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What is Demat Account
Dr. Mangesh Bhople
Demat
Account
WHAT IS DEMAT ACCOUNT?
What is Dematerialization?
Benefits of a demat account
Key elements of a Demat Account
Facilities available with a Demat Account
Types of Demat Accounts
KYC documents required for Demat Account
WHAT IS DEMAT ACCOUNT?
A demat account stands for
‘dematerialized’ account
which means that your
shares, stocks, bonds, and
other financial securities are
now available in electronic
form rather than a ‘material’
or hard copy form.
A Demat account can hold the following range of
securities:
Shares Stocks E-gold
Bonds
Government
securities
IPOs
Exchange-
traded funds
Non-
Convertible
debentures
Mutual funds
traded on the
stock exchange
What is Dematerialization?
Dematerialization is the process of
converting the physical share certificates
into electronic form, which is a lot easier
to maintain and is accessible from
anywhere throughout the world.
An investor who wants to trade online
needs to open a Demat with a Depository
Participant (DP). The purpose
of dematerialisation is to eliminate the
need for the investor to hold physical share
certificates and facilitating a seamless
tracking and monitoring of holdings.
Benefits of a Demat account
convenient and time-saving
trading and investment.
No tedious paperwork
required to register
transactions.
No risk of theft, delays, or
forging of physical copies of
share certificates, bonds,
etc.
Single integrated platform
for holding debt as well as
equity instruments.
Automated credits in case of
bonus, splits, mergers,
consolidations, etc.
Every stakeholder is notified
of the transaction through
electronic alerts removing
the need to contact the
company, trader, investor.
Address changes are
updated with every
company invested in by the
investor through the
Depository Participant.
One single share can be
bought/sold instead of lots.
Removal of stamp duty costs
which were otherwise
associated with physical
records of securities has led
to significant reduction in
the cost of trading.
Key elements of a Demat account
Depository
Central Depository of
Securities Ltd and
National Depository of
Securities Ltd
Depository Participant
(DP)
A stockbroker, a
clearinghouse, a state
financial corporation
Investor 16Dogit Unique ID
• A demat account is not only used for holding your financial securities; it also serves many other functions:
• The account holder can transfer all or part of their holdings to another person. The account holder only needs to fill a Delivery
Instruction Slip with the accurate information and the seamless transfer of shares or other holdings can be carried out.
• 2. The investor can choose to convert their physical share certificates or other physical records of securities into electronic
form through the process of dematerialising. To do this, the account holder has to fill out the Demat Request Form (available
with every DP) detailing the information of the physical certificates and submit it along with the original certificates to the DP.
Since every type of security has a different International Securities Identification Number (ISIN), the investor will have to
separate forms for every security.
• Once the DP verifies all the documentation, the DP updates the investor account, and the Depository makes a note of the
changes.
• Similar to dematerialising, a demat security can be processed into a physical record through rematerialising. For this, the
investor needs to fill out a Remat Request Form with the ISIN.
• 3. The value of the security holdings can be used as collateral while applying for a loan.
• 4.
• The securities in the demat account are linked with the company. In such a case, whenever there is a split in equity, a bonus is
issued, or the company takes any other step concerning the shares or other securities, the investor is notified, and the security
status is automatically updated, thanks to the centralised system. A demat account makes it easy for the investor to keep an
eye on their investments.
• 5.
• Available only when you have specific securities (and not zero balance) in your demat account, this facility can be used when
the investor expects any untoward activities to occur. You can freeze your demat account similar to how you block a bank
account or a credit card.
• 6. To enable swift transactions, the NSDL allows the investor to make a transaction and then submit the e-slip to their
respective DP.
Facilities available with
a demat account
Investment transfer
Dematerialization
Collateral for loan
Corporate actions
Freeze the account
E-facility like Pay I in
out , e slip etc
Types of Demat Accounts
• Investors residing in India.
Regular Demat
Account:
• NRIs who hold a non-resident rupee
account (NRE) can open this type of demat
account. This account allows the
international transfer of funds.
Repatriable
Demat Account:
• Non-resident Indians with a non-resident
ordinary rupee (NRO) account can open
this type of demat account. However, this
does not allow for international transfer of
funds.
Non-repatriable
Demat account
How to open Demat Account?
Offline and online
Select a Depository Participant
Fill application form along with KYC documents such as Identity Proof,
Address Proof, PAN card, Bank details, and your personal details.
Verification process : The DP will conduct an in-person verification of you
and your KYC documents.
Final approval: Once your documents are verified, and the final
formalities are completed, your new demat account will be opened. You
will also be given the Unique Identification Number for your account.
List of accepted KYC documents
Proof of identity
passport
driver’s license
voter’s ID
IT returns
Verified copy of electricity/phone bill
PAN card
Bank attestation
A photo ID card issued by a central or state government body
ICAI, ICWAI, ICSI, bar council etc, issued identification card with
photograph
Proof of address
Voter’s ID
Ration card
Passport
Driving license
Bank passbook/ bank statement
Leave and license agreement/ agreement for sale,
Verified copies of residential telephone/ electricity bills
Self-declaration by High Court/Supreme Court judges
A photo ID card with address issued by a central or state government
body
ICAI, ICWAI, ICSI, bar council etc., issued identification card with
photograph and address.

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What is Demat Account - Use and functions

  • 1. What is Demat Account Dr. Mangesh Bhople
  • 2. Demat Account WHAT IS DEMAT ACCOUNT? What is Dematerialization? Benefits of a demat account Key elements of a Demat Account Facilities available with a Demat Account Types of Demat Accounts KYC documents required for Demat Account
  • 3. WHAT IS DEMAT ACCOUNT? A demat account stands for ‘dematerialized’ account which means that your shares, stocks, bonds, and other financial securities are now available in electronic form rather than a ‘material’ or hard copy form.
  • 4. A Demat account can hold the following range of securities: Shares Stocks E-gold Bonds Government securities IPOs Exchange- traded funds Non- Convertible debentures Mutual funds traded on the stock exchange
  • 5. What is Dematerialization? Dematerialization is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.
  • 6. Benefits of a Demat account convenient and time-saving trading and investment. No tedious paperwork required to register transactions. No risk of theft, delays, or forging of physical copies of share certificates, bonds, etc. Single integrated platform for holding debt as well as equity instruments. Automated credits in case of bonus, splits, mergers, consolidations, etc. Every stakeholder is notified of the transaction through electronic alerts removing the need to contact the company, trader, investor. Address changes are updated with every company invested in by the investor through the Depository Participant. One single share can be bought/sold instead of lots. Removal of stamp duty costs which were otherwise associated with physical records of securities has led to significant reduction in the cost of trading.
  • 7. Key elements of a Demat account Depository Central Depository of Securities Ltd and National Depository of Securities Ltd Depository Participant (DP) A stockbroker, a clearinghouse, a state financial corporation Investor 16Dogit Unique ID
  • 8. • A demat account is not only used for holding your financial securities; it also serves many other functions: • The account holder can transfer all or part of their holdings to another person. The account holder only needs to fill a Delivery Instruction Slip with the accurate information and the seamless transfer of shares or other holdings can be carried out. • 2. The investor can choose to convert their physical share certificates or other physical records of securities into electronic form through the process of dematerialising. To do this, the account holder has to fill out the Demat Request Form (available with every DP) detailing the information of the physical certificates and submit it along with the original certificates to the DP. Since every type of security has a different International Securities Identification Number (ISIN), the investor will have to separate forms for every security. • Once the DP verifies all the documentation, the DP updates the investor account, and the Depository makes a note of the changes. • Similar to dematerialising, a demat security can be processed into a physical record through rematerialising. For this, the investor needs to fill out a Remat Request Form with the ISIN. • 3. The value of the security holdings can be used as collateral while applying for a loan. • 4. • The securities in the demat account are linked with the company. In such a case, whenever there is a split in equity, a bonus is issued, or the company takes any other step concerning the shares or other securities, the investor is notified, and the security status is automatically updated, thanks to the centralised system. A demat account makes it easy for the investor to keep an eye on their investments. • 5. • Available only when you have specific securities (and not zero balance) in your demat account, this facility can be used when the investor expects any untoward activities to occur. You can freeze your demat account similar to how you block a bank account or a credit card. • 6. To enable swift transactions, the NSDL allows the investor to make a transaction and then submit the e-slip to their respective DP.
  • 9. Facilities available with a demat account Investment transfer Dematerialization Collateral for loan Corporate actions Freeze the account E-facility like Pay I in out , e slip etc
  • 10. Types of Demat Accounts • Investors residing in India. Regular Demat Account: • NRIs who hold a non-resident rupee account (NRE) can open this type of demat account. This account allows the international transfer of funds. Repatriable Demat Account: • Non-resident Indians with a non-resident ordinary rupee (NRO) account can open this type of demat account. However, this does not allow for international transfer of funds. Non-repatriable Demat account
  • 11. How to open Demat Account? Offline and online Select a Depository Participant Fill application form along with KYC documents such as Identity Proof, Address Proof, PAN card, Bank details, and your personal details. Verification process : The DP will conduct an in-person verification of you and your KYC documents. Final approval: Once your documents are verified, and the final formalities are completed, your new demat account will be opened. You will also be given the Unique Identification Number for your account.
  • 12. List of accepted KYC documents Proof of identity passport driver’s license voter’s ID IT returns Verified copy of electricity/phone bill PAN card Bank attestation A photo ID card issued by a central or state government body ICAI, ICWAI, ICSI, bar council etc, issued identification card with photograph Proof of address Voter’s ID Ration card Passport Driving license Bank passbook/ bank statement Leave and license agreement/ agreement for sale, Verified copies of residential telephone/ electricity bills Self-declaration by High Court/Supreme Court judges A photo ID card with address issued by a central or state government body ICAI, ICWAI, ICSI, bar council etc., issued identification card with photograph and address.