Difference Between Demat and Remat
Anybody who is interested to invest in the stock market must be familiar with certain terms like dematerialisation, rematerialisation, etc. Let us learn about the difference between dematerialisation vs. rematerialisation in this article. When you buy shares of a company, electronic shares are issued that get stored in a demat account. Previously, shares were issued in physical form only and investors had great difficulty in storing them due to the drawbacks such as physical damage, theft and forgery of shares. Even the transaction took a lot of time as the shares had to be sent through postal means. And hence to do away with all these, dematerialization process was introduced. It is the process by which you can get your physical shares converted to electronic format. All the electronic shares are stored in NSDL or CDSL. The first thing you have to do to trade in the share market is to open a demat and trading account with a SEBI registered stockbroker. There are two types of broking houses such as discount brokers and full service brokers. If you are just a beginner in the stock market, you can choose a full service broker as they provide all guidance and support by means of research recommendations and customized financial advice.
Rematerialisation is the process of converting electronic shares into physical shares. Why should somebody be interested in doing this? These are for those investors who have merely 1 or 2 shares and don’t want to pay annual demat account maintenance charge just to hold those 2 shares. There is no maintenance charge if you hold physical shares. This is the reversal of dematerialisation.
Procedure for Dematerialisation:
- 1. You need a demat account for this which can be provided by a Depository Participant/Stockbroker.
- 2. Get the DRF (Dematerialisation Request Form) and submit it along with your physical share certificates to the DP/stock broker.
- 3. DP sends your request to depository and RTA.
- 4. Registrar completes dematerialisation and informs DP.
- 5. Your account is credited with electronic shares.
Procedure for Rematerialisation:
- 1. Get the RRF (Rematerialisation Request Form) and submit it to DP.
- 2. The DP sends the request to RTA.
- 3. RTA makes new physical certificate and sends it to you.
|Definition||Conversion of physical shares to electronic format||Conversion of electronic shares back to physical form|
|Maintenance Cost||Annual Maintenance cost is applicable||No maintenance cost|
|Drawback||-||Chances of theft, forgery is high|
|Account maintained by||Depository Participant||Company|
As an investor, you have to know the benefits of having a demat account. If you wish to sell your shares, you should definitely have your shares in electronic format. This also quickens the process of your transaction. Hope you got a clear picture about the difference between demat and remat. Open your demat account and begin investing in the stock market in various investment avenues as per your risk appetite to achieve your long term and short-term goals.