DEMAT Account

• 27 November 2015 | 1629 Views | By Mint2Save

Earlier, for the investment in a public limited company for procuring its share (Ordinary or preferential or otherwise), investor used to get a certificate depicting the name of the company, its registered address, face value of the share, number of share allotted/issued to the investor along with other necessary information like certificate Nos., date of allotment, name of the holder( single or joint), etc., printed on it against the investment made. It used to be a valuable document as good as a promissory note.

The paper certificate (the physical form of share/s) is subject to many risks like getting mutilated, lost, torn accidently, burnt in fire, stolen, and so on. Therefore, to make it immune to the maximum of the risks mentioned above,  and make them safer, a scheme was launched to convert this physical form of the share into an electronic form that can be well understood by the word `dematerialized form `or `demat form`.

For opening a demat account the investor has take the help of a `Depository Participant` or D.P.  The investor has to open a demat account with the D.P.

Depository Participant` or D.P.  is an authority that is promoted/authorized by the stock exchange for accepting requests made by investor for opening a demat account with it. In turn, the D.P issues allots a unique/specific id. Number known as D.P.  account number and , a specific client id. Nos. D.P. can have as many as possible investors with it and, each given a specific D.P. ID. and client id. Nos. Every client can have as much as possible scripts in his/her name in demat form in the account and may sale or purchase more (i.e.  perform trading ) securities( shares /bonds/debentures etc.)through this account quickly, saving stamp duty, time and risks related with physical form of securities. The investor can monitor its portfolio with any risk and wastage of time. The two very popular D.P. s are N.S.D.L and C.D.S.L.

Both the D.P. s are promoted  and authorized by S.E.B.I. to perform the task and duties of D.P.

The conveniences or facilities offered by D.P.  to the client are briefed as below:-

1. Wide  network of the D.P. offers services to the client not only in any part of the country but even abroad, too. at quick pace.
2. On –line services through its central data base : The D.P. facilitates use of its services through net working using internet(electronic media).
3. Availability of wide spectrum of securities facilitates the account holder to trade with all types of shares and other forms of securities.
4. Lower fees structure brokerage facilitates an investor to enjoy trading.
5. Account holder can get daily valuation of the securities held in P. account which are safe & secure against risk and hazards.
6. Direct crediting of dividends etc.

Opening of `demat account` – for opening a demat account is easy if following documents are provided to the D.P. by the client while submitting an application in a prescribed form & requisite fees etc:-

1. Copy of PAN card
2. Copy of voter id. card / passport/ration card/driving license.

• Pass-port size photograph of the applicant/s with signatures across the photo(s).

1. Copy of power attorney, if need be.
2. Copy of water/electricity/telephone bill (latest) as proof of address.
3. Cancelled cheque of bank account issued by the bank of client with which client wishes to facilitate the D.P. regarding  making /receiving payment against the transactions be.
4. A new provision is also under process where a Demat account can be opened alongside a Savings Bank Account, thus giving more flexibility to saving and investing options .

It`s true that D.P. charges some  nominal amount anually as fees for maintaining your account and services provided by him.

In nut -shell, having a demat account for trading and keeping the securities safe & secure, trade quickly and  from any part of the country and abroad, receive dividends etc., quickly and so on, is not only beneficial and convenient but mandatory too, as without it ,now a days you cannot even think of trading i.e. performing  sale & purchase of securities.