• Products
    Investment Suite
    Stocks
    Mutual Funds
    Future and Options
    IPO
    Exchange Traded Funds
    Commodity
    Stockcase (Stock Baskets)
    Non Convertible Debentures
    Sovereign Gold Bond
    Exclusive
    NRI Account
    Corporate/HUF Trading Account
    Private Client Group
    Features
    SipIt
    MTF
    Investment Suite
    Exclusive
    Features
    Stocks
    Mutual Funds
    Future and Options
    IPO
    Exchange Traded Funds
    Commodity
    Stockcase (Stock Baskets)
    Non Convertible Debentures
    Sovereign Gold Bond
    NRI Account
    Corporate/HUF Trading Account
    Private Client Group
    SipIt
    MTF
  • Platform
    Trading Platforms
    Kotak Neo App & Web
    Nest Trading Terminal
    NEO Trade APIs
    Trade From Charts
    Features and Tools
    MTF
    Securities Accepted as Collateral
    Margin Requirements
    Equity Screeners
    Payoff Analyzer
    Calculators
    SIP Calculator
    Lumpsum Calculator
    Brokerage Calculator
    Margin Calculator
    MTF Calculator
    SWP Calculator
    CAGR Calculator
    Simple Interest Calculator
    ELSS Calculator
    Step up SIP Calculator
    All Calculators
    Trading Platforms
    Features and Tools
    Calculators
    Kotak Neo App & Web
    Nest Trading Terminal
    NEO Trade APIs
    Trade From Charts
    MTF
    Securities Accepted as Collateral
    Margin Requirements
    Equity Screeners
    Payoff Analyzer
    SIP Calculator
    Lumpsum Calculator
    Brokerage Calculator
    Margin Calculator
    MTF Calculator
    SWP Calculator
    CAGR Calculator
    Simple Interest Calculator
    ELSS Calculator
    Step up SIP Calculator
  • Pricing
  • Research
    Research Calls
    Long Term calls
    Short Term calls
    Intraday calls
    Derivatives calls
    Pick of the week
    Top Monthly Picks
    Stock Research Recommendations
    MTF Stock Recommendations
    Research Reports
    Fundamental Research Report
    Technical Research Report
    Derivative Research Report
    Research Calls
    Research Reports
    Long Term calls
    Short Term calls
    Intraday calls
    Derivatives calls
    Pick of the week
    Top Monthly Picks
    Stock Research Recommendations
    MTF Stock Recommendations
    Fundamental Research Report
    Technical Research Report
    Derivative Research Report
  • Market
    Market Movers
    Share Market Today
    Top Gainers
    Top Losers
    Stocks
    Large Cap
    Mid Cap
    Small Cap
    Indices
    Nifty 50
    Bank Nifty
    FinNifty
    Nifty Midcap India
    VIX
    All Indices
    Mutual Funds
    SBI Mutual Funds
    HDFC Mutual Funds
    Axis Mutual Funds
    ICICI Prudential Mutual Funds
    Nippon India Mutual Funds
    All AMC's
    IPO
    Upcoming IPO
    Current IPO
    Closed IPO
    Recently Listed IPO
    Tata Capital IPO
    Quarterly Results
    Jindal Steel's Q1 FY 2025-26 Quarterly Results
    SRI LOTUS DEVLPRS N RTY L's Q1 FY 2025-26 Quarterly Results
    Aeroflex Neu's Q1 FY 2025-26 Quarterly Results
    PVP Ventures' Q1 FY 2025-26 Quarterly Results
    Market Movers
    Stocks
    Indices
    Mutual Funds
    IPO
    Quarterly Results
    Share Market Today
    Top Gainers
    Top Losers
    52 Week High
    52 Week Low
    Volume Shockers
    Large Cap
    Mid Cap
    Small Cap
    State Bank of India
    Reliance Industries Ltd
    HDFC Bank Ltd
    Infosys Ltd
    Tata Consultancy Services Ltd
    Hindustan Unilever Ltd
    ITC Ltd
    IRCTC
    NSE
    Nifty 50
    Bank Nifty
    FinNifty
    Nifty Midcap India
    VIX
    BSE
    Sensex
    BSE Bankex
    BSE Small Cap
    BSE Mid Cap
    BSE 100
    Indian Indices
    Global Indices
    Gift Nifty
    S&P
    Nikkei Index
    Hong Kong Index
    KOSPI Index
    Global Indices
    AMC's
    SBI Mutual Funds
    HDFC Mutual Funds
    Axis Mutual Funds
    ICICI Prudential Mutual Funds
    Nippon India Mutual Funds
    Schemes
    Parag Parikh Flexi Cap
    SBI Small Cap Fund
    SBI Contra Fund
    Nippon Small Cap Fund
    ICICI Pru Technology Fund
    Upcoming IPO
    Current IPO
    Closed IPO
    Recently Listed IPO
    Tata Capital IPO
    Austere Systems IPO
    Sharvaya Metals IPO
    Vigor Plast India IPO
    Urban Company IPO
    Karbonsteel Engineering IPO
    Taurian MPS IPO
    Vashishtha Luxury Fashion IPO
    boAt IPO
    Jindal Steel's Q1 FY 2025-26 Quarterly Results
    SRI LOTUS DEVLPRS N RTY L's Q1 FY 2025-26 Quarterly Results
    Aeroflex Neu's Q1 FY 2025-26 Quarterly Results
    PVP Ventures' Q1 FY 2025-26 Quarterly Results
    NDR INVIT Trust's Q1 FY 2025-26 Quarterly Results
    Jaiprakash Associates' Q1 FY 2025-26 Quarterly Results
    Alps Industries' Q1 FY 2025-26 Quarterly Results
    Brightcom Group's Q1 FY 2025-26 Quarterly Results
    Visa Steel's Q1 FY 2025-26 Quarterly Results
    Coffee Day Enterprises' Q1 FY 2025-26 Quarterly Results
    Supreme Holdings & Hospitality's Q1 FY 2025-26 Quarterly Results
    Kavveri Defence & Wireless Technologies' Q1 FY 2025-26 Quarterly Results
  • Learn
    Stockshaala
    Basics of Stock Market
    Introduction to Fundamental Analysis
    Introduction to Technical Analysis
    Derivatives, Risk management & Option Trading Strategies
    Personal Finance
    Resource
    Market Ready
    Kotak Insights
    Infographic
    Podcast
    Webinars
    Youtube Channel
    Investing Guide
    Demat Account
    Trading Account
    Share Market
    Intraday Trading
    IPO
    Mutual Funds
    Events
    Budget 2025
    Muhurat Trading
    Share Market Holiday
    Market Outlook 2025
    Stockshaala
    Resource
    Investing Guide
    Events
    Basics of Stock Market
    Introduction to Fundamental Analysis
    Introduction to Technical Analysis
    Derivatives, Risk management & Option Trading Strategies
    Personal Finance
    Market Ready
    Kotak Insights
    Infographic
    Podcast
    Webinars
    Youtube Channel
    Demat Account
    Trading Account
    Share Market
    Intraday Trading
    IPO
    Mutual Funds
    Budget 2025
    Muhurat Trading
    Share Market Holiday
    Market Outlook 2025
  • Partner
    Business Associates
    Kotak Connect Plus
    Startup connect
    Business Associates
    Kotak Connect Plus
    Startup connect
  • Support
    FAQs
    Circulars
    Bulletins
    Contact Us
    Forms Download
    Get your Statement
    FAQs
    Circulars
    Bulletins
    Contact Us
    Forms Download
    Get your Statement
  • News

All About Dematerialization

  •  6 min read
  •  2,758
  • Updated 13 Aug 2025
All About Dematerialization

Technology has brought about a drastic change in people’s everyday lives. The stock markets too have not been left untouched by the change. In 1875, the Bombay Stock Exchange was founded with an open outcry floor trading exchange. Traders would stand on the floor and shout prices of stocks for buying or selling. Then, money would be exchanged for physical receipts of the shares, which were called certificates. This led to a great amount of paperwork. Even the settlements of trade agreements took time because of the need to deliver the share certificates.

Dematerialisation in India began in the mid-1990s to overcome the limitations of the physical share trading system, which included theft, forgery, loss, and long settlement cycles. The turning point came with the establishment of the National Securities Depository Limited (NSDL) in 1996, followed by the Central Depository Services (India) Limited (CDSL) in 1999. These institutions facilitated the electronic holding and transfer of securities. The Securities and Exchange Board of India (SEBI) made it mandatory for listed companies to trade shares in dematerialised form, leading to faster and safer transactions. Over the years, dematerialisation gained popularity, and now most equity transactions in India are conducted in demat form. This transition has significantly improved transparency, efficiency, and investor confidence in the Indian capital markets.

To convert physical shares into dematerialised form, as an investor, you must first open a demat account with a registered Depository Participant (DP) such as a bank or brokerage. After opening the account, you need to submit a Dematerialisation Request Form (DRF) along with the original physical share certificates to the DP.

The DP then forwards the documents to the concerned registrar or transfer agent. If all details match and the certificates are valid, the registrar approves the request and updates the electronic records. The shares are then credited to your demat account. This process usually takes about 15–30 days. Once completed, you can view and trade these shares electronically, without needing to handle any physical certificates.

  • Common Bank:

Dematerialisation is not just for shares, but also for debt instruments like bonds. Now, you can hold all your investments in a single account.

You can read all the benefits offered by Kotak’s Trinity account.

  • Automatic Update:

Since this is a common account, you don’t have to keep giving all your details like addresses every time you transact or every time you change the details. These details are automatically made available to companies you transact with.

However, you will have to complete your KYC in the first go.

  • Odd-lot Problem:

Earlier, shares were transacted in lots. A single or odd number of securities could not be transacted. This problem is now eliminated. As an investor, the entire process of investing has become a whole lot easier with a host of trading tools offered by Kotak Securities.

  • Delivery Risks:

Dematerialisation has also eliminated the risks of fake shares, thefts, deliveries gone wrong, and so on, and reduced the paperwork involved. Time of delivery has also reduced drastically. Once your trade is approved, the securities are automatically credited to your account. This applies to other company-related activities like stock splits, stock bonuses, and so on.

  • Cost Reduction:

Earlier, when you transferred the securities, you incurred extra costs due to the stamp duty. This is not a problem with securities in their dematerialised forms

  • Easy To Hold:

Paper certificates are vulnerable to tears and damage. In contrast, the dematerialised format is a safe and convenient way to hold securities. You also have a nomination facility, whereby you can facilitate a transfer of shares in the event of your demise.

While dematerialisation has made investing more efficient, it comes with certain drawbacks.

  • One major concern is the risk of cyber fraud or hacking, as all securities are stored electronically.
  • As an investor, you may also face technical glitches on trading platforms or during the transfer of shares.
  • The process involves annual maintenance charges and transaction fees that can reduce profits for small investors.
  • Additionally, if you are an investor who is not tech -savvy may find it difficult to adapt to online systems.
  • Incorrect data entry or discrepancies in demat account details can lead to issues in the transfer or sale of shares, requiring lengthy resolution processes.
Feature Dematerialisation Rematerialisation
Definition
Conversion of physical share certificates into electronic form
Conversion of electronic holdings back into physical certificates
Objective
To simplify trading and storage of securities
To revert to holding physical certificates
Account Requirement
Requires a demat account with a depository participant
Requires submitting a Rematerialisation Request Form (RRF)
Time Taken
Around 15–30 days
May take a few weeks
Trading Flexibility
Easy and fast trading via electronic platforms
Cannot be traded easily; slower processing
Popularity
Widely used in Indian markets
Rarely used
Risk
Cybersecurity and technical glitches
Risk of physical loss, damage, or forgery
  • Fill up an account opening form and submit along with copies of the required ID and address proofs and a passport-sized photograph. You also need to have the original documents for verification.

  • You will be provided with a copy of the rules and regulations, the terms of the agreement and the charges that you will incur.

  • During the process, an In-Person/Online Verification would be carried out. A member of the DP’s staff would contact you to check the details provided in the account opening form.

  • Once the application is processed, the DP will provide you with an account number or client ID. You can use the details to access your account online.

  • As a demat account holder, you would need to pay some fees like the annual maintenance fee levied for maintenance of account and the transaction fee -- levied for debiting securities to and from the account on a monthly basis. These fees differ from every service provider. While some DPs charge a flat fee per transaction, others peg the fee to the transaction value, and are subject to a minimum amount. The fee also differs based on the kind of transaction (buying or selling). In addition to the other fees, the DP also charges a fee for converting the shares from the physical to the electronic form or vice-versa.

  • A demat account can be opened with no balance of shares. It also does not require that a minimum balance be maintained. To know the entire process in detail, you can check how to open a demat account.

To know the entire process in detail, you can check how to open a demat account.

You need to submit proof of identity and address along with a passport size photograph and the account opening form. Only photocopies of the documents are required for submission; originals are required for verification.

Proof of identity: PAN card, voter's ID, passport, driver's license, bank attestation, IT returns, electricity bill, telephone bill, ID cards with applicant's photo issued by the central or state government and its departments, statutory or regulatory authorities, public sector undertakings (PSUs), scheduled commercial banks, public financial institutions, colleges affiliated to universities, or professional bodies such as ICAI, ICWAI, ICSI, bar council etc.

Proof of address: Ration card, passport, voter ID card, driving license, bank passbook or bank statement, verified copies of electricity bills, residence telephone bills, leave and license agreement or agreement for sale, self-declaration by High Court or Supreme Court judges, identity card or a document with address issued by the central or state government and its departments, statutory or regulatory authorities, public sector undertakings (PSUs), scheduled commercial banks, public financial institutions, colleges affiliated to universities and professional bodies such as ICAI, ICWAI, Bar Council etc.

All you need to do is fill in the Demat Request Form (DRM), fill in the appropriate details of the share certificates you hold, and submit it with the physical share receipt. Every share certificate needs a separate DRM form. Once the form is approved, your demat account will automatically be updated to reflect your newly dematerialiszed shares.

Dematerialisation has transformed the way investors like you interact with the stock market, making trading quicker, safer, and paperless. While there are a few limitations to consider, the benefits far outweigh them for most investors. By opening a demat account, you get access to a more streamlined and secure investment experience. Whether you are just starting out or looking to convert old physical certificates, dematerialisation is now the default route for investing in today’s digital first markets.

This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.

Did you enjoy this article?

0 people liked this article.

What could we have done to make this article better?

Get Your Demat in Minutes!
+91 -

Get Your Demat in Minutes!
+91 -