Opening a Demat Account

A: To open a Demat account an investor needs to open an account with a Depository Participant registered with SEBI. For opening an account investor needs to fill up an account opening form and submit copies of the approved documents to serve as proof of identity (POI), proof of address (POA) as specified by SEBI and PAN card in original at the time of opening of account. All applicants should also carry original documents for verification. DP also provides the investor with a copy of the agreement and schedule of charges.After processing the account opening documents, the DP will provide an account number (client id) to applicant. Once the account of an applicant is opened with a DP, he/she becomes a client which is also called BO (Beneficiary Owner) and the account number allotted to him is called BO-ID (Beneficiary Owner Identification number). Also, the In-Person Verification (IPV) of the applicant should be carried out by the DP at the time of account opening. The staff of DP should establish the identity of the applicant (guardian in case of minor) by verifying the photograph affixed in the account opening form as well as the proof of identity with the person concerned. In case of joint account, IPV needs to be carried out for all the holders of the account. Demat services are currently offered by most of the broking houses, as well as several financial and banking institutions. The entities offering depository services are known as depository participants. By definition, a depository participant is an intermediary between depositories, like NSDL and/or CDSL, and an investor.

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Fees Involved
A: To open a demat account you need to pay certain fees. This fee is divided into four major heads:

Annual maintenance fee Custodian fee Transaction fee All the charges vary from one DP to another. Annual maintenance fee This fees is levied for maintenance of account.

Transaction fee The fee is levied for debiting securities to and from the account on a monthly basis. While some DPs, charge a flat fee per transaction, others peg the fee to the transaction value, subject to a minimum amount. The fee also differs based on the kind of transaction (buying or selling). In addition to the other fees, the DP also charges a fee for converting the shares from the physical to the electronic form or viceversa. This fee varies for both demat and remat requests. For demat, some DPs charge a flat fee per request in addition to the variable fee per certificate, while others charge only the variable fee.

Where does one begin?

A: First step is to open an account with a DP. Most of the broking houses, as well as several financial and banking institutions offer depository services and thus are also known as depository participants. It's not necessary to have DP of your broker, but many brokers incentivize their clients by offering lower charges for opening demat accounts with their DPs. Here is a broad list of documents you may need for opening an account (you won't need all of them though): Proof of Identity

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PAN card Voter's ID

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Passport Driver's license Bank attestation IT returns Electricity/ Landline phone bill ID cards with applicant's Photo, issued by a. Central/State Government and its Departments, b. Statutory/Regulatory Authorities, c. Public Sector Undertakings, d. Scheduled Commercial Banks, e. Public Financial Institutions, f. Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student) g. Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members and Proof Of Address: I. Ration card II. Passport III. Voter ID Card IV. Driving license V. Bank passbook / Bank Statement (NSDL/POLICY/2007/0074 dated December 1, 2007 and NSDL/POLICY/2008/0037 dated May 27, 2008) VI. Verified copies of a. Electricity bills (not more than two months old), b. Residence Telephone bills (not more than two months old) and c. Leave and License agreement / Agreement for sale VII. Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts. VIII. Identity card/document with address, issued by a. Central/State Government and its Departments, b. Statutory/Regulator y Authorities, c. Public Sector Undertakings, d. Scheduled Commercial Banks, e. Public Financial Institutions, f. Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student) and g. Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

Only photocopies of the documents are required for submission, but originals are also required for verification. The applicant also needs to submit a passport size photograph with the account opening form.

How many shares you need to have to open a demat account?

A: A demat account can be opened with no balance of share and there is no minimum balance to be maintained. You can also have zero balance in your account.

What will it cost?

A: To open a demat account you need to pay certain fees. this fee is divided into four major heads: 1.) Annual maintenance fee 2.)Transaction fee. All the charges vary from

one DP to another.

Nomination Possible?
A: Yes, nomination is possible you can have a nominee of your choice by filling up the nomination details in the account opening form. This enables the nominee to receive the securities after the death of the holder of the demat account.

Transfer of Shares between Depository Participants

A: Transfer of shares is possible, you need to fill the DeliveryInstruction Slip Book (DIS) and submit the same to your DP for transferring your shares from one DP account to another.. However you need to check, whether both Demat account's Depository Participant is same or not(CDSL or NSDL) If both of them are different, then you need an INTER Depository Slip (Inter DIS). If they are same, then you need INTRA Depository Slip (Intra DIS). Do try to submit that DIS when market is on. Accordingly, date of submission of DIS and date of execution of DIS can be same however difference of one day is also acceptable. For transfer, you also need to pay the broker some charges. | Back | Top | Next |