Depository System — Secretarial Practice STD 12 Commerce / Arts — Question
Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsSecretarial PracticeDepository System4 Marks
Question
Depository system allows both: Physical to electronic and electronic to physical conversion.
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Answer
Under the Depository system, physical certificates can be converted into electronic ones known as ‘Dematerialization’.
Similarly, the conversion of electronic securities into physical certificates is known as ‘Rematerialization’.
Due to Dematerialization transfer of securities takes place fast and transactions are also settled immediately. Whereas in Rematerialization, settlement of transactions in the physical system takes more time.
In Rematerialization, storing and handling physical certificates is more time-consuming. Whereas in dematerialization, there is no handling of certificates.
There are chances of certificates getting lost, damaged, torn, stolen, misplaced during transit, etc.
In this technological world, Demat securities are more preferred over Rematerialized securities.
Thus, it is rightly justified that the Depository system allows both: Physical to electronic and electronic to physical conversion.
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