Question:
The process of holding securities in an electronic form is known as :
The process of holding securities in an electronic form is known as :
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Paper certificates turned into electronic holdings in a demat account. The word for this process starts with "demat".
Updated On: Nov 11, 2026
- Dematerialisation
- Rematerialisation
- Depository
- Capitalisation
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The Correct Option is A
Solution and Explanation
Step 1: Understand the idea:
Earlier, investors held share certificates on paper. Paper certificates could be lost, stolen, forged or delayed in transfer.
To remove these risks, securities are now held in electronic form in a demat account. The process of converting paper certificates into electronic form is the process asked about in the question.
Step 2: Check option (A) Dematerialisation:
Dematerialisation means converting physical share certificates into electronic form and holding them in a demat account.
This matches the question exactly. So (A) is right.
Step 3: Check option (B) Rematerialisation:
Rematerialisation is the opposite process. Electronic holdings are turned back into physical certificates.
So (B) is wrong.
Step 4: Check option (C) Depository:
A depository is an institution, such as NSDL or CDSL, that keeps securities in electronic form on behalf of investors. It is the holder, not the process.
So (C) is wrong.
Step 5: Check option (D) Capitalisation:
Capitalisation refers to the total amount of capital used by a company or to turning a cost into an asset. It has nothing to do with holding securities electronically.
So (D) is wrong.
Final Answer:
Holding securities in electronic form is known as dematerialisation, which is option (A).
Earlier, investors held share certificates on paper. Paper certificates could be lost, stolen, forged or delayed in transfer.
To remove these risks, securities are now held in electronic form in a demat account. The process of converting paper certificates into electronic form is the process asked about in the question.
Step 2: Check option (A) Dematerialisation:
Dematerialisation means converting physical share certificates into electronic form and holding them in a demat account.
This matches the question exactly. So (A) is right.
Step 3: Check option (B) Rematerialisation:
Rematerialisation is the opposite process. Electronic holdings are turned back into physical certificates.
So (B) is wrong.
Step 4: Check option (C) Depository:
A depository is an institution, such as NSDL or CDSL, that keeps securities in electronic form on behalf of investors. It is the holder, not the process.
So (C) is wrong.
Step 5: Check option (D) Capitalisation:
Capitalisation refers to the total amount of capital used by a company or to turning a cost into an asset. It has nothing to do with holding securities electronically.
So (D) is wrong.
Final Answer:
Holding securities in electronic form is known as dematerialisation, which is option (A).
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