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Definition of demat account
A demat, or DP can be defined as an account used for enabling an investor to hold various financial units in electronic form instead of holding it physically. This DP account is similar to a savings bank account. In order to open DP account, the investor is required to approach a Depository participant.
Who is Depository Participant?
A depository participant, or DP, is the one that holds an investor's records in a dematerialised form as well as receives all the trades for purchasing and selling. This DP then opens your account and allots an account number as well as a DP ID number. So thereafter, this DP ID number will have to be mentioned wherever units are supposed to be credited to demat account. A DP's main advantage is the fact that an investor is able to hold the whole portfolio of mutual fund units, shares and other securities in a single account, in an electronic form.
For instance, if a particular investor has invested in HDFC Mutual, ICICI Pru Mutual and Kotak Mutual, then all of such holdings can be stored in a single DP account in place of possessing physical certificates of every investment.
There are about four main charges involved during the opening and maintenance of a Demat account, namely account opening charges, annual maintenance fee, custodian fee and transaction fee. Almost all these charges are different for different DP.
Transfer of securities to demat account
Securities can easily be transferred to demat account. So if you still do not possess a DP account, you better do it now. For opening this account, all you need to do is to fill in your details in a dematerialised request form (DRP), provided by a DP. Once you have filled up this form, submit it to your DP along with various required statement.
One thing you need to keep in mind is that in case of mutual funds, your DP account and the units' holding should have same names as well as mode of holding. Your DP then provides you an acknowledgment of the form's receipt, which is then send to the Registrar & Transfer Agent (RTA). As a result, your physical units are then converted in the demat mode by making the entry in their books as well as intimating the relevant exchange. The exchange then notifies this DP, followed by the DP crediting the account of investor with units. While submission is done for conversion, the investor is supposed to ensure that the holding mode is the same.
A demat, or DP can be defined as an account used for enabling an investor to hold various financial units in electronic form instead of holding it physically. This DP account is similar to a savings bank account. In order to open DP account, the investor is required to approach a Depository participant.
Who is Depository Participant?
A depository participant, or DP, is the one that holds an investor's records in a dematerialised form as well as receives all the trades for purchasing and selling. This DP then opens your account and allots an account number as well as a DP ID number. So thereafter, this DP ID number will have to be mentioned wherever units are supposed to be credited to demat account. A DP's main advantage is the fact that an investor is able to hold the whole portfolio of mutual fund units, shares and other securities in a single account, in an electronic form.
For instance, if a particular investor has invested in HDFC Mutual, ICICI Pru Mutual and Kotak Mutual, then all of such holdings can be stored in a single DP account in place of possessing physical certificates of every investment.
There are about four main charges involved during the opening and maintenance of a Demat account, namely account opening charges, annual maintenance fee, custodian fee and transaction fee. Almost all these charges are different for different DP.
Transfer of securities to demat account
Securities can easily be transferred to demat account. So if you still do not possess a DP account, you better do it now. For opening this account, all you need to do is to fill in your details in a dematerialised request form (DRP), provided by a DP. Once you have filled up this form, submit it to your DP along with various required statement.
One thing you need to keep in mind is that in case of mutual funds, your DP account and the units' holding should have same names as well as mode of holding. Your DP then provides you an acknowledgment of the form's receipt, which is then send to the Registrar & Transfer Agent (RTA). As a result, your physical units are then converted in the demat mode by making the entry in their books as well as intimating the relevant exchange. The exchange then notifies this DP, followed by the DP crediting the account of investor with units. While submission is done for conversion, the investor is supposed to ensure that the holding mode is the same.
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