How to Convert Physical Shares into Demat Form?

In the past, the shares of a company were held in the form of physical certificates, but with the introduction of Demat accounts, storing your securities digitally became a reality. With dematerialization, the physical share certificates are converted into electronic form, which provides safety and convenience to investors. This process eliminates risks associated with physical certificates, such as loss, theft or damage. Additionally, it simplifies the process of transferring securities and makes portfolio management easier. 

In this blog, we will walk you through the process of converting the physical shares into electronic format, ensuring a flawless transition to the mоdern and paperless world of stock trading. 

What is Dematerialisation?

Dematerialization refers to the process of converting the physical shares into an electronic form, which can then be stored in a Demat account. This modern approach eliminates the need for physical share certificates and reduces the risks of loss, theft, or damage. Investors who hold physical shares can convert them to digital format by following a simple process.

To convert physical shares into demat, the first step is to open a Demat account online with a Depository Participant (DP), typically a bank or stockbroker. Once the account is set up, fill out a Dematerialisation Request Form (DRF) and submit it along with the physical share certificate to the DP. The DP verifies the details and sends the request to the issuer or R&T agent for approval. Once approved, the shares are credited to the investor’s Demat account in electronic form.

Knowing how to convert the physical shares to demat is crucial for modern investors. It streamlines portfolio management and tax filings and reduces the need for paperwork. Converting physical shares to demat is now compulsory practice for better security and convenience in managing one’s investments. 

Process to Convert Your Physical Shares into Demat Form

The process of converting your physical shares to demat simply ensures the secure and paperless management of your investments. Here’s a step by step guide on how to convert physical shares into demat form:

• Open a Demat Account Online: Begin with opening a Demat account with a Depository Participant (DP), which could be a bank or stockbroker. This account will hold your electronic shares after successful dematerialization.

• Submit Physical Share Certificates: Once your Demat account is active, then obtain a Dematerialisation Request Form (DRF) from your DP. Fill out the form and submit it along with the original physical share certificates. The DP gives an acknowledgement slip in return.

• Verification by DP: Your DP will verify the details provided in the DRF and ensure the authenticity of the physical share certificates. Upon successful verification, the DP enters the details in the DPM software and a Dematerialization Request Number (DRN) is generated.

• Forwarding to Company & Depository: After the generation of DRN, the request is forwarded to the Depository Module (DM). After verification, the DP forwards your request to the issuer or R&T agents.

• Credit to Demat Account: Once the dematerialization process is complete, your shares are converted into electronic form and credited to your online Demat account.

Documents Required to Convert Physical Share Certificate to Demat

To convert the physical shares to demat and certain documents are required to ensure a smooth transition from paper-based certificates to electronic shareholding. Here is a list of the essential documents and steps to follow on how to convert physical shares into demat:

• Demat Account: First, open a Demat account online with a Depository Participant (DP) such as a bank or stockbroker. Documents required are a PAN card, proof of identity, proof of address, bank details, etc.

• Dematerialisation Request Form (DRF): Once your account is active and obtains a DRF from your DP. This form is mandatory for initiating the dematerialization process.

• Original Physical Share Certificates: Submit your original physical share certificates along with the DRF. Ensure that the details on the certificates match those in your DRF form.

• Identity and Address Proof: In some cases, your DP may ask for additional documents like a PAN card, Aadhaar card, or other identity and address proof to verify your credentials.

Knowing how to convert physical shares to demat is essential for modern investors. Submitting these documents will ensure a smooth, secure conversion process and allow you to enjoy the benefits of paperless shareholding. 

What are the advantages of converting physical shares into Demat?

Converting the physical shares to demat offers numerous advantages and makes it an essential step for modern investors. Here are the key benefits:

• Security: One of the biggest advantages is enhanced security. Physical share certificates are prone to theft, damage, or loss. By converting them to demat form, investors eliminate these risks and ensure their shares are safely stored in electronic form.

• Convenience: Management of physical shares can be difficult, especially when trading or transferring shares. By knowing how to convert physical shares into demat, you can easily access, trade and transfer shares online.

• Faster Transactions: Dematerialization speeds up the process of buying and selling shares. Once in demat form, settlement transactions are processed electronically, making them quicker and more efficient.

• Elimination of Paperwork: With demat, there’s no need to handle large volumes of paperwork. You avoid delays in settlement caused by the verification of physical documents.

• Cost Reduction: Demat account eliminates paperwork, which reduces administrative effort and costs.

Knowing how to convert physical shares to demat ensures better portfolio management, increased security and faster transactions, making it a highly beneficial move for investors. 

Disadvantages of Using Physical Share Certificates for Trading of Shares

Holding physical share certificates comes with several disadvantages, which is why converting the physical shares to demat has become essential. Here are the key drawbacks of trading with physical shares:

• Risk of Loss or Theft: Physical share certificates can be lost, stolen or damaged and cause significant inconvenience and potential financial loss. In contrast, the dematerialized shares are securely stored in electronic form and eliminate risks.

• Cumbersome Trading Process: Trading physical shares involves extensive paperwork and a lengthy verification process. This can delay transaction and settlement times. By learning how to convert physical shares into demat, investors can avoid these delays and streamline their investing journey.

• High Costs: Transferring physical shares requires extensive paperwork, which can increase transaction costs due to more administrative effort. Converting to demat form eliminates the extra expense.

• Limited Accessibility: Physical shares require the owner to be present in person with the certificates at the time of transfers or sale, making it difficult to manage your investments remotely. 

• Increased Risk of Frauds: Physical shares are more susceptible to forgery or fraudulent transfers. Dematerialization helps safeguard your investments with secure electronic records.

Investors can avoid these disadvantages by understanding how to convert physical shares to demat.

How to open a Demat account with Pocketful

Opening a Demat account with Pocketful is a simple and efficient way to manage your shares digitally. Here’s a step-by-step guide on how to open a Demat account with Pocketful:

• Visit Pocketful’s Website or App: Start by visiting Pocketful’s official website or downloading their app. The platform allows you to easily manage your investments and convert physical shares to demat form.

• Sign Up or Log In: Create an account by providing the basic personal details or log in if you are already registered.

• Fill in Your Details: To open a Demat account online, you will need to provide documents such as a PAN card, proof of identity, address proof, bank details, etc. These details are necessary for the KYC process.

• Submit Documents: Upload your documents and your bank account details. If you are looking to convert physical shares, Pocketful’s team will guide you through the steps on how to convert physical shares into demat.

• Complete e-KYC and Verification: Pocketful secure e-KYC process makes verification quick and easy. Once your details are verified, your Demat account will be activated.

By following these steps, you can open a Demat account with Pocketful and manage your investments effortlessly by converting physical shares to demat. 

Conclusion

Opening a Demat account with Pocketful is a streamlined and secure process that enables the investors to efficiently manage their shares online. By following a few simple steps including signing up, submitting the required documents and completing e-KYC, users can open a Demat account online and seamlessly convert physical shares to demat form. 

This transition ensures better security, quicker transactions, and convenience in managing the investments. With Pocketful’s user friendly platform, converting physical share certificates into digital form becomes a hassle-free experience, which allows you to take full control of your portfolio with confidence and ease. 

Frequently Asked Questions (FAQs)