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Understanding Demat Account

Investing in shares is supposed to be one of the best ways to boost your portfolio. Today everyone who has a considerable risk appetite is encouraged to be a part of the capital markets. To add to the ease, share trading has long become a part of the digital world. With the emergence of online trading, buying shares and adding them to your portfolio just happens at the click of a mouse. The online trading portals have price quote watch, order placing tools, latest market updates and in-depth analysis all rolled into one.

 

Gone are the days when one had to maintain physical certificates for each share. Today you can can maintain shares in electronic form in your dematerialised account, popularly known as Demat account. A single Demat account can be used by an investor for multiple security transactions. While online trading account enables you to buy and sell the shares, the demat account is instrumental in holding those securities. Also there is no compulsion of maintaining a specified minimum number of securities in the demat account.

There is also a 3 in 1 trading account which gives you the functionality of a savings, trading and Demat account, all integrated into one.

Opening a demat account involves 4 easy steps:

  1. Select and approach a certified DP (Depository Participant) i.e. one registered with the National Securities Depository Ltd. (NSDL) and   the Central Depository Services Ltd. (CSDL). This DP can be a broker , bank or any financial intermediary
  2. Fill up the account opening form provided by the DP
  3. Furnish the required documents like proof of address and identity
  4. Providing the original PAN card during account opening

How To Open a Demat AccountYes, getting started is that simple. After successful opening of the account, you can apply for the Delivery Instruction Slip (DIS), which is provided by the DP.
A plethora of depository-related services can be availed of through the DP. Holding a demat account is a pre-requisite for investment in equity, gold through ETFs and IPOs.

Some of the other services provided by the demat account are:

  • Transfer and settlements of shares:  If you are selling securities, you have to provide a delivery instruction slip; if you have purchased securities, a receipt instruction slip or one time standing instruction for credit has to be provided.
  • Benefits of corporate actions: Non-cash corporate entitlements like bonus and rights issue can be directly credited to the demat account.
  • Dematerialisation and rematerialisation of shares: You can convert your physical securities into electronic form or vice-versa through the demat account. For dematerialisation, you need to provide the physical share certificates along with a Dematerialisation Request Form (DRF) for each scrip as permitted by NSDL.
  • Pledging for loan: You can also opt to avail of loan against shares by pledging shares held in your demat account.

However, these accounts are subject to the following charges:

  • Annual Maintenance Charge: Levied on a fixed basis
  • Demat and Remat Charges: Levied per request
  • Debit Transactions: Based on the value of the transaction
  • Failed / Rejected Instruction: Charged per instruction
  • Pledge Charge/Invocation charge: Based on the value of securities

With everything taking place in the virtual world, you can also access the details of your account online. Extremely convenient and easy to operate, demat account enables you to trade in shares in a safe and secure way with no risk of forgery, theft, misuse or destruction.

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