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What is Demat?

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"Demat Accounts and Finance Topics" written by Experts from Indian Blogger.
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What’s a demat account?
Demat refers to a dematerialised account.
Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account.

Let’s say your portfolio has  100 of Satyam, 200 of IBM and 120 of TCS shares. All these will show in your demat account. So you don’t have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.

Rights

Dematerialisation of your holdings is not mandatory. You can hold your securities either in demat form or in physical form. You can also keep part of your holdings (in the same scrip) in demat form & part in physical form. However, a select list of securities announced by SEBI can be delivered only in demat form in the stock exchanges connected to NSDL.

Procedure

  1. Fill demat request form (DRF) (obtained from DP with whom your depository account is opened).
  2. Deface the share certificate(s) you want to dematerialise by writing across Surrendered for dematerialisation.
  3. Submit the DRF & share certificate(s) to DP. DP would forward them to the issuer / their R&T Agent .
  4. After dematerialisation, your depository account with your DP, would be credited with the dematerialised securities.

Points To Remember

  1. Only securities admitted by NSDL can be dematerialised. The list is available with your DP.
  2. Only securities registered in the name of the account holder can be dematerialised.
  3. Dematerialisation is normally completed within 15 days after the share certificates have reached the issuer/ their R&T Agent. Thus it may take you a month from the date you hand over shares, to receive demat credit.
  4. Dematerialisation would be done only when the issuer / their R&T Agent is satisfied of genuineness of securities & ownership status.
  5. All the joint holders should sign the DRF.
  6. The pattern of holding in the DRF should match the pattern of holding on the share certificate & the pattern in which account is opened.
  7. Demat requests with name(s) not matching exactly with the name(s) appearing on the certificates merely on account of initials not being spelt out fully or put after or prior to the surname, would be processed, provided the signature(s) of the client(s) on the DRF tallies with the specimen signature(s) available with the issuer/ their R & T agent. 
  8. If the signature in the DRF does not match with the signature available with the issuer/ their R & T agent, the issuer/ their R & T agent may at the time of demat confirmation, ask for additional documentation (like bank attestation/ notarisation, etc.) to prove that the certificate belongs to the person who forwarded the DRF.
  9. In case there is any problem in processing the DRF, contact your DP and if he cannot resolve the problem you may contact NSDL.
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