DEMAT

Introduction:
The term "de-mat", in India, refers to a dematerialized account
for individual Indian citizens to trade in listed stocks or debentures in
electronic form rather than paper, as required for investors by the
Securities and Exchange Board of India(SEBI). In a de-mat account, shares
and securities are held electronically instead of the investor taking
physical possession of certificates. A de-mat account is opened by the
investor while registering with an investment broker(or sub-broker). The
de-mat account number is quoted for all transactions to enable electronic
settlements of trades to take place.
Access to the de-mat account requires an internet password and a
transaction password .Transfers or purchases of securities can then be
initiated. Purchases and sales of securities on the de-mat account are
automatically made once transactions are confirmed and completed

Aim and Objective:

To know the role of Demat Account .
To know the procedure of opening DEMAT ACCOUNT.

Need and Importance:

WHY DEMAT?
1. Physical records are slowly being replaced by their electric form in all
walks of life.
2. The situation is no longer different when it comes into the field of
investments wherein it becomes very difficult to handle and maintain
documents in their respective physical state.
3. The DEMAT account presents a simplified form by which investments and
securities can be handled even by small investors in an effective manner.
4. Elimination of problems related to selling securities on behalf of a minor.
5. Elimination of problems related to change of address of investor, transmission etc.
6. Reduction in handling of huge volumes of paper periodic status reports.
WHAT DEMAT GIVES YOU?
1. The importance of DEMAT accounts is that it transfers the balance of power to
your hands by awarding the facility of choice to select the manner, mode and
amount of investments.
2. Other factors become relevant because one can choose whether one wants to
buy one share or 1000 shares.

So with Dematerialized Securities, the entire process of transferring shares,

bonds and other financial assets has become smooth and swift. DEMAT
Accounts offer numerous advantages and hence it makes sense for the retail
investors to open DEMAT Accounts as early as possible

Presentation:
HOW TO OPEN A DEMAT ACCOUNT:
1. The first and foremost step is to approach DP or depository participant
with whom you want to open you Online Demat Account. Like a bank or
broker, depository participant acts like an agents between the investor
and depository.

A depository (in simple terms) is an institution holding a pool of pre-verified shares held in
electronic mode that offers efficient settlement of transactions. A Depository Participant
(DP) is an intermediary between the investor and the depository. A DP is typically a
financial organization like a bank, broker, financial institution, or custodian acting as an
agent of the depository to make its services available to the investors. Each DP is
assigned a unique identification number known as DP-ID. As of March 2006, there were
a total of 538 DPs registered with SEBI.

2. Secondly, you will have to fill up online demat account opening form and
attach documents for proof of your identity and address. The documents
that you will need are: PAN Card, any identity proof (like voters id, driving
license, passport etc). Any residence proof (like ration card, driving
license, etc). Self attested passport size photograph.
3. You will have to sign a pact with your depository participant in which all
the rules and regulations will be written to be followed by the investor and
DP both. Your DP will give you the copy of the agreement.
4. Once the agreement is signed and the verification of your documents will
be done, in about 15 days you will get your online demat account number.
It is also known as BO ID that is beneficiary owners identification number.
All your future transactions will be done with this ID.
5. Now that you own a demat account, you can step into the world of stock
exchange and start investing your money in mutual funds, shares,
debentures, insurance, retirement funds etc. It should be noticed that

unlike every bank account where we have to keep a minimum balance,

demat account does not require you to have a minimum number of
securities. You can open a demat account with a zero balance and also you
need not have any minimum balance to maintain the account. You may
have a zero balance in your online demat account.
Apart from the procedure to open a online demat account, one should also
know the Demat Account charges.
There are mainly 5 types of charges that are levied on Demat Accounts:
1. Demat Account Opening Charges
2. Annual Maintenance Fee
3. Custodian Fee
4. Transaction Fee/Brokerage
5. Dematerialization Fee

Conclusion:
India adopted the Demat System for electronic storing, wherein shares and securities are
represented and maintained electronically, thus eliminating the troubles associated with
paper shares. After the introduction of the depository system by the Depository Act of 1996,
the process for sales, purchases and transfers of shares became significantly easier and
most of the risks associated with paper certificates were mitigated.