The Demat full form stands for a Dematerialized Account. Demat account that holds financial securities
digitally and to trade shares in the share market. Demat accounts are
maintained by two depository organizations: the National Securities Depository Limited (NSDL) and the Central Depository Services Limited
(CDSL)
Demat enabled the digitization process of the Indian stock
trading market and enforced better governance by SEBI. In addition, the Demat
account reduced the risks of storing, theft, damage, and malpractices by
storing securities in electronic format. It was first introduced in 1996 by
NSE. Initially, the account opening process was manual, and it took investors
several days to get it activated. Today, one can open a Demat account online in
5 minutes. The end-to-end digital process has contributed to popularizing Demat
Dematerialization
is the process of converting the physical share certificates into electronic
form, which is a lot easier to maintain and is accessible from anywhere
throughout the world. An investor who wants to trade online needs to open a
Demat with a Depository Participant (DP). The purpose of is to eliminate the
need for the investor to hold physical share certificates and facilitating a
seamless tracking and monitoring of holdings.
Earlier, the share
certificate issuance process was time-consuming and cumbersome, which Demat has
helped transform by speeding the entire process and storing security
certificates in digital format. Once your Demat account is active, you can
convert paper certificates into digital format by submitting all your physical
securities along with a Dematerialization Request Form (DRF). Also, remember to
deface each physical certificate by mentioning ‘Surrendered for Dematerialization’
on it. You will receive an acknowledgement slip when you surrender your share
certificates.