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Thread: Demat Account
02-02-2012, 01:24 AM #1
Demat AccountWhat 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...
02-02-2012, 01:26 AM #2
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