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Thread: Demat Account

  1. #1
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    Dec 2009

    Default Demat Account

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    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.
    ...being a human...

  2. #2
    Retired Staff
    Join Date
    Dec 2011


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