The Postal Department, in association with the National Securities Depository Limited (NSDL), has undertaken an initiative to demat savings certificates. The National Small Savings Certificate and Kisan Vikas Patra are covered under the scheme.

Presently, the scheme has been started in a few post offices only. It is expected that based on the feedback received, and after plugging loopholes, the scheme will be gradually expanded to other post offices as well.

Dematerialisation of savings certificates entails the process of converting the paper certificates into an equivalent number of securities/units in electronic form. These in turn are credited into the investor’s DP account with the depository participant (DP).

The investor has to apply in an application form directly or through an agent to any of the specified post offices. Investors who already have a DP account can quote the number in the application form. NSDL will open a DP account in respect of all those investors who don’t have a DP account.

The investor will be mailed a ’statement of transaction’ having details of units credited in his DP account. The facility of transfer, nomination, premature encashment (in case of KVP), and pledge will be available to the investor in the demat mode. The payment of interest will continue to be the same as in case of paper holdings.

An investor is not liable to pay any extra charges for this facility. On maturity of the certificates, the redemption amount can either be to the investor’s bank account or through cheque/warrant. An investor can maintain his address and bank account details for all his investments through communication with one DP.

Advantages for investors

Convenience: The investor needs to make a single or no visit at all to the post office for the entire lifecycle of investing in the instrument (including purchase and redemption). Consolidation: Multiple holdings can be consolidated in a single account. So less paperwork.

Safety: Demat of certificates obviates the need to hold these certificates in physical mode. As such, there is more safety from loss, theft or damage.

Security: Scrip-less holding is a secure mode as it is tamper-proof.

Automatic redemption: On redemption, the investor does not need to go to the post office for the proceeds. The redemption amount is directly credited to the bank account of the investor.

Existing facilities continue: Even in demat form, all the existing facilities such as transfer, pledge, make nomination etc will continue.

In future, investors may expect scrip-less certificates instead of paper certificates. Trading in demat form eliminates the cumbersome use of paper. The investor gets very cost-effective custodial service for lifetime investments by maintaining them in demat form compared to the risk in keeping physical shares. There is no risk of loss due to theft, mutilation etc.

Dematerialisation relieves the hassles of keeping paper documents and multiple folio numbers. It would also enable encashment of these certificates from any branch of the post office as the account can be accessed online by any post office.

State Bank of India has tied up with its wholly owned subsidiary SBICAP Securities Ltd for providing e-trading services to its customers, the bank said in a notice to the BSE today.

SBI already provides online trading through ‘eZ-trade@sbi, in a tie-up with Motilal Oswal Securities Ltd. It is a three-in-one account where the demat account and the savings or current account is with SBI and the trading account is with Motilal Oswal.

The recent boom in the stock markets seems to be attracting more retail investors to the bourses, if the number of new ‘demat’ accounts being opened, is any indication.

According to the latest ‘demat’ accounts data released by Central Depository Services Ltd (CDSL), one of the two depositories, shows that more than four lakh new accounts have been opened in the last two-and-a-half months – a 50 per cent increase in monthly average compared to that of the first eight months of the current year.

Rise in NSDL too

Though corresponding figures of NSDL, the other depository, are not available, NSDL officials said there has been a noticeable increase in the number of new accounts in recent times.

The number of demat accounts with CDSL has almost doubled to 28.24 lakh as on November 15, 2007, from 15.55 lakh as on January 1, 2007, according to a release from the depository here on Saturday.

Mandatory opening

As on April 1, 2006, PAN Card number has been made mandatory for opening the demat account.

In the beginning of this year, the total number of accounts frozen for non-PAN compliance with CDSL was 6.07 lakh.

This has come down to 3.95 lakh as on November 15, 2007.

An official with CDSL said, “The number of demat accounts in this financial year is mainly because of the jump in number of IPOs and also the positive market sentiments.”

“The BSE sensitive index last year was around 12,000 now it stands at 20,000, people are now willing to open demat accounts to participate in our booming markets.”

Retail participation

Jayesh Sule, Executive Vice-President, NSDL, said, “the demat number has definitely been going up. There has been a lot of retail participation now.”

“This is mainly because the market is doing extremely well now and also because the value of stocks have gone up.”

“The total number of demat account with NSDL as on November 10, stands at 8.2 million.”

India’s largest investment portal today announced the launch of MF Direct Account, a special scheme launched to attract, new investors to the world of mutual funds.

The two-in-one account is a combination of a savings account and a MF investment account. Customers who open a Direct MF Account can seamlessly invest in mutual funds with the click of button. On investment the funds get transferred from their savings account and on redemption the funds get transferred back to their savings account.

The Direct MF Account can be opened at any center of ICICIdirect and is currently free of cost. There are no transaction costs for investing or redeeming, apart from those charged by individual fund houses.

The Direct MF Account is backed by the most exhaustive research on all available mutual fund products in the country. This will allow the customer to a huge basket of over 1000 mutual funds, their portfolios and past performance before taking an investment decision.

 The product is a result of an intensive research carried out by ICICIdirect.com. The research pointed to the fact that an overwhelming majority of consumers look at Mutual Funds as a first safe step into the stock market. However what they expect from the seller is neutral, fact-based research that can help them evaluate the huge number of schemes available. This is exactly where ICICIdirect.com comes in.

 Anil Kaul, Head ICICIdirect elaborates on the need gap, “As per the latest 2007 report of Invest India Market Solutions – Dataworks, there are about 144 Mn working age Indians with bank accounts. Yet there are only 5.8 Mn demat accounts. This gap represents the potential for this new product from ICICIdirect.com. We believe that with our quality services and research backed product, customers will see immense value in the offering. We also think that having taken this first step, they will then take the second of immersing themselves deeper into equity. We have thus created a ladder for their ease and convenience.”

The MF Direct Account comes with the following advantages:

• Customer can invest in MF through CallNTrade
• Convenient paperless MF investments 
• Automatic Credit/Debit from Bank account 
• Online order status tracking 
• Online updation of portfolio calculated at latest NAV. 
• Online dividend payout / reinvestment facility 
• Single point customer query handling 
• Conveniently investing in SIP, in case one chooses to