Tuesday, March 3, 2015

Demat account

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Demat Account
Earlier, shares and securities were issued to investors in physical form (like certificates etc.). Physical possession of certificates had several risks - like fear of theft, management problem for individuals who used to invest in several shares or securities at several times, or wear and tear of those certificates (If you lose any certificate, you lose your valuable investment return!)

Then dematerialized account (in short Demat account) was invented to reduce those risks. In this account, all type of shares and securities are being stored in dematerialized / digital form (meaning material form is converted to digital form). 

Operating a Demat account is as simple as operating an online bank account. After opening a Demat account, you will be quoted a demat account number. You will use this account number to all type of electronic settlements of trade in shares or other securities.


Demat Conversion - Rematerialization
Converting physical records of investments into digital form is known as "dematerialization" of securities. The reverse is also possible if someone wants to use physical records instead of demat account, and the process is known as "rematerialization".
In that case, one has to fill in a Remat Request Form (RRF) to convert the digital certificates into equivalent physical certificates.


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