There are two
Depositories
and approximately 390
Depository
Participants (DP) are registered with SEBI at present. The two
Depositories are:
- National Securities Depository Limited
- Central Depository Services (I) Limited
The benefits of availing Depository Services are as follows:
- A safe, convenient way to hold securities;
- Instant transfer of securities;
- Stamp duty is not required on transfer of securities;
- Elimination of risks associated with physical certificates such
as bad delivery , fake securities, Delays, thefts etc.;
- Reduction in paperwork involved in transfer of securities;
- Reduction in the cost of transaction,
- No odd lot problem, even one share can be sold;
- Facility of nomination;
- Change in address recorded with DP gets registered with all
companies in which investor holds securities electronically
eliminating the need to correspond with each of them separately;
- Transmission of securities is done by DP eliminating
correspondence with companies;
- Credited automatically into demat account of shares, arising
out-of bonus or split or consolidation or merger etc.
Opening of an account with any of the depository Participant of any
depository is required to avail the services.
Opening of an account
The investor has to approach a Depository Participant and fill up an
account opening form with the support proof of identity and address.
Proof of Identity : Photograph and Signature of investor must be
authenticated by investor's bank or by an existing demat account holder.
Alternatively, one can submit a copy of a valid Passport, Voters Id
Card, Driving License or PAN card with photograph.
Proof of Address : A copy of ration card or passport or voter ID or PAN
card or driving license or bank passbook as proof of address.
The investor has to sign an agreement with DP in a depository
prescribed standard format, which holds a detail of investor's and DPs
rights and duties. DP provides investor with a copy of the agreement and
schedule of charges for future reference. The DP opens the account for
the investor in the system and give an account number, which is also
called BO ID (Beneficiary owner Identification number).
Kindly note that there is no balance of securities required in the
account and more than one account in the same name can be opened either
with the same DP or with other irrespective of the brokers account.
FAQs on Depositories And Custodians
What is to be done if the investors
address changes?
If the Investors address changes it should be immediately informed to
his/her DP, who in turn updates the records.
Can an investor open a single account
for securities owned in different ownership patterns ?
No. The demat account must be opened in the same ownership pattern in
which the securities are held in the physical form. e. g. if one share
certificate is in your individual name and another certificate is
jointly with some other, two different accounts would have to be opened.
What is required to be done if one has
physical certificates with the same combination of names, but the
sequence of names is different i.e. some certificates with 'A' as first
holder and 'B' as second holder and other set of certificates with 'B'
as first holder and 'A' as the second holder?
In such case one may open only one account with 'A' & 'B' as the
account holders and lodge the security certificates with different order
of names for dematerialisation in the same account. One has to fill-up
an additional form called "Transposition cum Demat" form. This
would help you to effect change in the order of names as well as
dematerialise the securities.
Whether investors can freeze or lock
their accounts?
Yes, investors can freeze or lock their accounts for any given period
of time. Accounts can be frozen for debits/credits or for both.
