Demat Account Concepts & Processes

Demat stands for dematerialisation, which allows you to convert one material into another. There is a similarity between a demat account and a savings account. 

Let’s understand the concept of a demat account. 

Those times are gone when traders and investors used to swap their physical share certificates. Holding these certificates was not easy to handle but prone to risks. There is a possibility that these certificates will get damaged during delivery or transfer. To get rid of this hurdle, the National Securities Depository Limited (NSDL) introduced the concept of the demat system, which allows you to hold physical shares in electronic form. Simply put, you can hold all your investments in electronic form using a demat account. 

Demat Account Significance

  • A demat account reduces trading time. You can buy, sell, and transfer shares and other securities within a fraction of a second using this kind of account. 
  • All the mutual funds, equities, shares, and bonds can be held in one single account. 
  • You will not have to use different accounts for different securities. With a single demat account, you can invest in multiple securities simultaneously. You can track the status of different securities from a single location. 
  • There is less chance of losing physical certificates through misfortunes such as robbery, theft, etc. With a demat account, you will not have to worry about the safety and security of all your investments that come with physical shares. 
  • A depository participant (DP) helps you to open a demat account on any depository like NSDL or CDSL in India. There is no need to go to different companies you have invested in. 
  • A single demat account to trade in any random number of shares. It was not possible in the earlier days. 
  • You can decide your investments based on goals without any restrictions. 
  • It unnecessarily eliminates the issuance and distribution of physical share copies and costs. Still, if you would like to have physical share copies, then you can have them. You just have to request the same. 

The Dematerialisation of Securities

This process allows you to convert physical share certificates into electronic form. All the transactions through the demat account will happen in electronic form. Transferring securities is possible through a demat form where there will not be the requirement of stamp duty. There will be electronic execution of all transactions; therefore, it is essential to follow it. 

The Securities and Exchange Board of India (SEBI) is a market regulator that authorizes stock investments in India. With the dematerialization of shares, you will not have to worry about trading’s safety and security because the responsibility of all the shareholdings is upon the central depositories such as NSDL and CDSL. 

The Dematerialisation of Procedure

The starting of dematerialisation happens from opening a demat account. You must choose a depository participant (DP) to open a demat account that provides demat services. Investors will have to request the DP for dematerialisation by submitting the dematerialisation Request Form (DRF), where you will have to send share certificates. There is a need to mention “surrendered for dematerialisation” for every share certificate. 

After you fill in the details on the DRF, they will verify them. The dematerialization request verifies the client’s signature and the specimen signature. There will also be the specimen signature, specific numbers, paid-up status, etc. If the form and security come in order, you will get an acknowledgment slip duly signed and stamped from your DP. If there are no proper securities, the client will get them back. It is all up to the DP how they process the request along with the share certificates to the company. At the same time, they will send them to the Registrars and Transfer Agents via the depository. 

After the approval of the request, there will be the destroyer of physical share certificates. The depository will receive the confirmation of dematerialisation. After that, the dematerialisation of shares to the DP from the depository will dematerialize. You can see shareholdings credited to your account electronically. Almost 15 to 30 days are required for this process from submitting the dematerialization request.

Transfer and Closure

Individuals can transfer their investments to another demat account from one account. You will not have to pay any extra charge for it. You must submit a form to the stockbroker with whom you will open a trading account and demat account. Within one-two working day, you will get shares transferred to your demat account from your respective stockbroker. Opening the new one with the same names is a must when you would like to transfer a joint demat account. 

What are the Depository Concepts? 

A depository acts as a centralized location that allows you to keep all your electronic securities. The process of depository helps investors buy and sell securities through stockbrokers. Depository participants (DPs) also help to maintain shareholdings comprehensively. Depository participants (DPs) act as authorized 

 links between investors and depositories. You will get the essential facility of a demat account through depositories. 


It is pretty easy to understand rematerialization. The rematerialisation process happens when electronic shareholdings to physical certificates after submitting the Remat Request Form (RRF). All shareholders must sign the RRF. After their verification by DP, it is needed to submit to the Registrar. The investor must submit RRF to DP, whose work is to verify and give it to the depository. After checking out your demat holding status, the depository will pass it to the Registrar and Transfer Agent. After data verification by RTA, they will proceed forward to printing your shareholding certificates. The depository will get the request to delete the demat stocks from your demat account. After which, you will get the physical share certificates. 


Demat Accounts come with various benefits, to name a few, safety, easy transaction, and faster trade settlement. If you are willing to open a demat account easily, then you must open your demat account with Share India and begin your investing journey. One of India’s leading stockbroking firms ‘Share India’ offers its users the flexibility and efficiency of trading and investing.

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