Dematerialisation

Of Shares & Securities

What is Demat

Conversion of physical securities into

electronic form
No distinctive number to securities
required as depositing & withdrawing
money from a bank without bothering
about distinctive no. of currency

Demat-need ?

bad deliveries due to signature difference

mistakes in completion of transfer deeds
tearing and mutilation of securities
fake certificates
fraudulent interception of certificate in transit
transfer stamp duty
extra consumption of time by the Companies
postal delays and charges etc

Dematerialisation

Introduced in India through the enactment of

the Depositories 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 exchanges connected to NSDL

DEMAT-participants
Participants:

Investors
The Depository

NSDL [national securities depository ltd.]

CDSIL[central depository of securities india ltd.]

The Depository Participants

The Issuing Company

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

Depository

a depository is an organisation, which

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

Depository Participant
A Depository Participant (DP) is an agent
of the depository who is authorised 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.

Procedure of Dematfor an investor

Fill DRF(Demat
Request Form)
available with DP
Deface the share
certificate(s) one
wants to dematerialise
by writing across
Surrendered for
Dematerialisation

Submit the DRF and

Share Certificates to
DP
DP would forward
them to the issuer/their
Registrar & Transfer
Agent
Investors depository
a/c would be credited
with the dematerialised
securities

The time involved in the

process

Dematerialisation 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.

Trading & Settlement in

Dematerialised Securities

If you are a buyer:

Purchase securities in any of the S.E.s(connected

to NSDL) through a broker of your choice and make
payment to your broker
Broker arranges payment to clearing corpo./clearing
house of the stock exchange
Broker receives cr. in his clearing a/c
Broker can directly transfer these securities to your
a/c
Broker gives instructions to your DP to debit his
clearimg a/c and credit your depository a/c.
You give instructions to your DP for receiving Cr.
If instructions match your a/c with your DP is
credited

Trading & Settlement in

Dematerialised Securities

If you are a seller

Sell your demat securities in any of the Stock

Exchanges linked to NSDL through a broker
You give instructions to your DP for Debit of your
Depository a/c and Credit of your brokers clearing
member a/c at least 24 hrs i.e.one working day prior to
the pay-in date or before the deadline prescribed by
your DP
On pay in day your broker gives instruction to his DP for
delivery to clearing corpo.
Broker receives payment from the clearing corpo.
You receive the payment accordingly.

Charges

Charges are paid through DPs

Custody charges: 0.01% p.a.(Rs.10 for every

Rs.100,000) of the average market value of
securities held in a/c
Settlement charges: 0.02% (Rs.20 for every Rs.
100,000)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
Rematerialisation charges of 0.10%(Rs.100 for
every Rs.100,000) of the market value of
securities or Rs.10,whichever is higher

Other Benefits
Allotment

directly in Demat form

possible,
Pledge of Demat holdings possible,
Lending/Borrowing of Demat Securities
to/from an Authorised intermediary,
Freezing of a/c possible
Transmission of holdings,
Nomination facility