Why do you need a Demat Account?
Demat Account simplifies your investment documentation. It requires efforts to maintain the paperwork and investment records. Also, electronic shares save 0.5% of stamp duty. Now, let’s know some more facts about DMAT account, which you can’t afford to miss:
Benefits of having Demat
It is always a smart decision to open a demat account as there are many benefits which this account offers. Let’s have a look at some major advantages.
- Convenience: No need to go to the broker’s place to settle down the transactions, as all these things are online.
- Safety: Opening a demat account is the safest way to avoid theft, loss of documents, damage, etc. unlike the physical documents.
- Nomination facility:Demat account allows you to grant access to a nominee in your absence. Thus the nominee can take care of all your transactions if you are unable to do it yourself.
- Loan facility: You can take advantage of a loan facility against the holdings in demat account. You can keep the securities and shares as collateral.
- Corporate benefits: Demat comes with corporate benefits like interest, dividends, refunds, etc credited to your demat account.
What is Dematerialization?
Dematerialization is the procedure of giving electronic format to physical shares and securities. So, open a demat account if you are looking for dematerialization of your mutual fund units, share certificates, government securities, etc. Once opened, you can get electronic shares in the demat account by surrendering your physical entities. To open a demat account; you need a depository participant (DP), who can take care of all your shares and securities in electronic format. Like any banking services, benefits of depository services are taken through DP. Any financial institute like bank, stock-brokers, and financial corporations can work as a DP, if they are following SEBI’s norms. Currently, there are two depositories, Central Depository Services India Limited (CDSL), and National Securities Depository Limited (NSDL). Both these depositories get registered with Securities of Exchange Board of India (SEBI).
How much time does it take to dematerialize the shares?
Usually, it takes around 30 days. But in case if your process is taking more than 30 days, you can contact your DP. If he is unable to help you, you can send a complaint to an investor complaint cell of CDSL or NSDL.
What is the procedure of transferring demat account from one DP to others?
For such transfer, it is required to open another demat account. Once done, fill and sign ‘Account Closure Form’ and submit it to your existing DP. In that form fill the details of your new demat account. Your DP will do balance transfer and close your old demat account.
Is it possible to have more than one demat account?
Yes, there is no restriction on the number of demat accounts. You can open many demat accounts.
Is it necessary to keep a small balance in my demat account?
No, there is no need to keep any small balance; you can also keep zero balance in your demat account.
Is it mandatory to give my account details at the time of opening a demat account?
Yes, it is mandatory to provide your bank details. These bank details given to the issuer company for crediting any payable amount into your account. Hence we recommend you provide your active bank account details.
Like a bank account can I avail the facility of ‘either or survivor’.
No, as per the current rules, demat account can’t be operated as ‘either or survivor’. Hence any changes done in the joint demat account should be signed by all the joint account holders.
Are all the DPs the same?
NSDL has decided eligibility criteria for working as a DP. All the DPs get approved by NSDL after getting a certificate of registration from SEBI. The services offered, service charges, service standards rendered may differ among different DPs.
Can I convert my electronically operated Demat account into a physical account?
Yes, for this, you need to fill Rematerialization Request Form (RRF) and submit it to your DP. Once your DP receives the request, you will get share certificates from the R&TA.
What does 'Standing Instruction’ mean in the account opening form?
In demat account, ‘Delivery instruction slip’ for all debit transactions, and ‘Receipt instruction slip’ for every credit transfer is there. Through standing instruction you can avoid giving receipt whenever credit is expected in the account.
Is it possible to dematerialize tax-free bonds investments under lock-in condition?
Yes, it is possible to dematerialize tax-free bonds even in lock-in condition. The process is like that of demat of shares.