Overview of Demat Account

Demat account allows you to buy, sell and transact shares without the endless paperwork and
delays. It is also safe, secure and convenient.

In India, a demat account, the abbreviation for dematerialized account, is a type of banking
account which dematerializes paper-based physical stock shares. The dematerialized account is
used to avoid holding physical shares: the shares are bought and sold through a stock broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a
demat account for share trading above 500 shares. As of April 2006, it became mandatory that
any person holding a demat account should possess a Permanent Account Number (PAN), and
the deadline for submission of PAN details to the depository lapsed on January 2007.

Is a demat account a must?

Now a day, practically all trades have to be settled in dematerialized form. Although the market
regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500
shares to be settled in physical form, nobody wants physical shares any more. So a demat
account is a must for trading and investing.

Why demat?
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 title of securities, and provides easy receipt of public issue
allotments.
It also 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 (as against 0.5
per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt
of such benefits as stock splits and bonuses.
Steps involved in opening a demat account

First an investor has to approach a DP and fill up an account opening form. The account opening
form must be supported by copies of any one of the approved documents to serve as proof of
identity (POI) and proof of address (POA) as specified by SEBI. Besides, production of PAN
card in original at the time of opening of account has been made mandatory effective from April
01, 2006.
All applicants should carry original documents for verification by an authorized official of the
depository participant, under his signature.

Further, the investor has to sign an agreement with DP in a depository prescribed standard
format, which details rights and duties of investor and DP. DP should provide the investor with a
copy of the agreement and schedule of charges for their future reference. The DP will open the
account in the system and give an account number, which is also called BO ID (Beneficiary
Owner Identification number).

The DP may revise the charges by giving 30 days notice in advance.  SEBI has rationalized the
cost structure for dematerialization by removing account opening charges, transaction charges
for credit of securities, and custody charges vide circular dated January 28, 2005.

Further, SEBI has vide circular dated November 09, 2005 advised that with effect from January
09, 2006, no charges shall be levied by a depository on DP and consequently, by a DP on a
Beneficiary Owner (BO) when a BO transfers all the securities lying in his account to another
branch of the same DP or to another DP of the same depository or another depository, provided
the BO Account/s at transferee DP and at transferor DP are one and the same, i.e. identical in all
respects.  

In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP

should also be a joint account in the same sequence of ownership.
Rights

1. You can open more than one depository account in the same name with single DP/
multiple DPs.
2. No minimum balance is required to be maintained in a depository account.
3. You can give a onetime standing instruction to your DP to receive all the credits coming
to your depository account automatically.

Procedure

1. Fill account opening form (available with your DP).

2. Give your DP the duly filled account opening form with introduction documents as may be
required.
3. Sign agreement with DP (agreement will state rights & obligations of both parties). The
agreement will contain the fee structure of your DP. Your DP would give you a copy of this
signed agreement for your record.
4. DP would give you Client Id no. (Account no.) Once your depository account is opened. This
Client Id no. along with your DP Id no. Forms a unique combination. Both these nos. should
be quoted in all your future correspondence with DP/NSDL / Issuing Company/their
registrar & transfer (R&T) agent.
5. Your DP would give you pre-printed instruction slips for depository services viz.,
dematerialization, delivery instruction for trades, etc..Preserve these carefully.
6. Your DP would give you a list of deadlines for giving instructions for various depository
activities viz., transfer for effecting sale, purchase etc.. If not, check with the DP.

Required Documents

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 additional
incentives to customers who open a demat account with them.
Along with the application form, your photographs (with co-applicants) and proof of
identity/residence/date of birth have to be submitted. The DPs also ask for a DP-client agreement
to be executed on non-judicial stamp paper. Here is a broad list (you won’t need all of them
though):

 PAN card 
 A canceled check,
 Voter’s ID 
 Passport 
 Ration card 
 Driver’s license 
 Photo credit card 
 Employee ID card 
 Bank attestation 
 IT returns 
 Electricity/ Landline phone bill

While they only ask for photocopies of the documents, they will need the originals for
verification. You will have to submit a passport size photograph on which you sign across.

Procedure

1. Fill account opening form (available with your DP).

2. Give your DP the duly filled account opening form with introduction documents as may be
required.
3. Sign agreement with DP (agreement will state rights & obligations of both parties). The
agreement will contain the fee structure of your DP. Your DP would give you a copy of this
signed agreement for your record.
4. DP would give you Client Id no. (Account no.) once your depository account is opened. This
Client Id no. along with your DP Id no. forms a unique combination. Both these nos. should
be quoted in all your future correspondence with DP/NSDL / Issuing Company/their
registrar & transfer (R&T) agent.
5. Your DP would give you pre-printed instruction slips for depository services viz.,
dematerialization, delivery instruction for trades, etc..Preserve these carefully.
 6. Your DP would give you a list of deadlines for giving instructions for various depository
activities viz., transfer for effecting sale, purchase,etc.. If not, check with the DP.

Indiabulls Demat Account Services

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• Its offers single –

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You can access Indiabulls’s services through
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•Our all – India network of associates on an assisted trade.
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It provide you value- added services at www.Indiabullsbroking.com, you get

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• Risk Analyzer for analysis of your risk profile
• Asset allocators to build an appropriate investment portfolio
• Innovative use of technology for facilitating

The benefits:-

Benefits of Demat Account

• 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;
• No odd lot problem, even one share can be sold;
• Nomination facility;
• 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.
Benefit For Investors

Demat account has become a necessity for all categories of investors for the following reasons/
benefits:
 SEBI has made it compulsory for trades in almost all scrip’s to be settled in Demat mode.
Although, trades up to 500 shares can be settled in physical form, physical settlement is
virtually not taking place for the apprehension of bad delivery on
 account of mismatch of signatures, forgery of signatures, fake certificates,etc.
 It is a safe and convenient way to hold securities compared to holding securities in
physical form..
 No stamp duty is levied on transfer of securities held in Demat form.
 Instantaneous transfer of securities enhances liquidity.
 It eliminates delays, thefts, interceptions and subsequent misuse of certificates.
 Change of name, address, registration of power of attorney, deletion of deceased's name,
etc. - can be affected across companies by one single instruction to the DP.
 Each share is a market lot for the purpose of transactions - so no odd lot problem.
 Any number of securities can be transferred/delivered with one delivery order. Therefore,
paperwork and signing of multiple transfer forms is done away with. It facilitates taking
advances against securities on low margin/low interest.

Points To Remember

1. You may choose your DP based on your evaluation of their reputation, service standards,
charges, other conveniences, etc.
2. Open depository account with the same holding pattern as there on existing physical
securities. You will need to open separate accounts for every different combination of
holding pattern. Eg.: If 100 securities of company ABC & 200 securities of company PQR
are registered in the name of X as first holder & Y as second holder, one account in name of
X as first holder & Y as second holder is sufficient. Whereas, if 100 securities of company
ABC are registered in the name of X as first holder & Y as second holder & 200 securities
of company PQR are registered in the name of Y as first holder & X as second holder, you
 will need to open two accounts, one in the name of X as first holder & Y as second holder
and the second in the name of Y as first holder and X as second holder.
3. Account opening procedure should typically take 2-5 days.
4. In case of holdings of a partnership firm, the account should be opened in the name of the
partner(s).
5. In case of holdings of a HUF, the account should be opened in the name of the Karta.
6. In case of a minor, the depository account should be opened in the name of the minor and
the guardian’s name should be mentioned. The guardian will sign as signatory on behalf of
the minor. For selling the securities of the minor, a court order should be obtained.
7. In case of any difficulties, contact your DP.
8. Only securities admitted by NSDL can be dematerialized. The list is available with your
DP.
9. Only securities registered in the name of the account holder can be dematerialized.
10. Dematerialization is normally completed within 15 days after the share certificates have
reached the issuer/their R&T Agent. Thus it may take you a month from the date you hand
over shares, to receive demat credit.
11. Dematerialization would be done only when the issuer / their R&T Agent is satisfied of
genuineness of securities & ownership status
12. All the joint holders should sign the DRF.
13. The pattern of holding in the DRF should match the pattern of holding on the share
certificate & the pattern in which account is opened.
14. Demat requests with name(s) not matching exactly with the name(s) appearing on the
certificates merely on account of initials not being spelt out fully or put after or prior to the
surname, would be processed, provided the signature(s) of the client(s) on the DRF tallies
with the specimen signature(s) available with the issuer/ their R & T agent.
15. If the signature in the DRF does not match with the signature available with the issuer/
their R & T agent, the issuer/ their R & T agent may at the time of demat confirmation, ask
for additional documentation (like bank attestation/ notarization, etc.) to prove that the
certificate belongs to the person who forwarded the DRF.
16. In case there is any problem in processing the DRF, contact your DP and if he cannot
resolve the problem you may contact NSDL.
Buying and Selling of Dematerialization
INTRODUCTION

The procedure for buying and selling dematerialized securities is similar to the procedure for
buying and selling physical securities.  The difference lies in the process of delivery (in case of
sale) and receipt (in case of purchase) of securities.

In case of purchase:-

 The broker will receive the securities in his account on the payout day
 The broker will give instruction to its DP to debit his account and credit investor’s
account
 Investor will give ‘Receipt Instruction to DP for receiving credit by filling appropriate
form. However one can give standing instruction for credit in to ones accounts that will
obviate the need of giving Receipt Instruction every time.

 In case of sale:-

The investor will give delivery instruction to DP to debit his account and credit the broker’s
account. Such instruction should reach the DP’s office at least 24 hours before the pay-in as
otherwise DP will accept the instruction only at the investor’s risk.

Rights

1. Dematerialized securities can be traded on those stock exchanges connected to NSDL.

At present, NSE, BSE, CSE, DSE, LSE, BGSE, OTCEI, MSE, ISE & ASE are connected to
NSDL. At these stock exchanges, two segments would be available to trade in
dematerialized securities :
o Unified (erstwhile physical) segment - In this segment delivery obligation can be
met by delivering dematerialized or physical securities at the option of the seller.
However, for a select list of securities prescribed by SEBI, securities cannot be
delivered in physical form in the unified segment, of stock exchanges connected to
NSDL. This list presently covers 160 securities. This list has been expanded to cover a
 total of 200 securities with effect from January 17, 2000. Over a period, this list would
cover all actively traded securities.
o Exclusive demat segment - In this segment delivery obligation can be met by
delivering dematerialized securities only. Physical securities cannot be delivered in the
exclusive demat segment.

2. Procedure
Trading in dematerialized securities is done through your broker just like trading in
physical securities. After your broker executes the trade, your DP will help to deliver
shares to your broker (in case you sell) on the basis of valid instruction given by you to
your DP and receive shares from your broker (in case you buy) on basis of valid
instruction given by your broker to his DP.

Buy dematerialized securities

1. You purchase securities in any of the stock exchanges connected to NSDL through a
broker of your choice and make payment to your broker. Make sure you tell your broker
you want only demat shares.
2. Broker arranges payment to clearing corporation/ clearing house of the stock exchange.
3. Broker receives credit in his clearing account with his DP on the pay-out day. He can
immediately transfer these securities to your depository account, provided your account is
already active.
4. Broker gives instructions to his DP to debit his clearing account and credit your
depository account.
5. You give instruction to your DP for receiving credit in your depository account. If you
have given standing instruction to receive credits, no separate instruction for receiving
credit will be required.
6. If the instructions match, your account with your DP is credited.

Sell dematerialized securities

 1. You sell your dematerialized securities in any of the stock exchanges linked to NSDL
through a broker of your choice.
2. You give instruction to your DP for debit of your depository account and credit of your
brokers clearing member account at least 24 hours i.e. one working day prior to the pay-in
date or before the deadline prescribed by your DP, so that your brokers clearing account is
credited at the time arranged with him.
3. On the pay-in day, your broker gives instruction to his DP for delivery to clearing
corporation/clearing house of the relevant stock exchange.
4. The broker receives payment from the clearing corporation / clearing house.
5. You receive payment from the broker for the sale in the same manner you would receive
payment for a sale in the physical mode.

Points To Remember

1. Trading continues to be through brokers. In case of any problem in execution of trade,

contact your broker and if he fails to resolve the problem you may contact the stock
exchange.
2. When you buy securities through the stock exchange, your brokers clearing account is
credited to the extent of the securities purchased, on receipt of instruction from clearing
corporation/ clearing house of the stock exchange. Your depository account is credited only
when your broker gives a delivery instruction to his DP. Securities are not directly credited
to your account by the clearing corporation/ clearing house of the stock exchange. In case
your broker does not give a delivery instruction, contact him or concerned stock exchange
or SEBI. If your depository account is not credited, in spite of your broker giving valid
instruction to his DP, contact the DP and if he fails to resolve the same you may contact
NSDL.
3. When you sell securities, you have to give a delivery instruction to your DP to transfer
the securities to your brokers clearing account. They are not automatically debited from
your account by NSDL or by the clearing corporation/ clearing house of the stock exchange.
In case the DP defaults in executing your instruction, the DP is liable to compensate you for
the loss incurred, provided your instruction was in
order and has been submitted to the DP at least 24 hours i.e. one working day prior to the
 pay-in date or before the deadline prescribed by DP. In case the DP fails to resolve your
problem, you can contact NSDL.

NEED OF THE STUDY

The need of the study arises because of the reason that a trainee must understand the company,
its achievements and tasks, products and services and also to collect information about its
competitors, its products and services offered. So that, after understanding and collecting
information about the organization and its competitors, a trainee will be able to work well for the
organization.
From the study I have learned very much, about the company as well as the strategy of the
customers, which helps me a lot at my working days.