DEMATERIALIZATION OF SHARES IN INDIA


A steady rise in the number of individual investors in the stock markets has been a trend of late. Unlike earlier, these investors are no more only from metropolitan cities. They now belong to even small and remote cities and towns. The advancements in online trading with the help of digital technology have improved the access that investors have to the capital markets. However, things were not the same earlier. 

Physical certificates were given to the investor for every investment and these physical copies had to be produced every time to make a claim or transaction on these certificates. This paper-based system of trading in securities wasted a lot of time and was vulnerable to errors, frauds, theft, and damage. The Securities and Exchange Board of India introduced the Depository Act, 1996, which provides for the electronic bookkeeping of shares. This act paved the way for the establishment of depositories and made the dematerialization of the physical certificates possible. 

Dematerialization of certificates and the electronic transaction of securities made it safe, fast, and convenient to trade them. For anyone who is aiming to invest in the stock market, it is important to understand the various processes related to the dematerialization of shares and the charges and processes for opening and keeping Demat accounts and trading accounts.

 

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