In the demat system, rematerialisation means:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → converting electronic holdings into physical certificates
Option (1) converting electronic holdings into physical certificates — Correct. Physical shares can be turned into electronic form, and electronic holdings can be turned back into physical certificates. This reverse step is rematerialisation.
Option (2) converting physical certificates into an electronic form — Incorrect. Converting physical certificates into electronic form is dematerialisation.
Option (3) pledging demat securities to get loans — Incorrect. Pledging demat securities to get loans is a benefit of holding shares in demat form. No conversion is involved.
Option (4) transferring demat shares to some other account just like cash — Incorrect. Moving shares to another account just like cash is also a benefit of dematerialisation.
NCERT (Pre-rationalised Edition): “Dematerialisation and Depositories … The Securities and Exchange Board of India (SEBI) has made it mandatory for the settlement procedures to take place in demat form in certain select securities. 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. …” |