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Opening an account

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"Demat Accounts and Finance Topics" written by Experts from Indian Blogger.
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Steps involved in opening a demat account
First an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents to serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. Besides, production of PAN card in original at the time of opening of account has been made mandatory effective from April 01, 2006.
All applicants should carry original documents for verification by an authorized official of the depository participant, under his signature.

Further, the investor has to sign an agreement with DP in a depository prescribed standard format, which details rights and duties of investor and DP. DP should provide the investor with a copy of the agreement and schedule of charges for their future reference. The DP will open the account in the system and give an account number, which is also called BO ID (Beneficiary Owner Identification number).

The DP may revise the charges by giving 30 days notice in advance.  SEBI has rationalised the cost structure for dematerialisation by removing account opening charges, transaction charges for credit of securities, and custody charges vide circular dated January 28, 2005.

Further, SEBI has vide circular dated November 09, 2005 advised that with effect from January 09, 2006, no charges shall be levied by a depository on DP and consequently, by a DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his account to another branch of the same DP or to another DP of the same depository or another depository, provided the BO Account/s at transferee DP and at transferor DP are one and the same, i.e. identical in all respects.  

In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP should also be a joint account in the same sequence of ownership.

Rights

  1. You can open more than one depository account in the same name with single DP/ multiple DPs.
  2. No minimum balance is required to be maintained in a depository account.
  3. You can give a one time standing instruction to your DP to receive all the credits coming to your depository account automatically.

Procedure

  1. Fill account opening form (available with your DP).
  2. Give your DP the duly filled account opening form with introduction documents as may be required.
  3. Sign agreement with DP (agreement will state rights & obligations of both parties). The agreement will contain the fee structure of your DP. Your DP would give you a copy of this signed agreement for your record.
  4. DP would give you Client Id no. (account no.) once your depository account is opened. This Client Id no. alongwith your DP Id no.forms a unique combination. Both these nos. should be quoted in all your future correspondence with DP/NSDL/ Issuing company/their registrar & transfer (R&T) agent .
  5. Your DP would give you pre-printed instruction slips for depository services viz., dematerialisation, delivery instruction for trades, etc..Preserve these carefully.
  6. Your DP would give you a list of deadlines for giving instructions for various depository activities viz., transfer for effecting sale, purchase,etc.. If not, check with the DP.

Points To Remember

  1. You may choose your DP based on your evaluation of their reputation, service standards, charges, other conveniences, etc.
  2. Open depository account with the same holding pattern as there on existing physical securities. You will need to open separate accounts for every different combination of holding pattern. Eg.: If 100 securities of company ABC & 200 securities of company PQR are registered in the name of X as first holder & Y as second holder, one account in name of X as first holder & Y as second holder is sufficient. Whereas, if 100 securities of company ABC are registered in the name of X as first holder & Y as second holder & 200 securities of company PQR are registered in the name of Y as first holder & X as second holder, you will need to open two accounts, one in the name of X as first holder & Y as second holder and the second in the name of Y as first holder and X as second holder.
  3. Account opening procedure should typically take 2-5 days.
  4. In case of holdings of a partnership firm, the account should be opened in the name of the partner(s).
  5. In case of holdings of a HUF, the account should be opened in the name of the Karta.
  6. In case of a minor, the depository account should be opened in the name of the minor and the guardian?s name should be mentioned. The guardian will sign as signatory on behalf of the minor. For selling the securities of the minor, a court order should be obtained.
  7. In case of any difficulties, contact your DP.
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