What is Dematerialization (Demat of Shares)?
The process of changing physical shares and securities into digital or electronic form is known as dematerialisation or demat of shares. Let's take a closer look at the concept of dematerialization (demat of shares).
Why is Dematerialization (demat of shares)Needed?
It might
be difficult to keep track of all the paper paperwork. Furthermore, the growing
number of papers may result in the loss of an important document. It has the
potential to bring down the Indian stock market and any firms linked to it.
Furthermore, stamp duty is reduced by 0.5 percent when a share is transferred.
Dematerialized (demat of shares) shares get credits and bonuses directly into
their account, with no risk of loss in transit and lower interest rates on
loans linked with Demat accounts.
Process of
Dematerialization (demat of shares)
The
process of dematerialization (demat of shares) begins with the creation of a
Demat account.
·
Choose a DP (depository participant):
Depository Participants are the majority of financial institutions and
brokerage businesses.
·
Fill out the account registration form: To open a
Demat account, you must complete an account opening form. Basic contact
information is included.
·
To verify your papers, you must
send a copy of your income evidence, identity proof, address proof, current
bank account proof, and one passport-sized image.
·
Sign the following standard agreement with the DP: The rules
and regulations, as well as the charges and terms and conditions of the
agreement between you and the depository participant, shall be contained in a standardised
agreement.
·
Document authentication: All of the
documentation you supplied in your application will be verified by a member of
the DP staff.
·
The following is how the Demat account number and
ID are generated: Your Demat account number and ID will be generated
once all of your paperwork have been confirmed. You may use this information to
log into your Demat account online.
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