Demat Account Concepts & Processes

Does everybody know what a demat account is? It is an electronic way to hold all of one’s investments, such as bonds, shares, and mutual funds in one place, and is a safe, convenient way to keep track of them.

Having understood the meaning of demat account, let’s now look at certain concepts and processes associated with such accounts.

Transfer, Closure, cum Waiver (TCW)

Individuals can transfer their holdings from an existing demat account to another institution without any additional charge. If they opt for this choice, the beneficiary owners’ (BO) accounts at both the transferor depository participant (DP) and transferee DP are identical. If they wish to transfer a joint demat account, they will have to open the new one in the same names.


  • Account holder/s must submit the duly completed form, in person, to the institution. Corporate accounts can be transferred or closed by an authorized signatory of the institution
  • All holders must sign the form in the presence of an official from the DP
  • Any one of the joint holders must sign in the presence of a bank personnel
  • A stamped and signed copy of the crystal report or client master report from the central depository of the new account, where the transfer is being proposed, needs to be submitted
  • All unused instruction sheets must be cancelled and returned
  • Submission and verification of the self-attested identity proof copy by a bank official is mandatory
  • Names and details of demat account holders on new and old must be identical

Depository Concepts

A depository is a centralized location where all electronic securities are held. India has two such depositories, namely the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL). Under the Depositories Act, individuals can avail these services through one of the DPs.

Securities’ Dematerialization

In this process, physical certificates are converted to electronic securities. All transactions are now executed electronically, which makes it mandatory for investors to follow suit.

Procedure of Dematerialization

After submitting the certificate along with the Demat Request Form (DRF), the DP will verify the details before forwarding them to the Company or Registrar. The dematerialization procedure is completed in approximately 30 days.

Dematerialization Credit

On receipt of the DRF and physical securities, the Registrar or Company processes the request. On successful completion, an equal number of electronic securities is credited to the holders’ demat accounts. If the request is rejected, investors need to contact the DP and seek assistance for the resubmission of a fresh DRF.

Transmission cum Demat

If the investment is held in a joint name of a deceased investor, surviving holder/s must submit the certificates, the death certificate, and the Transmission cum Demat form to the DP. The names of all surviving holder/s must match the details on the demat account.

Transposition cum Demat

If the names on the demat account do not match the names on the physical certificates, a Transposition cum Demat form must be submitted to the DP to convert these into an electronic form.


The electronic holdings are reconverted to physical certificates by submitting the Remat Request Form (RRF). The RRF must be signed by all holders, verified by the DP and then submitted to the Company or Registrar.

Freezing and De-freezing

Demat account holders can freeze their accounts by submitting a request to the DP. To de-freeze the accounts, holders must submit a request in the appropriate format as required by the DP.


A request form signed by all holders must be submitted. All holdings in the account must be transferred prior to closing the demat account. In the case of pending dematerialization requests or corporate actions demat account, closure is not possible.


With an understanding of the various concepts and the process of how a demat account works, users can start financial planning through equity investing.