Demat Account: Introduction, Charges, Documents Required
My this article is particularly all details about Demat account means this article is answers to questions such as how to open account, what are the charges for the same, which documents are required for same, what are the benefits and disadvantages of the same, etc.
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Demat account is an account containing shares and securities of the stock market and other market in de-materlised form. Before April 2006, it was optional for the buyers and sellers to keep there shares and securities with them in physical or demat form, but from April 2006, it was made compulsory for all of them to have demat form who want to take part in exchange of shares and securities.
Opening a Demat Account :
The first step for opening Demat account is to register with the Depository Participant. Depository participant are the ones who authorise the persons whether they are eligible for Demat account or not by checking relevant documents. The list of depositories can be available from NSDL site. The second step for opening an account is to fill a form provided by D.P. and than third step is to surrender the physical copy of shares certificate which they would be converting in demat form. It is very simple process to open a demat account just as you open a bank account.
Must Read – Difference between shares and stocks
Account opening charges :
Normally there is no charges for account opening of demat, but than also some charges fees which may be refundable also. Banks are also now starting with account opening of demat account. They donot separately charge for account opening because they are knowing that they would be earning well when the party would be transacting with the commodity. There is no specific rule for keeping minimum balance in the demat account.
Documents required for opening a demat-account
- Proof of identity
- Proof of address
- Cancelled cheque for bank account number
There can be more than one Demat accounts with one same or another different depository participants but there can be no joint account for two parties, the willing person has to open there own individual account and would be individually liable. The most important thing is to add nominee while filing the form.
Depository – Dematerialisation – Rematerialisation :
Depositary is an institution which keeps, maintains and hold the shares, securities, bonds, debentures etc. of the person who are registered with that particular institution.
Dematerialisation is a chain or process through which the physical stocks are converted into demat or computerised form so that the life of that material increases as the computerised system will be for forever but the physical copy might not be.
Rematerialisation is process through which the demat shares or electronic shares are converted again to physical form. This has a opposite function than the dematerialisation has. For rematerialisation, a separate form named RRF has to be filed with the concerned depository and if it accepts it then your electronic shares will be continue to be processed in physical form.
The usage of Demat account has been so much that they have been used in numbers as bank accounts have been opened, The number of players in playing in the stock market is increasing day by day, the same is the position with the demat account.