Question

Explain the following term/concept:

Dematerialization

Answer 1

1. Dematerialization refers to the process of changing physical share certificates into electronic format. A demat account stores these converted shares. Investors have the option to maintain their shares and securities either physically or digitally.
2. Recently, SEBI has made it mandatory to dematerialize shares and securities that are frequently and widely traded on stock exchanges. This shift to an electronic form significantly reduces the paperwork involved with physical holdings and removes risks such as theft, loss, damage, delays, and delivery issues.