Q.What is meant by Dematerialization?

Dematerialisation is the process of converting physical securities into electronic form held in a demat account, making trading paperless and secure.

Earlier, shares and securities were held as physical paper certificates, which could be lost, stolen, forged or damaged, and transfer took a long time. Dematerialisation solves these problems.

Meaning and working:

• 'Demat' means holding securities in electronic form instead of paper.
• The investor opens a demat account with a Depository Participant (such as a bank or broker) linked to a depository like NSDL or CDSL.
• The physical certificates are surrendered and the equivalent holdings are credited electronically to the demat account.

Benefits:

• No risk of loss, theft, forgery or damage of certificates.
• Quick and easy transfer of securities. …