This document discusses dematerialization of shares and securities. It defines dematerialization as the conversion of physical securities like shares and debentures into electronic form, which are then stored by a depository. The main benefits of dematerialization are reduced risk, time and cost savings, high liquidity, and ease of corporate actions. National Securities Depository Limited and Central Depository Services Limited are the two depositories in India that work along with depository participants and companies to facilitate dematerialization and provide additional services to investors.

1. Dematerialisation
Of Shares & Securities
BY
Sruthi Rajendran
CMR Institute of Technology

2. What is Demat ?
Conversion of physical securities into electronic
form
It is a process whereby your securities like
shares, debentures,etc are converted into
electronic data and stored in computers by a
depository.
Depository is the body which is responsible for
storing and maintaining investor's securities in
demat or electronic format. In India there are two
depositories i.e. NSDL and CDSL.

3.  Dematerialization may refer to:
 Dematerialization (economics) - the reduction in the quantity of
materials required to serve economic functions (doing more with
less).
 Dematerialization (securities) - moving from handling paper
securities certificates to book form, usually electronic.
 Dematerialization of the art object - an idea in conceptual art where
the art object is no longer material.
 Dematerialization (products) - using less or no material to deliver
the same level of functionality.
 Demat accounts - a type of banking account in India where paper-based
physical shares are stored electronically.
 Teleportation (disambiguation) - the movement of objects from one
place to another without travelling through space.

4. Benefits of Demat
• Demat format reduces the risk of bad deliveries
• Time and money is saved as you are not dealing in paper now. You need not go to the
notary, broker for taking delivery or submitting the share certificate
• Liquidity is very high in case of demat format as whole process in automated.
• All the benefits of corporate action like bonus, stock split, rights etc are managed
through the depository leading to elimination of transit losses
• Interest on loan against demat shares are less as compared to physical shares
• Investors save stamp duty while transferring shares in demat format.
• One needs to pay less brokerage in case of demat shares

5. DEMAT-participants
 Participants:
◦ Investors
◦ The Depository
 NSDL [national securities depository ltd.]
 CDSIL[central depository of securities
india ltd.]
◦ The Depository Participants
◦ The Issuing Company

6. NATIONAL SSEECCUURRIITTIIEESS DDEEPPOOSSIITTOORRYY LLIIMMIITTEEDD ((NNSSDDLL))
 Established in August 1996 as the first depository in
India.
 This depository promoted by institutions of national
stature responsible for economic development of the
country has since established a national infrastructure
of international standards that handles most of the
securities held and settled in dematerialized form in
the Indian capital market.
NSDL has around 1,23,84,644 investors associated
with it currently and has 14,336 service centers all
over India

7. CENTRAL DDEEPPOOSSIITTOORRYY OOFF SSEERRVVIICCEESS LLIIMMIITTEEDD ((CCDDSSLL))
CDSL received the certificate of commencement of
business from SEBI in February, 1999.
 All leading stock exchanges like the National Stock
Exchange, Calcutta Stock Exchange, Delhi Stock
Exchange, The Stock Exchange, Ahmedabad, etc. have
established connectivity with CDSL.
 Currently around 81 lakh investors and 12000 companies
have admitted their securities (equities, bonds,
debentures, commercial papers), units of mutual funds,
certificate of deposits etc. into the CDSL system.
CDSL has around 568 Depository Participants (DPs) in
around 13000 different locations all over India.

8. Depository Participant
A Depository Participant (DP) is an agent of
the depository who is authorized to offer
depository services to investors.
Financial institutions, banks, custodians and
stockbrokers complying with the
requirements prescribed by SEBI/
Depositories can be registered as DP.

9. PPRREECCAAUUTTIIOONNSS
 Holdings in those securities that have not yet been admitted for
dematerialisation by NSDL cannot be dematerialised. List of securities
admitted for dematerialisation should be verified before defacing the
securities.
 Holdings in street name cannot be dematerialised.
 The combination of names of holders as printed on the physical certificate
should be identical with the names initiating the dematerialisation request.
 Separate dematerialisation requests will have to be filled for locked-in and
free holdings.
 Separate dematerialisation requests will have to be filled for holdings
locked-in for different reasons.
 Separate dematerialisation requests will have to be filled for fully paid up
and partly paid-up holdings.
 Separate dematerialisation requests will have to be filled for holdings in the
different ISINs of a company.

10. Investors [Beneficial Owner]
 Individual
 Partnership Firm
 HUF
 Company
“Beneficial Owner” is a person in whose name a
demat account is opened with Depository for the
purpose of holding securities in the electronic
form

11. TO OPEN DEMAT ACCOUNT
 Open an account with DP
 Fill up the Dematerialization Request Form and submit
together with share certificate which is to be demat.
 The DP upon receipt of the shares and the DRF, will issue
an acknowledgement and will send an electronic request to
the Company/Registrars and Transfer Agents of the
Company through the Depository for confirmation of
demat.

12. DDooccuummeennttss RReeqquuiirreedd FFoorr DDeemmaatt
AAccccoouunntt
To open a Demat account you have to provide
documents which fulfill the requirements of KYC
(Know Your Customer) norms. You have to sign a
contract with Stock broker. Generally the documents
are:
PAN (Compulsory)
Bank statement (last 6 months)
One cancelled cheque
Address Proof
Income Tax Return
Two colour photos

13. CCEERRTTIIFFIICCAATTIIOONN PPRROOGGRRAAMM
"NSDL-Depository Operations Module".
This programme helps the candidate to understand and
assimilate the procedures to be followed in conducting
various transactions in the NSDL depository system.
NSDL has made it mandatory for all branches of
Depository Participants (DPs) to have at least one person
qualified in the Certification Programme.

14. Procedure of Demat-for
an investor
Fill DRF(Demat
Request Form)
available with DP
Deface the share
certificate(s) one
wants to
dematerialize by
writing across
“Surrendered for
Dematerialization”
Submit the DRF
and Share
Certificates to DP
DP would forward
them to the
issuer/their
Registrar &
Transfer Agent
Investor’s
depository a/c
would be credited
with the
dematerialized
securities

15. The time involved in the
process
Dematerialisation is normally completed
within 15 days after the share certificates
have reached the issuer/their R&T agent.
Thus it will take only a month from the
date one hands over shares, to receive
Demat Credit.

16. VVAALLUUEE AADDDDEEDD SSEERRVVIICCEESS [[EE- sseerrvviiccee]]
SPEED-e
SPEED-e enables demat account holders (including
Clearing Members) to submit delivery instructions
directly on the Internet through SPEED-e website.
IDeAS
IDeAS (Internet-based Demat Account Statement) is the
facility for viewing balances and transactions in the
demat account updated on an online basis with a delay
of maximum 30 minutes.

17. STEADY
STEADY is a facility which enables the brokers to
deliver/submit contract notes to custodians/ fund
managers electronically by transmitting digitally
signed trade information with encryption. It further
enables fund managers to enrich the contract note and
convert it into instructions for the custodian. STEADY
can be used for FII Trades and Domestic
Institutional Trades.
Depository Account Validation (DAN)
Depository Account Validation (DAN) is an secured
internet based facility which provides an online
interface enabling subscribers to validate DP ID, Client
ID and PAN of investors through a file upload.

18. Other Benefits
Allotment directly in Demat form possible,
Pledge of Demat holdings possible,
Lending/Borrowing of Demat Securities
to/from an Authorized intermediary,
Freezing of a/c possible
Transmission of holdings,
Nomination facility

19. RREEMMAATTEERRIIAALLIISSAATTIIOONN
The process of getting the securities in an
electronic form, converted back into the
physical form is known as
Rematerialisation. An investor can
rematerialize his shares by filling in a
Remat Request Form (RRF).

21. SSTTAATTIISSTTIICCSS AASS OONN AAUUGGUUSSTT 3311 22001144
INVESTOR ACCOUNT 133,03,386
DP SERVICE CENTRES 14,291
DEMAT CUSTODY VALUE 105,59,587
Rs 1,746 billion

22. NNSSDDLL SSTTAATTIISSTTIICCSS
EQUITY SHARES QUANTITY IN
MILLION
VALUE IN RUPEES
MILLION
NSE 4,805 1,209369
BSE 3,020 199,543
TOTAL 7,825 1,408,912
DEBT OR BOND
4,42600
SETTLEMENT

23. TTHHAANNKK YYOOUU