A Demat Account Introduction

Primary, open a demat account. Let's begin a few questions that come to mind. What is the variation amid a depository and a depository participant? A depository is a place where the shares of investors/traders are held in electronic form. The depository has brokers who are called depository participants (DPs).suppose of it like a bank. The head office where all the technology rests and details of all accounts held is like the depository. And the DPs are the branches that cater to individuals. There are only 2 depositories in India -- the National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). There are over a 100 DPs.

What's a demat account? Demat submits to a dematerialized account. justify;"> Just as you have to open an account with a bank if you desire to save own money, make cheque payments etc, you want to open a demat account if you desire to purchase or sell shares. So it is just like a bank account where genuine money is returned by stocks. You have to way the DPs (remember, they are like bank branches), to open your demat account.

Let's say own portfolio of stocks appears like this: 40 of Infosys, 25 of Wipro, 45 of HLL and 100 of ACC. All these would demonstrate in own demat account. So you do not have to own any physical certificates viewing that you own these stocks. They are all held electronically in own account. As you purchase and sell the stocks, they are adjusted in own account. Just like a bank passbook or note, the DP would offer you with periodic reports of holdings and transactions.

Is a demat account a should? Nowadays, practically all deals have to be advanced in dematerialized form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has permitted deals of upto 500 stocks to be advanced in physical form, nobody desires physical stocks any more. So a demat account is a should for trading and spending.

Where do I start? Appear for a DP to have an account with most banks is also DP participants, as are many Share brokers. You could decide own extremely own DP. To obtain a list, visit the NSDL and CDSL websites and see who the registered DPs are. A broker is dividing from a DP. A broker is a member of the stock exchange, who purchases and sells stocks on his behalf and on behalf of his customers.

A DP would just provide you an account to hold those stocks.

You don’t have to take the same DP that own Stock broker takes. You could decide your own. But many brokers offer special spurs in the form of lesser charge for opening demat accounts with their DPs.

Get own documents in place Once you approach own DP, you would be directed through the formalities of opening an account. You should fill up an account opening form and sign a contract with own DP. The DP would ask for some papers as verification of own identity and address. Verify with them what they need. For instance, some may believe a driver's license, others may not.

Here is a broad list (you won't need all of them though): ? PAN card ? Voter&ID ? Passport ? Ration card ? Driver&license ? Photo credit card ? Employee ID card ? Bank attestation ? IT returns ? Electricity/ Landline phone bill While they only ask for photocopies of the papers, they would want the originals for proof. You would have to submit a passport size photograph on which you sign across. How many stocks you need to have to open an account? When opening an account with a bank, you want a lowest balance. Not so with a demat account. A demat account could be opened with no balance of stocks. And there is no lowest balance to be continued either. You could have a 0 balance in own account.

What would it charge? The fees for account opening, yearly account maintenance charges and transaction fees differ amid DPs. To catch a relative idea, visit the websites of NSDL and CDSL.

Could I appoint? Sure. You could appoint whoever you like by satisfying up the proposal details in the account opening form. This is to allow the nominee to get the securities after the death of the holder of the demat account.

All set? When you open an account, the DP would assign a single BO ID (Beneficial Owner Identification) Number, which you want to quote for all future transactions. If you desire to sell own stocks, you want to place an order with own broker and offer a 'Delivery Instruction' to own DP. The DP would debit own account with the number of stocks sold. You would get the payment from own broker. If you desire to purchase stocks, notify own broker concerning own Depository Account Number, so that the stocks bought are credited into own account. Report by rediff