What Does DRN in Demat Account Mean? – Process Of Dematerialisation

What Does DRN in Demat Account Mean?

Meaning of Demat Account.

Demat account means a process through which an investor can trade shares and financial securities in an electronic format instead of physical certificates, thereby reducing several disadvantages of securities in physical form. With dematerialization, an investor follows a streamlined process with modernized trading.

What Does DRN in Demat Account Mean?

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Dematerialization of securities is not mandatory for investors and they can hold securities either in physical form or in electronic form. An investor can also retain a part of his securities in Demat or physical form. However, a particular list of securities declared by the Securities and Exchange Board of India (SEBI) can be held only in a Demat form in the stock exchanges related to National Securities Depository Limited (NSDL).

How Does The Demat Account work?

Let’s take a comprehensive look at how the Demat account works.

Before we dwell on what DRN (Demat request number) means, it is important to understand the intricacies of how a Demat account works. An investor planning to dematerialize his securities needs to open a Demat account with a depository participant (DP).

The investor has to submit the required certificates and a passport size photograph to the DP, after which it will intimate the NSDL electronically and sends the securities to the concerned R&T agent/Issuer. NSDL then notifies the R&T agent/Issuer using the NSDL about the application for dematerialization.

If the R&T agent/Issuer finds the certificates in place, it enrolls NSDL as the holder of the securities (the investor being the beneficial owner) and electronically delivers the application to NSDL for approval. After the confirmation, NSDL credits the securities in the Demat account of the investor with the DP.

DRN In Demat Account

After opening a Demat account, the DP assigns a Client ID to the investor. The investor should surrender the physical share certificates to the DP by filling the dematerialization request form (DRF) after which the DP generates a number known as Demat request number (DRN).

Consequently, your DP will transfer the document along with the DRF to the concerned organization. After verification, the organization authenticates the DRN and the dematerialized securities are credited in electronic format to the Demat account. You have the option to reverse the process if you want and get the securities reconverted into paper form. The process is known as re-materialization.

The Process Of Dematerialisation

An investor must submit the original share certificate along with the Demat request form (DRF) with a DP for Demat account opening. The DP will cancel the share certificate and attach the seal of “surrendered for dematerialization” and send the documents to R&T agent/Issuer after generating an automated request in the depository system.

The DP has to forward the documents to R&T agent/Issuer within 15 days from the date of release of the documents. The R&T agent/Issuer after confirmation of the documents verifies the DRN in the depository system for credit of shares to the Demat account of the investor.

The R&T agent/Issuer may reject a DRN due to signature mismatch, the difference in the name of the investor, lodgement of old and wrong share certificates, etc. In such a situation, the R&T agent/Issuer will give back the original documents to the DP with a covering letter that encapsulates the reasons for refusal.

Moreover, they will also provide the procedure for rectification with a copy signed to the investor. The investor has to rectify the defects and re-submit the certificates through their DP for a Demat account.

For each account started with your DP, you will get a “statement of account” from the DP on a quarterly basis. If the account has a credit/debit during the period, you will receive a “statement of account” within 15 days of the credit/debit to your account. What Does DRN in Demat Account Mean?

Benefits of Dematerialisation

Following are some of the benefits of a Demat account:

1. Easy execution of sale and purchase of mutual funds, stocks, bonds, etc.
2. Quick allotment/credit in case of bonus
3. No chances of share/securities certificates being stolen, lost, or mutilated and no risk of forged documents.
4. Minimum paperwork compared to physical shares.
5. No stamp duty for transfer, i.e., cost-effective
6. No prospect of a delivery gone wrong since everything is done in an electronic format.

An investor must always remember the basics of investing with a Demat account and go for investment opportunities which are long-term and not short-term as it’s a risky situation. Make an informed decision and hold on to the securities until the purpose for which you bought them has been accomplished.

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What Does DRN in Demat Account Mean?