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How to Open Demat Account



HowtoOpenDematAccount


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How to Open Demat Account


Demat account is a safe and convenient means of holding securities just like a bank account is for funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus, it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.

OPENING A DEMAT ACCOUNT

To start dealing in securities in electronic form, one needs to open a demat account with a DP of his choice. An investor already having shares in physical form should ensure that he gets the account opened in the same set of names as appearing on the share certificate; otherwise a new account can be opened in any desired pattern by the investor.

Getting started Documents to be attached
1. Choose a DP • Passport size photographs
2. Fill up an account opening form provided by DP, and sign an agreement with DP in a standard format prescribed by the depository. • Proof of residence (POR) - Any one of Photo Ration Card with DOB / Photo Driving License with DOB / Passport copy / Electricity bill / Telephone bill
3. DP provides the investor with a copy of the agreement and schedule of charges for his future reference. • Proof of identity (POI) - Any one of Passport copy / Photo Driving License with DOB / Voters ID Card / PAN Card / Photo Ration Card with DOB
4. DP opens the account and provides the investor with a unique account number, also known as Beneficiary Owner Identification Number (BO ID). • PAN card


Note:

• The agreement required to be signed by the investor details the rights and duties of the investor and DP.

• DP may revise the charges by giving a 30 days prior notice. SEBI has rationalized the cost structure for isation by removing account opening charges, transaction charges for credit of securities and custody charges, effective from January 28, 2005.

THINGS INVESTORS SHOULD KNOW BEFORE OPENING ACCOUNT

1. Providing the bank account details at the time of account opening.:-- It is mandatory for an investor to provide his bank account details at the time of opening a demat account. This is done to safeguard investor's own interests.

2. Change in bank account details.-- It is possible for an investor to make changes to the details of his bank account. The investor must inform any change in his bank account details to his DP. This enables him to receive the cash corporate benefits (such as dividends, interests) directly into his account in time and discourages any unauthorized use by any second party.

3. Change in the address of investor as provided to the DP:-- Any change in your address should be immediately informed to DP. This enables DP to make necessary changes in the records and informing the concerned companies about the same.

4. Opening multiple accounts:-- An investor is allowed to open more than one account with existing DP or with different DPs.

5. Minimum balance of securities required in demat account:-- There is no stipulated minimum balance of securities to be kept in a demat account.

6. Account opening and ownership pattern of securities:-- One must make sure to open a demat account in the same ownership pattern in which the physical securities are held. For example: If you have two share certificates, one in your individual name (say 'X') and the other held jointly with some other individual (say 'XY'), then in such a case you will have to open two different accounts in respective ownership patterns (one in your name i.e. 'X' and the other account in the name of 'XY').

7. Holding a joint account on "Either or Survivor" basis like a bank account:-- No investor can open a demat account on "E or S" basis like a bank account.

8. Allowing somebody else to operate your Demat account:-- It is possible for an account holder (Beneficiary Owner) to authorize some other person to operate the demat account on his behalf by executing a power of attorney. After submitting the power of attorney to the DP, that person can operate the account on behalf of the beneficiary owner (BO)..

9. Addition/deletion of the names of the account holders after opening the account:-- It is not possible to make changes in the names of the account holders of a BO account. A new account has to be opened in a desired holding/ownership pattern.

10. Closing a demat account and transfer of securities to another account with same or different DP:-- An investor, if he wants, can also close his demat account with one DP and transfer all the securities to another account with existing or a different DP. As per a SEBI circular issued on November 09, 2005, there are no charges for account closure or transfer of securities by an investor from one DP to another

11. Freezing/Locking a demat account :-- The account holder can freeze his demat account for a desired time period. A frozen account prevents securities to be transferred out of (Debit) and transferred into (Credit) the account.



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