Consider the following statements about holding shares in demat form:
(A) Shares can be transferred to some other account just like cash.
(B) Demat securities can be pledged or hypothecated to get loans.
(C) Holding shares in demat form is very convenient, as it is just like a bank locker.
(D) Electronic holdings can be reconverted into physical certificates.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (B) and (D) only
(A) Shares can be transferred to some other account just like cash. — Correct. Dematerialisation lets shares move to another account just like cash.
(B) Demat securities can be pledged or hypothecated to get loans. — Correct. Demat securities can be pledged or hypothecated to raise loans.
(C) Holding shares in demat form is very convenient, as it is just like a bank locker. — Incorrect. Holding shares in demat form is convenient because it is just like a bank account. Shares sit as an electronic balance in an account, with no papers to store.
(D) Electronic holdings can be reconverted into physical certificates. — Correct. Electronic holdings can be reconverted into physical certificates; this is rematerialisation.
NCERT (Pre-rationalised Edition): “Dematerialisation and Depositories … Holding shares in demat form is very convenient as it is just like a bank account. Physical shares can be converted into electronic form or electronic holdings can be reconverted into physical certificates (rematerialisation). Dematerialisation enables shares to be transferred to some other account just like cash and ensures settlement of all trades through a single account in shares. These demat securities can even be pledged or hypothecated to get loans. …” |