What is a Demat A/c ?

What is a Demat A/c ?
Investors who wish to trade in the market need to have a dematerialized, or demat, account. In India, the government has mandated two entities –National Securities Depository, or NSDL, and Central Depository Services (India), or CDSL – to be the custodian of dematerialized securities.

What is a depository ?
A depository can be compared to a bank. A depository holds securities like shares, debentures, bonds, government securities, and units, among others of investors in electronic form. A depository also provides services related to transactions in securities.

What are the benefits of opening a demat account ?
The benefits of opening a demat account are:

1) Immediate transfer of securities;
2) No stamp duty on transfer of securities;
3) Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.;
4) Reduction in paperwork involved in transfer of securities;
5) Reduction in transaction cost;
6) Nomination facility;
7) Change in address recorded with DP gets registered electronically with all
companies in which investor holds securities eliminating the need to correspond with each of them separately;
8.) Transmission of securities is done by DP eliminating correspondence with companies;
9)Convenient method of consolidation of folios/accounts;
10)Holding investments in equity, debt instruments and government securities in a single account;
11)Automatic credit of shares into demat account, arising out of split/consolidation/merger etc.

How do I select a DP ?

A. You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be:
B. Convenience - Proximity to the office/residence, business hours.
C. Comfort - Reputation of the DP, past association with the organization, whether the DP is in a position to give the specific service you may need?
D. Cost - The service charges levied by DP and the service standards.

Three-in-One demat account:
Some brokers and banks offer a ’Three In One’ demat account, where you open a demat, broking and bank account with the same entity, in case of a bank DP. Elsewhere, if the DP is a broker, an existing bank account can be used for the purpose of a ’ Three In One’ account. This ensures easy transfer of funds. However, in some cases the brokers insist on opening a bank account with a particular bank as they often have tie ups with that bank. These accounts or tie ups are beneficial as they provide a one stop solution to you, thereby saving your time and unnecessary paper work. This has also proven to be cost effective. E-trading platforms are also available in most cases where, ‘Three in One account’ facilities are available.



What are the documents require to open a DP/ Demat A/c ?

Proof of identity (copy of any one proof):

1) Passport
2) Voter ID Card
3) Driving license
4) PAN card with photograph
5) Identity card/document with applicant's photo, issued by Central/State government and its departments.


Proof of address (copy of any one proof):

1) Ration card
2) Passport
3) Voter ID card
4) Driving license
5) Bank passbook
6) Verified copies of electricity bills/ residence telephone bills (not more than two months old)/ Leave and license agreement/ agreement for sale.
7) Identity card/document with address, issued by Central/State government and its departments.

Passport-size photograph

Nominee details

Copy of PAN card
One must remember to take original documents to the DP for verification. Your DP will carry-out "in-person verification" of account holder(s) at the time of opening your account.

* Dematerialization will normally take about 30 days.