Scribd Logo
Upload

Welcome to Scribd!

  • 44 views

    Dematerialization

    Uploaded by

    Saurabh Bhirud
    Dematerialization is the process of converting physical securities such as shares or debentures into electronic form and storing them in computers. This eliminates the need for physical certificates. It provides benefits like reduced risk, lower costs, increased liquidity and convenience. In India, dematerialization was introduced through the Depositories Act of 1996 and is handled by two depositories - NSDL and CDSL. Investors open demat accounts with Depository Participants who act as intermediaries between the investors and the depositories. The process involves submitting physical certificates to be dematerialized to the DP along with a request form. The DP then electronically requests the depository to credit equivalent dematerialized securities in the investor's account.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Dematerialization

    Uploaded by

    Saurabh Bhirud
    44 views19 pages
    Dematerialization is the process of converting physical securities such as shares or debentures into electronic form and storing them in computers. This eliminates the need for physical certificates. It provides benefits like reduced risk, lower costs, increased liquidity and convenience. In India, dematerialization was introduced through the Depositories Act of 1996 and is handled by two depositories - NSDL and CDSL. Investors open demat accounts with Depository Participants who act as intermediaries between the investors and the depositories. The process involves submitting physical certificates to be dematerialized to the DP along with a request form. The DP then electronically requests the depository to credit equivalent dematerialized securities in the investor's account.

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Dematerialization is the process of converting physical securities such as shares or debentures into electronic form and storing them in computers. This eliminates the need for physical certificates. It provides benefits like reduced risk, lower costs, increased liquidity and convenience. In India, dematerialization was introduced through the Depositories Act of 1996 and is handled by two depositories - NSDL and CDSL. Investors open demat accounts with Depository Participants who act as intermediaries between the investors and the depositories. The process involves submitting physical certificates to be dematerialized to the DP along with a request form. The DP then electronically requests the depository to credit equivalent dematerialized securities in the investor's account.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views19 pages

    Dematerialization

    Uploaded by

    Saurabh Bhirud
    Dematerialization is the process of converting physical securities such as shares or debentures into electronic form and storing them in computers. This eliminates the need for physical certificates. It provides benefits like reduced risk, lower costs, increased liquidity and convenience. In India, dematerialization was introduced through the Depositories Act of 1996 and is handled by two depositories - NSDL and CDSL. Investors open demat accounts with Depository Participants who act as intermediaries between the investors and the depositories. The process involves submitting physical certificates to be dematerialized to the DP along with a request form. The DP then electronically requests the depository to credit equivalent dematerialized securities in the investor's account.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 19

    What is Dematerialization?

    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.
    Actual stock certificates are slowly being removed
    and retired from circulation in exchange for
    electronic recording.
    Benefits of Dematerialization

    Reduces risk of bad deliveries

    Saves time and money (less paper work)

    High liquidity

    Elimination of transit losses

    Interest on loan against demat shares are less

    Saves stamp duty while transferring

    Less brokerage
    Dematerialization

    Introduced in India through the enactment of the


    Depositor Act, 1996.
    It is not mandatory
    One may keep its holding partly in physical form and
    partly in Demat form
    A select list of securities announced by SEBI can be
    delivered only in demat form in the stock exchange
    connected to NSDL
    Demat Participants

    Participants:
    o Investors
    o The Depository
    • NSDL ( National Securities Depository Limited)
    • CDSL ( Central Depository of Securities of India Limited)
    o The Depository Participants
    o The Issuing Company
    Depository

     A depository is an organization, which holds the


    beneficial owner’s securities in the electronic form,
    through a registered Depository Participant (DP)
     A depository functions somewhat similar to
    commercial bank.
     To avail of the services offered by a depository, the
    investor has to open an account with it through a
    registered DP.
    NSDL

    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
    currently and has 14,336 service centers all over India.
    CDSL

    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, Ahmadabad, etc. have
    established connectivity with CDSL.
    Currently around 81 lakh investors and 12000 companies
    have admitted their securities, units of mutual funds,
    certificate of deposits etc. into the CDSL system.
    CDSL has around 568 Depository Participants in around
    13000 different locations all over India.
    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.
    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
    Process - 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.
    Documents Required For Demat Account

    To open a Demat account you have to provide


    documents which fulfill the requirements of KYC
    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
    Process of Dematerialization

    Fill DRF available with DP

    Deface the share certificate(s) one wants to Dematerialize by


    writing across “surrendered for Dematerialization

    Submit the DRF and Share Certificate 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
    Time Involved

    Dematerialization 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.
    Value Added Services [E-services]

    SPEED-e
    IDEAS
    STEADY
    Depository Account Validation (DAN)
    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
    Trading & Settlement in Dematerialized Securities

    If you are a buyer: If you are a seller:


    Purchase securities in any of the S.E.s Sell your demat securities in any of
    through a broker of your choice and the stock Exchange linked to NSDL
    make payment to broker. through a broker
    Broker arranges payment to clearing
    You give instructions to your DP for
    corpo./clearing house of the stock
    exchange.
    Debit of your Depository a/c credit of
    Broker receives credit in his clearing a/c. your broker’s clearing member a/c at
    Broker can directly transfer these
    least 24hrs i.e. one working day prior
    to the pay-in date or before the
    securities to you’re a/c.
    Broker gives instructions to your DP to
    deadline prescribed by your DP
    On pay in day your broker gives
    debit his clearing a/c and credit
    depository a/c. instruction to his DP for delivery to
    You give instructions to your DP for clearing corpo.
    receiving Cr. Broker receives payment from the
    If instructions match you’re a/c with clearing corpo.
    your DP is credited You receive the payment accordingly.
    Charges

    Charges are paid through DPs


    Custody charges:0.01% p.a. of the average market
    value securities held in a/c
    Settlement charges: 0.02% of the market value of the
    securities being transferred from selling broker to
    the clearing corpo. of the stock exchange and same
    charges from clearing corpo. To buying agent
    THANK YOU

    You might also like