Mutual Funds dematerialisation-rematerialisation

Dematerialisation and Rematerialisation of mutual fund units

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Dematerialisation (demat) converts physical mutual fund unit holdings or folio-based statements into electronic demat-account form. Rematerialisation (remat) reverses the process, converting demat-form units back to folio-based holdings. Most modern Indian mutual fund investors use folio-based holdings as the default; demat is an optional alternative used for specific use cases (pledging, ETF holdings, broker-consolidation).

Folio vs Demat

DimensionFolio-basedDemat-based
Default for most MF investorsYesNo
CostFreeAMC charge (or BSDA Lite per BSDA Lite framework )
Pledging supportLimitedFull (broker pledge)
ETFsNot applicable (ETFs always demat)Required for ETFs
Multi-broker consolidationDifficultEasy

Use cases for demat

Operational mechanics

Demat conversion

  • Investor requests via AMC / depository participant.
  • Folio-based units converted to demat-form units.
  • Held in investor’s CDSL or NSDL demat account.

Remat conversion

  • Reverse process.
  • Units returned to folio-based holdings.
  • Used less frequently than demat conversion.

See also

External references

References

  1. SEBI (Mutual Funds) Regulations 1996.
  2. AMFI Best Practice Guidelines.

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