Are you searching about How Demat Account Works? Then you have landed at the right place. This blog has one simple objective: To help you understand about the process of demat account.
Importance of Demat Account
Let’s begin with a quick introduction of: what is Demat?
Demat is known as Dematerialisation. Its process of Transfer share certification from Physical to Digital (Electronic form) format.
With help of Demat, you can digitally secure your physical Certification into Demat form.
Demat Account holds all your physical certificate into Digital format. It’s one type of your Bank account where you can save your certificate and other financial documents, Exchange-traded funds in Electronics formats. When the shares and other securities are dematerialization their account are kept and maintained in the Demat account of Depository Participants. DP is authorized by CDSL/NSDL to operate Demat Account.
How to Dematerialised physical Shares into Demat?
A person has to open a Demat Account for Dematerialised Physical Shares. The following are steps to follow for that. Do you have a Demat Account? if No then please check before steps to open the Demat account before process Dematerialisation.
You also will know how Demat and trading account works after reading the below steps.
Read more: How to Open Demat Account?
Fill Account Opening Form:
Who wants to open a Demat account to fill the account opening form with all the particular details which required.
Provide Required Document list:
Pan Card, Identity Proof, Address Proof, Bank Details, etc are the major document required for the same – Click Here for Details Documents
Sign DP account opening Agreement with Depository:
Investor has to then sign it and submit it to DP and the DP charges a certain fee and would give a copy of the signed agreement to the investor. Also, submit to sign Terms and Condition rights and obligation page.
Depository Provide Client ID:
The Depository Participant would give the unique Client ID once the investors’ depository account is opened.
DP provides instruction Slip:
If the investor wants to transfer his shares to other DP or other investor DP account that instruction slip required (it’s one kind of Chq book for DP)
Dematerialization Form:
Investor should fill the Dematerialisation form and attached a Physical Certificate. ( for future reference keep Xerox or Scan copy of your portfolio of physical certificate )
Submit Dematerialisation form to DP Office:
Once the form fills completely deposit your physical certificate with the Dematerialisation form to your DP office. They will provide you receipt copy.
DP will submit the Dematerialisation form:
They submit the Dematerialisation form to the respective company registrar. They will check all details and records in place and match investor signs with their records.
Timeline:
Maximum 30 days’ time required for Transfer Physical Shares to Demat form if everything in place. If any query they will inform the investor or DP by mail and send the certificate back.
After Demat:
Once your Dematerialisation complete you can sell them online or transfer to other investors DP by Electronically.
You can Open Trading Account with SEBI Register Broker to sell your DP stock online.
How Demat Account Works in our Country?
Now that you know the process of opening a demat account; let’s have a look at how it works. You can compare a demat account with a savings account in your bank. We know that we use our savings account to store our money in our bank. Similarly we use demat account to store shares and securities of a different companies.
All you need is a depository participant that is affiliated to the NSDL. As a result; whenever you buy any shares or securities; you get credit in your demat account. And when you want to sell them you can do that from your demat account easily.
