The Postal Department, in association with the National Securities Depository Limited (NSDL), has undertaken an initiative to demat savings certificates. The National Small Savings Certificate and Kisan Vikas Patra are covered under the scheme.

Presently, the scheme has been started in a few post offices only. It is expected that based on the feedback received, and after plugging loopholes, the scheme will be gradually expanded to other post offices as well.

Dematerialisation of savings certificates entails the process of converting the paper certificates into an equivalent number of securities/units in electronic form. These in turn are credited into the investor’s DP account with the depository participant (DP).

The investor has to apply in an application form directly or through an agent to any of the specified post offices. Investors who already have a DP account can quote the number in the application form. NSDL will open a DP account in respect of all those investors who don’t have a DP account.

The investor will be mailed a ‘statement of transaction’ having details of units credited in his DP account. The facility of transfer, nomination, premature encashment (in case of KVP), and pledge will be available to the investor in the demat mode. The payment of interest will continue to be the same as in case of paper holdings.

An investor is not liable to pay any extra charges for this facility. On maturity of the certificates, the redemption amount can either be to the investor’s bank account or through cheque/warrant. An investor can maintain his address and bank account details for all his investments through communication with one DP.

Advantages for investors

Convenience: The investor needs to make a single or no visit at all to the post office for the entire lifecycle of investing in the instrument (including purchase and redemption). Consolidation: Multiple holdings can be consolidated in a single account. So less paperwork.

Safety: Demat of certificates obviates the need to hold these certificates in physical mode. As such, there is more safety from loss, theft or damage.

Security: Scrip-less holding is a secure mode as it is tamper-proof.

Automatic redemption: On redemption, the investor does not need to go to the post office for the proceeds. The redemption amount is directly credited to the bank account of the investor.

Existing facilities continue: Even in demat form, all the existing facilities such as transfer, pledge, make nomination etc will continue.

In future, investors may expect scrip-less certificates instead of paper certificates. Trading in demat form eliminates the cumbersome use of paper. The investor gets very cost-effective custodial service for lifetime investments by maintaining them in demat form compared to the risk in keeping physical shares. There is no risk of loss due to theft, mutilation etc.

Dematerialisation relieves the hassles of keeping paper documents and multiple folio numbers. It would also enable encashment of these certificates from any branch of the post office as the account can be accessed online by any post office.

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