Demat account is the primary requirement for transacting in the Indian financial markets. As per an order by the Securities and Exchange Board of India (SEBI) the shareholders must convert physical shares to demat. Therefore, to do the conversion of physical holding into electronic form, you must know about the process. In this article, you will learn the process of converting your physical shareholding in the form of share certificates into a demat account.
Since you want to convert your physical shares into a demat account, the first and foremost thing that you must do is open a demat account. The process of demat account opening is as follows;
Process of Opening Demat Account
- Firstly, you must carefully select the broker or depository participant with whom you want to open a demat account.
- Fill the account opening form with the broker.
- Submit the compulsorydocuments.
- The broker will hand over the agreement documents consisting of the details about your and broker’s rights and responsibilities.
- The broker will send a member to your place for carrying out in-person verification to check the details given by you in the account opening form.
- On successful processing of the application, the broker will give the demat account number, login ID and password. By logging into the demat account, you can start trading in the Indian stock market from anywhere in the world.
When the process of opening the demat account is complete, you can start the procedure for converting physical shares to demat.
Process of Converting Physical Shares into Demat
- Request for Dematerialisation Request Form (DRF) from the depository participant.
- Fill the DRF and submit it to the depository participant.
- Submit the share certificates with ‘Surrendered for Dematerialisation’ written on the certificate along with the DRF.
- The request to complete the physical shares into the demat form will take around two to three weeks of time. On successful verification of the DRF along with the share certificate, you will receive an electronic request for converting physical shares into demat form. The dematerialised shares will then be credited to your demat account.
On completing the process of conversion, you can dispose off the physical share certificate. There is no need to keep them safe. Now the shares are in your demat account and you can easily transfer them electronically from one demat account to another.
The conversion of physical shares into demat account is done because of the many disadvantages of physical shares. Let us learn about them.
Disadvantages of Physical Shares
- You must keep the physical shares safely because there is a risk of losing them due to theft, forgery, damage, etc.
- Transacting through physical shares is a long and time consuming process.
- Physical shares attract stamp duty making the transaction cost higher.
The above are some of the disadvantages of physical shares. To know more about the stock market information, you may visit Trading Fuel. We are the leader in providing stock market education. We regularly update our articles and blogs. All the content on our website is free of cost. To keep learning about the stock market, you may subscribe to our website.