Regulators like SEBI and market infrastructure institutions like NSE, NSDL, BSE & CDSL have been pushing for Physical Share Certificates to be dematerialized to simplify investments and investments related activities like trading and share transfers.
Dematerialization of physical shares has been an issue for both the regulators and investors since the 1990s. There was a sudden rush in the inquiries from our investors and clients about Physical to Demat Conversion when RTA suggested freezing of physical shares. We know we need to act now to make things simple and transparent for our clients, says Ranjit Jha, CEO and MD of Rurash Financials.
While we started to work on this vertical a few months back, it was the client insight that sparked the necessity to simplify physical to demat conversions. We started receiving cases where share consultants and even some of the leading brokerage firms were trying to capture the investors with physical share certificates to sell Demat accounts and get portfolios. They felt it was less about solving the problem at hand and more about a case of upsell or cross sell, said the vertical lead of demat services at Rurash.
The problems in physical to demat conversion are real time. At the same time, we need to understand that it requires education and process transparency. As financial services providers we need to understand that the audience for this service who have felt entitled for a share ownership only through those physical share certificates. They are not the present day robo-investors and that is why the service requires a different treatment.
You need to educate the owners of physical shares about why conversion to demat form is prudent. Simple things like, Shares in demat form are easier to maintain and bring in transparency. This, when there are rising concerns over beneficial ownership of entities.
Process defining, how the processing of re-lodged transfer request would involve intimating the transferee through a letter. The same is sent through speed post or email with all the required details helping investors take the required corrective steps.
Quoting economic times feature story in wealth, facts state, a company like ITC has 375 crore shares in physical form in total, which is a whopping 30 percent of its total equity shares. Others are better off, Bajaj Auto l has 6.18 percent in physical form, Tata Steel has 1.9 percent, and HUL 1.7 percent. Coal India has the least number of non-dematerialised shares (5289 shares that is 0.000085 percent). And a far away second is Power Grid with 41,973 shares held which is 0.000802 percent.
Team Rurash shared the reasons why people still have physical shares, some of them were:
- The families consider the physical shares as legacy where certificates are from forefathers. So they wish to treasure it.
- A lot of investors who have changed their names couldn’t do it considering the tedious processes of physical to demat conversion.
- Many of the investors have moved abroad and become NRIs.
- Several cases were stuck because of joint holders, ownership and the changed preferences of trading.
- The seasoned investors had combinations created for IPO subscription. They now find it difficult to bring back together.
- Shares owned by Joint holders when one entity is no more, with no nomination or documents needed to claim the shares.
We understand that it is a slow process but now is the time to monetise your physical share certificates for good. Remember this can also help you from losing money as demat form of shares be traded from anytime anywhere.
Dematerialisation might come across as a difficult deal like change most of the times. But we recommend connecting with Physical Share Consultants like Rurash and take action on your legacy or inherited shares. You can visit the site, www.rurashfin.com or call: +91- 9321263677 or +91-9321263672