Question

What is meant by Dematerialization?

Hint:

Remember: Demat = Physical shares → Electronic form.

Answer 1

Concept: Dematerialization is an important concept in modern financial markets.
Step 1: Definition.
Dematerialization (Demat) is the process of converting physical share certificates into electronic form and holding them in a demat account.
Step 2: Purpose.

• Eliminates risks of loss, theft, or damage of physical certificates
• Facilitates easy and faster trading of securities

Step 3: Conclusion.
Thus, dematerialization ensures safe and convenient holding of securities in electronic form.