Points To Remember When Operating Demat Account

In today's digital world, everything has become simpler and easier. For instance, having a demat account has made things convenient for investors and traders in the stock market. Thus, everyone is learning how to open demat account. Nevertheless, there are certain criterias you need to keep in mind while operating them.

What is a demat account?

A dematerialized account or demat account is an electronic form of holding your financial securities (debt or equity). The demat accounts are administered by two main depository organizations in India: Central Depository Services Limited and National Securities Depository Limited. Financial institutions like banks, also known as DP (Depository Participant), are the intermediary between the investor and depository.

Demat account online is like having a electronical ownership statement bank where you can maintain all your equity holdings. This resolves the hassle of the trade occurring in physical share certificates.

How To Open Demat Account?

• Select where you would like to open the demat account and with which DP.
• Fill the form to open a demat account with the copies of required documents and one passport size picture. For the verification process, carry your original documents.
• Agree to the terms and conditions that come with the demat account.
• An in-person verification will be conducted by a staff member of the DP to verify your details with the form filled while opening your demat.
• Once the verification is completed, you will be provided with a client ID and account number. Using those details, you can log in to your demat account.

Points To Keep In Mind While Operating A Demat Account:

Knowing to operate a demat account online is about security and smart utilization. That is why it is imminent to keep these in mind while operating a demat account:

• If you're still holding onto the physical share, note the distinct security numbers that were sent with the share certificate folio number. It is always good to keep the certificate's photocopy with you. Make sure that every detail in the certificate matches the in the demat account. Do not lose the acknowledgement of DRF (Demat Requisition Form) that was submitted to the DP until you receive the demat credit.
• Always remember to go through your transaction statements carefully. In any case of unauthorized credit or debit, inform your DP and then to CDSL/NSDL. Register demat online to get updates on a regular basis.
• While selling your shares, you first need to fill the DIS (Debit Instruction Slip). Mention the required details with accuracy and avoid any over writing. In the case of trading online, the broker might ask you for a power of attorney to make things simpler. It is completely legitimate, yet it is still up to you and you can sign the DIS physically.
• The basic precaution you can take is that on every DIS page insisting upon pre-printed DIS numbers and your ID (account number) to be pre-stamped. Ideally, keep your DIS booklet safe and to yourself.
• According to demat and SEBI regulations, you can pay any demat related fees online or via cheque, no matter how small the charge is. This is keeping in mind your interest to avoid any misuse of cash.
• Before issuing any DIS, always remember to check your balance. You are not allowed to sell more than the shares present in your demat account or sell the shares that are blocked due to any reason.
• Do not keep your demat account idle for too long. This will cause your account to freeze and until you send a letter regarding it to unfreeze, it will remain like that. In any case you're not utilizing your demat account, avail the freezing facility offered to your demat account. This ensures no unnecessary debits or credits in your account, but also keeps the frauds at bay.
• Although SEBI allows offline transfer of shares within family or relinquishing of shares, do not do this unless it is a genuine case. If it is not a genuine case, you will be called in for questioning. Avoid such situations as it is not only unethical, but also a regulatory hassle.

Conclusion

Demat accounts online have made it easier to hold securities. The risk associated with fake certificates, thefts and delays are all eliminated in case of a demat account. It also reduces a lot of paperwork and transaction costs. Thus, it is no wonder everybody wants to learn about them and understand how to open a demat account.