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June 14, 2026
The Dispatch

Definition

Dematerialisation

Dematerialisation is the process of converting physical share certificates into electronic form held in a demat account.

Before 1996, shares in India were held as paper certificates, prone to theft, forgery, and delays in transfer. Dematerialisation ('demat') converts those certificates into electronic balances held with NSDL or CDSL.

Since 2019, SEBI has barred the transfer of physical shares; securities must be in demat form to be sold. To dematerialise old certificates, an investor submits a Dematerialisation Request Form (DRF) along with the certificates to their DP.

Related terms

  • DepositoryA depository is an institution that holds your shares and securities in electronic (demat) form, much like a bank holds your money.
  • RematerialisationRematerialisation is the reverse of demat: converting electronic securities back into physical paper certificates.
  • Demat AccountA demat account holds your shares and securities in electronic form, eliminating physical certificates and enabling seamless trading and settlement on stock exchanges.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.