What Is The Procedure For Converting Physical Shares Into Demat?

Converting physical shares into a digital form is known as dematerialisation. In 2019, the Securities and Exchange Board of India (SEBI) mandated that trading shares in the stock market only occur electronically. This does not mean you cannot own physical shares, just that you cannot trade them. SEBI mandated this rule to ease buying/selling or transferring the shares.

If you have physical shares right now, you must convert them into a digital format to trade in markets. So, let us go through the steps you need to take to convert your physical shares.

To convert physical shares into digital format, you have two options:

• Open a Demat Account: This account stores your shares electronically, making them easily accessible and tradable.

• Request Share Dematerialisation: Submit a request to convert your physical share certificates into digital form, which will then be credited to your Demat account.

When converting physical shares into an electronic format, you need to have a Demat Account. Follow these simple steps to open a Demat account:

• Step 1: Visit the website of the Depository Participant (DP) you want to open the Demat Account with. DPs are intermediaries between the investor and the depository body. They can be banks or any financial institutions.

• Step 2: Fill out the appropriate Demat Account opening form on the site.

• Step 3: Submit all the necessary KYC documents along with the filled application form.

• Step 4: Sign an agreement and schedule of charges with the Depository Participant. This agreement contains details regarding the responsibilities and rights of both the DP and the account user.

• Step 5: After the approval of the Demat Account application, you will receive a unique ID and password to access your trading account.

The second step will convert physical shares into Demat. Follow the steps given below:

• Step 1: Contact your DP for a dematerialisation request form (DRF).

• Step 2: Fill in all the requested details in the DRF form and submit it along with the physical share certificates to your Depository Participant. You must also mention the phrase ‘Surrendered for Dematerialisation’ on each share certificate.

• Step 3: After receiving your DRF and share certificates, the DP will process your request.

• Step 4: Your Depository Participant then sends your request to an appointed registrar and Share Transfer Agent.

• Step 5: After the approval of the dematerialisation request, your DP transfers the electronic version of the shares into your Demat Account.

Other than the obvious advantage of being able to trade your shares, dematerialisation offers various benefits such as:

• Security: Physical share certificates will always risk unauthorised access and theft. When you convert your shares to Demat, these risks are eliminated. Additionally, you require a registered Demat number and password to access an account.

• Accessibility: All your share records are in an online infrastructure; this allows you to access them from any geographical location at any time.

• Reduced Costs: With Demat accounts, you avoid the costs associated with handling physical certificates, such as stamp duty on transfers and administrative fees for processing physical shares. This makes managing your portfolio more cost-effective.
   

Now that you know how to convert physical shares to Demat, you can contact your DP to start the process. The dematerialisation process will only take 2-3 weeks. You can easily buy/sell or trade shares online when the process is complete.

To apply for a Demat Account with HDFC Bank, click here.

Read more about transferring shares from one Demat Account to another by clicking here.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.