Demat Account

A Demat account allows you to buy, sell and transact shares without endless paperwork and delays. Its is also safe, secure, convenient and a must for trading in share market. The Demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership tittle of securities, and provides easy receipt of public issue allotments.
It helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting, and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty, avoid filling up to transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses. Around 200 “ depository participants” offer the Demat account facility. A comparison of fees charged by different DPs is detailed below. But there are three distinct advantages of having a Demat account with a bank – quick processing, accessibility and online transaction. Generally, banks credit your Demat account with shares in case of purchase, or credit your savings account with the proceeds of a sale on the third day.
Banks are also advantageous because of the number of branches they have. Some banks give the option of opening a Demat account in any branch, while others restrict themselves to a selected set of branches. Some private branches also provide online access to the Demat account. So, you can check on your holdings, transactions and status of requests through the net banking facility. A broker who acts as a DP may not be able to provide these services. Opening an individual Demat account is a two step process: You approach a DP and fill up the Demat account-opening booklet. The Web sites of NSDL and CSDL list the approved DPs. You will then receive an account number and a DP ID number for the account. Quote both the numbers in all future correspondence with your DP.

How Many Accounts?
 If your shares are held in joint names, be sure to open the account in the same order of names. If A, B and C jointly hold 100 shares in a company and have three share certificates all listing A, B and C as the first, second and their holders respectively, one account will suffice.
 For different combinations of names, open separate accounts for each combination. If the three certificates are held as ABC, BAC and CBA, three different accounts are necessary.
 There is no limit to the number of accounts you can open.
 There is no limit to the number of DPs you can have accounts with.
 You can even open a multiple-sign Demat account, which can be operated by multiple holders, like a joint savings bank account.
 You can even open a Demat account even before you acquire your first security.

Documents Required
The extent of documentation required to open a Demat account may vary according to your relationship with the institution. If you plan to open a Demat account with a bank, a savings account holder has an edge over the non-account holder. In fact, banks usually offer additionally incentives to customers who open a Demat account with them. Along with the application form, your photography (with co-applicants) and proof of identity/residence/date of birth and have to be submitted. The DPs also ask for a DP-client agreement to be executed on non-judicial stamp paper.