Ways In Which You Can Convert Your Physical Shares Into A Demat Account
Demat is the abbreviation for Dematerialisation. A Demat account is an account that allows investors to hold their shares and securities in a digital format instead of a physical format.Dematerialisation is the process of converting physical shares into an electronic format. These accounts are just like bank accounts. The only difference being, bank accounts store your money whereas Demat accounts hold your shares and securities. Due to the Demat account, trading, investing and monitoring of securities have become easy and extremely convenient. For an investor to be able to trade in the stock market, it is imperative to have a Demat account. The world is going digital and everyone prefers everything online including trading. The Securities And Exchange Board Of India (SEBI) is aiming for 100% dematerialization of shares in the time to come. It means that very soon all the existing physical shares will have to be mandatorily converted into a digital format.
The process of converting your physical shares into a Demat account is very simple. Investors can get their shares dematerialized by following a few easy steps as mentioned below:
Step 1: Opening a Demat Account
- Contact a Depository Partner (DP) that is registered with the SEBI.
- You will have to fill an account opening form.
- Submit your KYC documents for verification along with the filled application form.
- Sign an agreement with all the terms and conditions for opening a new account.
- Once the verification is complete and the application is processed, you will be provided with a Demat account number and you can then start trading in the share market using your newly opened Demat account.
Step 2: Process of converting your physical shares to dematerialized form.
- Contact your Depository Participant and ask for a Dematerialisation Request Form (DRF).
- Fill the DRF form and submit it to your DP along with your share certificates. Remember, each share certificate should have ‘surrendered for dematerialisation’ mentioned on them.
- Once the verification process of your DRF form and your share certificates are completed and successful, you will receive a message and your physical securities will be dematerialized and transferred to your Demat Account.
- The process may take up to 30 days to be completed.
Step 3: Dispose of physical shares certificates.
- Once the process of converting your physical securities to a digital format is completed, the physical shares certificates can be destroyed. You no longer have to safeguard them. You can now buy or sell your shares in no time using your Demat account.
Of course, it is a personal choice if you want to open a Demat account or not. But a demat account is way more beneficial than physical share certificates. The process of receiving and maintaining a physical share certificate from a company can be very time consuming. They need to be stored safely since they are a lot more susceptible to damage, theft or loss. Any transaction carried out using a physical share certificate requires stamp duty payments. Whereas, transactions carried out using Demat accounts do not require stamp duty payments. By opening and using a Demat account you can avoid duplication or dislodgement of share certificates. There is no time lag involved in this scenario. Also, times are changing and thanks to technology and modernization, there aren’t many brokers and agents who deal with physical shares as most of them prefer online trading.
Demat accounts are an inevitability if you are tired of stockpiles of share certificates. Having a Demat account gives you the opportunity to invest in various asset classes. And it is about time you start dematerializing your shares. But to be able to do so, you will require a Demat account. The process of opening a new Demat account has been mentioned above along with the process of converting your physical share certificates to digital form. And if you are looking for more assistance regarding shares and finances, then connect with a stockbroker now.