Dematerialisation

Dematerialisation (or demat) is the process of converting physical share certificates and bond documents into electronic form, held in a digital account maintained by a depository. In India, the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) are the two depositories responsible for maintaining demat accounts. Dematerialisation eliminates risks associated with physical certificates—such as loss, forgery, and theft—and enables seamless, paperless transfer of securities. SEBI has progressively mandated demat holding for a wider range of securities, and today virtually all exchange-traded stocks, bonds, mutual fund units, and sovereign gold bonds in India are held in demat form.