A Demat account or Dematerialized (converted from physical to electronic shares) account. It is an account that holds your shares and securities in electronic format. It also holds your Bonds, Mutual Funds, Government securities, and exchange-traded funds.
Why is it necessary to have a Demat Account?
Without the Demat account, you can not buy or sell the shares. You cannot invest directly in equity. SEBI mandates Demat for transactions of listed companies. Even at the time of applying for an IPO, it is mandatory to have the Demat account as the allotted shares will be credited to the Demat account.
How to Open Demat account?
- Decide a Depository Participant, which is an authorized bank. The choice of which DP you will choose depends on the various things like brokerage charges, annual charges, and the leverage provided.
- Give the KYC form and the duly filled account opening form to the bank.
- Attach the copies of PAN Card, House Proof, ID Proofs, and Passport-size Photographs.
- You will need to show the original documents for verification. Also need to give a cancelled cheque for dividend details.
- Now, you need to sign the agreements that mention all the rules & regulations. Please read them carefully before signing. Submit it, then an authorized person will sign it, and you get a copy of it.
- When the account opens, you will receive a unique ID. ID will help you to get access to your Demat account.
- DP will also give you the instructions related to the Demat account. Like, how to transfer or buy. You can also open your Demat account online.
Trading through a Demat account is just like making transactions in a bank account. There are two types of procedures. Basis of the two national depositories in India: NSDL and CDSL. Intra-depository transfer and Inter-depository transfer.
For transferring shares from one Demat account to another, there are two ways: Online and Offline.
There is an easy way to transfer stocks on the internet. You can follow the mentioned steps to transfer stocks from one Demat account to another.
- First of all, you need to register on the platform CDSL
- And then provide existing Demat account details.
- After that, the verification process will be done,
- Then the account holder will be able to make their future transfers online.
- Next, add the account in which you want to transfer the shares.
- After 24 hours, you can transfer securities from your Demat account to another.
Following are key steps you need to follow if you want to transfer stocks from one account to another. For this:
- You need to fill out a Delivery Instruction Slip (DIP).
- ISIN number of the shares you want to transfer, name of the company (security).
- Demat account and the DP ID of the account to which the shares you want to transfer.
- After filling all this in the form, submit the form to the old broker’s office for further procedure.
- The broker may charge a stated fee for processing the transferring request you have made.
- He will help you by transferring stocks from one Demat account to another.
If you close your old account, then the broker will charge no fee. The transfer of shares doesn’t amount to changing beneficial ownership.
A Demat account doesn’t need you to maintain any least balance. Also, you can hold more than one Demat account with one PAN Card but with a different DP. The benefit of a Demat account is that it is safer than holding physical shares. You can get a Demat account in no time and can access it on many touchpoints.
It’s a safe method to hold your securities as there is no risk of forging or losing shares. On the Demat account, Stock-splits get automatically updated. It also provides the facility of the nomination. In case of an investor’s demise, the shareholding in the Demat account can transfer to the nominee.
To Sum Up
If you have some fundamental knowledge about Demat account operations and the procedure, it’s well and good. You can take the help of this article to transfer your stocks from a Demat account to another. Otherwise, you can knock on the door of any stockbroker for similar support. He may ask you for some minimal charges.