demat account facilitates buying and selling shares,
precluding cumbersome paperwork and meaningless delays.
Advantages of a Demat Account
is a safe, secure and convenient mode of transacting in
uncertainty on ownership title of securities
quick allotment of public issues
smooth process in pledging shares
delays due to wrong/incorrect signatures, post, and
misplacement of certificates
risks like forgery and counterfeit, theft or damage to
on stamp duty, paperwork on transfer deeds
immediate benefits from bonus shares and stock splits
Who offers Demat
Participants or DPs offer demat account services, which would
include banks. Holding a demat account with a bank enables
quick on-line dealings, ensuring credit of a transaction to
the account holder’s savings account by the third day. Banks
have an added advantage over other DPs with their large
network of branches.
How to Open a
Demat Account in India
up the demat account opening form at the nearest Depository
may refer to either
NSDL at https://nsdl.co.in/ for the list of DPs in
demat accounts can be opened, retaining the same order of
demat accounts have to be opened for different combinations
of names in the case of three or more joint holders.
number of demat accounts and DPs are permitted
multiple-sign demat is feasible, operated by several holders
charge a fee for switching shares from electronic to
physical form and vice-versa, which varies from a flat fee
to a variable fee. Remat and demat charges may also show a
discrepancy between DPs
DPs offer a discount to frequent traders
is advisable to maintain all demat accounts with the same DP
to keep track of capital gains liabilities. Different DPs
follow dissimilar methods of computing the capital gains,
which is determined by the period of holding.
charges on a demat account vary between DPs. Broadly, they
are: account opening fee, an annual folio maintenance charge
paid in advance, a monthly custodian fee, and a charge on
transactions, which may either be charged every month or as
a flat fee per transaction, and its nature. Some DPs may
skip the account opening fee but charge a re-opening fee for
the account. Account holders are also subject to a service
opening balance is required for a demat account
documents to open a demat account
of identity, address and date of birth
agreement on non-judicial stamp paper
applicant receives an account number and a DP ID number
which are required for all future communication with the DP.
need to fill in NRI in the type and “repatriable" or
“non-repatriable” in the sub-type on the form. No special
permission from the RBI is required by NRIs to open a demat
account, though specific cases may require authorization from
the designated authorised dealers.
require separate demat accounts for securities under the
foreign direct investment (FDI) scheme, which is repatriable;
and the Portfolio Investment Scheme and Scheme for Investment
which can be either repatriable or non-repatriable.
Repatriable and non-repatriable securities cannot be held in a
single demat account.
Indians can continue to hold non-repatriable demat accounts
they hold even after they acquire non-resident Indian status.
However, when a NRI returns to India permanently, he must
inform his designated authorised dealer of his new status, and
a fresh account would have to be opened. The securities held
in the NRI demat account would have to be transferred to the
new resident demat account, and the NRI demat account
demat account would have to be linked with the NRI’s NRO
account for non-repatriable accounts and NRE accounts for
repatriable accounts to credit dividends and