InvestorQ : What is the process to dematerialize my physical shares and is it safe to keep shares in DP account? I am worried after the Karvy case.
Riya Dwivedi made post

What is the process to dematerialize my physical shares and is it safe to keep shares in DP account? I am worried after the Karvy case.

rhea Babu answered.
3 years ago

Dematerialization refers to converting your physical shares into dematerialized (electronic) shares. Firstly, let me tell you that demat is absolutely safe and you just need to take some basic precautions like regularly checking your ledger, verifying demat statements regularly and not leaving shares idle in the pool account of the broker. Now let us turn to the process of dematerializing shares.

For dematerializing shares, you need to go through the following steps.

1. You need to open a Demat account with a DP and submit the Demat Request Form (DRF) along with the share certificates. Before you submit the certificates to your DP, make it a point to deface the certificates by writing “SURRENDERED FOR DEMATERIALIZATION”.

2. Before sending shares for demat, check two things. Firstly, you must ensure that the stock is already admitted to demat and also that the names on the certificate match exactly with the demat account holder’s name.

3. Each share has a unique ISIN number so ensure that for each ISIN you fill up a separate DRF. If you have 12 ISINs in physical form then you need to fill up 12 DRFs. Otherwise, your DRF will get rejected.

4. The next step is DP scrutiny. The DP will scrutinize and verify the client signature in the DRF matches with the DP account as well as the paid-up status and the lock in status of the shares.

5. In case the share certificates and the DRF are in order in all respects, the DP will then upload the form with details in the DPM software provided by NSDL or CDSL (the principal depositories). Then the Demat Request Number (DRN) is generated, which you must keep safely till you get your demat credit.

6. The request will then be forwarded by the Depository Module of NSDL or CDSL directly to the Registrar & Transfer Agent who maintains the record of shareholders. The RTA will then check with the original signature in the company master record and also verify that the certificates are not duplicate or fake or mutilated in any respect.

7. Once the RTA finds the DRF to be perfect in all respects, then the DP will be intimated electronically and authorize the creation of appropriate credit balances.

8. Once the DP receives the authorization from the RTA via the electronic system, then the DP will credit your demat account with the equivalent number of shares. That completes the process and from that point you are free to either transfer these shares into another demat account or even to sell these shares in the market.

The entire process takes around 20-25 days from start to finish, assuming there no hitches along the way. In case, the process is delayed beyond a month, you can just verify the status through your broker.