Do you wish to buy and sell shares without getting involved in the burdensome paperwork? Do you wish to trade minus delays? Well, DEMAT account is your answer.
How to open a DEMAT account in India?
Depository participants (DPs) provide DMAT services. DPs include banks. All you need to do is fill up the DEMAT account opening form, available with your DP.
[Note: It is better to take the services of a bank as it ensures quick on-line dealings crediting the transaction to the account by the third day. Also, banks are a better option due to their large network of branches.]
Please visit www.NriDemat.com to get a list of DPs in India.
You would require the following documents to open a DEMAT account:
- Passport-size photograph
- Proof of identity, address and date of birth
- DP-client agreement on non-judicial stamp paper
- PAN Number
Once the account is opened, the account holder would receive the account number and the DP ID that is required for future correspondence with your DP.
Some pointers regarding DMAT account:
- Joint DEMAT accounts can be opened, retaining the same order of names
- In case of different combinations of names (in the case of three or more joint holders) separate DEMAT accounts have to be opened.
- Any number of DEMAT accounts and DPs are permitted
- A multiple-sign DEMAT is feasible, operated by several holders
- If you wish to switch shares from electronic to physical form, and/or vice-versa, you will have to pay a fee (that would vary from a flat fee to a variable fee) to the DP. Remat and DEMAT charges may also show a discrepancy between DPs
- Some DPs offer a discount to frequent traders
- It is advisable to maintain all DEMAT accounts with the same DP to keep track of capital gains liabilities. Also, different DPs follow different methods of computing the capital gains, which is determined by the period of holding.
- Different DPs charge different charges while opening a DEMAT account. However, broadly speaking, they are: an account opening fee; an annual folio maintenance charge paid in advance; a monthly custodian fee; and a charge fee (that may be charged per month or as a flat fee per transaction) on transactions, and its nature. Some DPs who skip the account-opening fee charge a re-opening fee for the account. Account holders are also subject to a service tax.
- No opening balance is required for a DEMAT account
Advantages of having a DEMAT account:
- Safe, secure and convenient mode for trading shares
- Minimize your brokerage charges
- Ensure immediate liquidity
- Remove uncertainty on securities’ ownership title
- Allow quick allotment of public issues
- Enable smooth process in pledging shares
- Avoid delays due to wrong/incorrect signatures, post, and misplacement of certificates
- Prevent risks like forgery and counterfeit, theft or damage to documents
- Save on stamp duty, paperwork on transfer deeds
- Get immediate benefits from bonus shares and stock splits
** It is always advised to open a Demat with a bank that offers complete NRI Banking services. More information on NRI Banking can be found at: http://www.nribankaccount.com/nriservices.html
NRI DEMAT account:
An NRI would have to type in ‘NRI’ in the space provided in the form for ‘type’ and “repatriable” or “non-repatriable” in the sub-type column provided in the form. Please remember that repatriable and non-repatriable types cannot be opened in the same account.
No special RBI permission is required by the NRI to open a NRI DEMAT account, though the same is required in certain specified cases.
An NRI requires separate DEMAT accounts for securities under the FDI (Foreign Direct Investment) scheme that is repatriable, and/or PIS (Portfolio Investment Scheme) scheme that is non-repatriable.
Resident Indians can continue with their non-repatriable DEMAT account even after they have acquired NRI status. But, when an NRI permanently returns to India, he is to inform his authorized dealer about the same so that a fresh account can be opened, transfers can be made from his NRI account, and the NRI account subsequently can be closed.
Note: The DEMAT account will be linked to the NRI’s NRO account in case of non-repatriable accounts, and NRE accounts in case of repatriable accounts.