HOW TO OPEN A
DEMAT ACCOUNT ?
Opening an individual Demat account is a two-step process: You approach a DP and fill up the Demat
account-opening booklet. The Web sites of the NSDL and the CDSL list the
approved DPs. You will then receive an account number and a DP ID number for
the account. Quote both the numbers in all future correspondence with your DPs.
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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 of shares looks like
this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. 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.
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Is a demat account a must? Nowadays,
practically all trades have to be settled in dematerialised form. Although
the market regulator, the Securities and Exchange Board of India (SEBI),
has allowed trades of upto 500 shares to be settled in physical form,
nobody wants physical shares any more.
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So a demat account is a must for trading
and investing.
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Most banks are also DP participants,
as are many brokers.
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You can choose your very own DP.
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To get a list, visit the NSDL and CDSL websites and see who the
registered DPs are.
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A broker is separate from a DP. A broker is a
member of the
stock exchange, who buys and sells shares on his behalf and on
behalf of his clients.
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A DP will just give you an account to hold those
shares.
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You do not have to take the same DP that your
broker takes. You can choose your own.
