broker registered as a DP with a depository, and then surrender his physical certificates for conversion into electronic form.
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