After dematerialising crores of shares over the past seven years, the National Securities Depository Ltd is set to extend the service to other financial instruments.

The country's largest depository, in collaboration with the Department of Posts, will dematerialise National Savings Certificate and Kisan Vikas Patra.

"The dematerialised NSC and KVP will be offered to investors at 10 post offices in Mumbai from Thursday. Later, the service will be extended," NSDL chairman and managing director C B Bhave told Business Standard.

He said the pilot project of making dematerialised NSC and KVP available at select post offices would make both the institutions understand the magnitude of infrastructural development required for extending the service across the country. The Department of Posts runs a network of 154,149 post offices.

The move, Bhave said, would save both investors as well as the Department of Posts from a lot a hassles.

Investors would stand to gain by avoiding the problems involved in loss of certificates, mismatch of signatures etc.

On the other hand, the Department of Posts would save on the cost involved in a long process that begins with the printing of the certificates and ends when it receives the matured certificates from investors after many years.

An investor would also be able to get the money credited to his bank accounts, mentioned at the time of opening the passbook for dematerialisation, once the certificates got matured.

Once the service was extended all over, an investor would be able to get the money credited from anywhere in the country.

Currently, an investor has no option but to encash the certificates at the post office which issued them to him.

In the depository system, the NSC and the KVP can be held in depository accounts, which is similar to holding funds in bank accounts.

This method does away with all the hassles associated with paperwork.

Financial markets intermediaries are upbeat about the potential of the proposed service.