DEMAT ACCOUNT

Efforts BySonali Arpit Wahi Ronny Bose Sameer Sharma Prabhakar Das Akansha Jayaswal

WHAT IS A DEMAT ACCOUNT ?

Demat Account, a short form of saying Dematerialized Account is a type of banking account which dematerializes the paper based physical shares. No distinctive number of securities required as depositing & withdrawing money from a bank without bothering

about distinctive no. of currency

Demat account allows you to buy or sell and transact

shares in safe, secure and convenient way without making any delay and paperwork.
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DEMAT-NEED ?
Bad deliveries due to signature difference Mistakes in completion of transfer deeds Tearing and mutilation of securities Fake certificates

Fraudulent interception of certificate in transit

Transfer stamp duty Extra consumption of time by the companies

Postal delays and charges etc

DEMATERIALISATION
Introduced in India through the enactment of the

Depositories Act, 1996 It is not mandatory One may keep their holding partly in physical form and partly in Demat form A selected list of securities announced by SEBI can be delivered only in demat form in the stock exchanges connected to NSDL

DEMAT-PARTICIPANTS
Participants:
Investors The Issuing Company

The Depository
The Depository Participants

Investors [Beneficial Owner]

Individual Partnership Firm Company

Beneficial Owner is a person in whose name a demat account is opened with Depository for the purpose of holding securities in the electronic form

THE ISSUING COMPANY

The issuing company - the company in which the investment is made.

DEPOSITORY
A depository is an organization, which holds the

beneficial owner's securities in electronic form, through a registered depository participant (DP). To avail of the services offered by a depository, the investor has to open an account with it through a registered DP. The minimum net worth stipulated by SEBI for a depository is Rs.100 crores. There are only two depositories in India. The National Securities Depository Ltd (NSDL) and The Central Depository Services Ltd (CDSL).
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DEPOSITORY PARTICIPANT
A Depository Participant (DP) is an agent of the depository who is authorized to offer depository services to investors. Financial institutions, banks, custodians and stockbrokers complying with the requirements

prescribed by SEBI/ Depositories can be registered as DP. As on September 30, 2008, a total of 711 DPs (266 NSDL, 445 CDSL) are registered with SEBI
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DEMAT PROCESS

PROCESS

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Following requisites are necessary for dematerialization of securities:

1. Investors should have a depository account.

2. Securities should be from the eligible list of securities issued by the depository.
3. Securities must be in the name of the account holders

and owned by him. 4. Separate demat requisition form is required for each issuer company. 5. DRF should be signed by all the holders so as to match specimen signature.
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HOW TO OPEN A DEMAT ACCOUNT?

Opening a Demat account is as simple as a bank account opening.

You can open a Demat account with any registered depository participant (DP).
The charges for account opening, annual account

maintenance fees and transaction charges vary between DPs. The client will be provided with an account number called BO ID (Beneficiary Owner Identification Number).
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WHO CAN OPEN A DEMAT ACCOUNT?

Any individual or corporate can open a Demat account.
It is possible to open more than one Demat account in identical names. A Demat account can be opened in more than one names but can be operated only for dematerialization of shares held in the same combination.

Once a Demat account has been started, it is not possible to change the account name.
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DOCUMENTS REQUIRED FOR OPENING A DEMAT ACCOUNT

A PAN card is a must for opening a Demat account. As of April

2006, it became mandatory that any person holding a Demat account should posses a Permanent Account Number (PAN).
Proof of Identification

Proof of Address
Recent photographs, one and, or more Bank Account Details
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FEES INVOLVED
There are four major charges usually levied on a demat account. All the charges vary from DP to DP.
Account-opening fee Annual maintenance fee Custodian fee Transaction fee
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RE-MATERIALIZATION
Rematerialisation is a process, by which a client can get his electronic holdings converted back into the physical holdings, i.e., he can get back the physical form of share certificates. To get the certificate back, he has to fill up a remat request form and submit it to its depository with

whom he has an account. The whole process of rematerialisation is completed within 30 days from the receipt of request.
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BENEFITS
A safe and convenient way to hold securities;
Immediate transfer of securities; No stamp duty on transfer of securities; Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.

Reduction in paperwork involved in transfer of securities;

Reduction in transaction cost. Nomination facility;
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BENEFITS Contd
No odd lot problem, even one share can be sold; Change in address recorded with DP gets registered with

all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;
Transmission of securities is done by DP eliminating

correspondence with companies;

Automatic credit into Demat account of shares, arising

out of bonus/split/consolidation/merger etc.

Holding investments in equity and debt instruments in a

single account.

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DISADVANTAGES OF DEMAT
Trading in securities may become uncontrolled in case of dematerialized securities. It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a

detriment to investors. Multiple regulatory frameworks have to be confirmed to, including the Depositories Act, Regulations and the various Bye Laws of various depositories. However, the advantages of dematerialization outweigh its disadvantages
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THANK YOU

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