A demat account is like a bank account for your securities or investments. The only difference is that while a bank account holds a depositor's money, the demat account contains your stocks, debentures, bonds, government securities (Gsecs), mutual fund units, exchange traded fund (ETF) units etc. in an electronic form.
The structure of the dematerialised system comprises a depository, which is the entity that actually holds your securities. This can be compared to a bank, which holds your money. The depository has dedicated agents called depository participants, more commonly referred to as DPs. If you want to use the services of a depository then you need to open an account with a DP, which is similar to opening an account with a bank branch. Kotak Securities is a DP of National Securities Depository Limited (NSDL) and you can approach us to open and mange a demat account.
Once an account is opened you can use this to hold your various investments. When you make an investment such as buying some stocks, then the quantity of stocks is directly credited to your demat account. If you sell some stocks, then these will transferred out of your demat account, which will then show the balance remaining therein. Similarly, the demat account can be used to deal in various other securities so that the transactions are completed electronically without your having to deal with the physical documents and the related paperwork. At any time, your demat account with us will reflect the details of your existing holdings. So, all that you need to do is just check your account from time to time to get all the individual details including the quantity and value of each investment.
Kotak Securities' demat account is a secured and convenient way to track your securities and investments.
Your first step to open a demat account is to get in touch with us - we are a depository participant (DP) with both National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL). Then all you have to do is fill in an account opening form, sign an agreement, provide photographs and submit documents of proof of identity, proof of address and a copy of the PAN card, we will take care of the rest of the procedure.
Before opening a demat account you must consider 5 things:
Minimum balance Versus a bank account where you need to maintain a minimum balance to avoid incurring several charges, there is no specified minimum number of securities that you need to maintain in the demat account.
Multiple accounts for varying ownership patterns
Check the exact holding pattern for stocks that you own in the physical form. You will need to open a demat account in the same sequence as your existing holdings and you can hold multiple accounts with different name combinations.
Delivery instruction slip protection
The equivalent of a bank cheque book is the delivery instruction slip in the demat account. This allows you to transfer securities out of your account. A high level of care in terms of maintaining the security and safety of slips is essential to prevent misuse of your account.
Seamless transaction Opening a Trinity account with us will provide you the ease of operation via linking your demat account with your trading account and bank account making the entire investing process one seamless transaction.
Account charges Several charges apply while operating the demat account. These are transparent and you (the account holder) must know these upfront. We mention below the exact charges along with the attendant conditions, so that there is complete clarity.
SCHEDULE OF CHARGES
Rs.50/- per request and Rs.3/- per certificate
Rs.10/- for 100 shares
- On market
- Off market
0.04% of the value of securities
(plus NSDL charges as applicable)
(plus NSDL charges as applicable)
Account maintenance charges
- Resident Indian
Rs. 50/-per month
Rs. 75/-per month
0.05% of the value of securities
Invocation of pledge
0.04% of the value of securities
Charge for client master change intimation
There are no charges payable at the time of opening account. All other charges will be billed on a monthly basis
In case of delays in the payment of charges, the demat account can be frozen for all operations till such time all dues are cleared. Please refer clause VIII mentioned in the agreement signed by you.
"All market instructions for transfer must be received latest by 4.00 p.m. on the previous working day prior to the pay in day as per SEBI Guidelines. All off market instructions for transfer must be received atleast 24 hours before the execution date. Late instructions would be accepted at the account holder's sole risk and responsibility".
Charges are subject to revision at the company's sole discretion and as per revisions in NSDL charges.
Any service not quoted above will be charged separately.
Value of transaction will be in accordance with rates provided by the Depository or actual transaction value, whichever is higher.
Service tax and other statutory charges if applicable will be levied separately.
Quarterly statements of transaction may not be sent to the clients, if there is no transactions and no securities balance in the account. Annual Maintenance Charges will NOT be levied in such cases.
In accordance with the SEBI circular (Ref # SEBI Circular No. CIR/MRD/DP/22/2012 dated August 27, 2012) effective from 1st October 2012 all Sole or First Holders of a demat account having value of securities not exceeding Rupees Two Lakhs are eligible and have an option to avail Basic Services Demat Account (BSDA), As per the said SEBI circular, for availing BSDA facility, the individual shall have only one BSDA in his/her name across all depositories for availing this facility a request letter in the prescribed format (available at you nearest Kotak Securities branch) can be submitted with the account opening form. Also an existing individual client who is eligible to convert his Demat account into BSDA can do so by submitting the request letter in this regard. In case the BSDA account holder converts such account into Non-BSDA (regular account) account or the account holder ceases to meet the eligibility criteria for BSDA account, the charges applicable to Non-BSDA (regular account) shall be levied.
For demat accounts having NIL transactions during the year, statement of holding will be sent only once in a year w.e.f. 1st October 2012
Demat accounts provide a range of benefits for its users - given below are a few that you can experience when you open and operate an account with us.
Risk elimination Several risks face you when you invest in physical securities such as: (i) fake securities or (ii) the transfer getting held up due to bad delivery, as the signature of the seller may not match etc. (iii) incomplete paperwork can also delay you becoming the owner of the securities. A demat account will eliminate all these risks as such an account will involve electronic transfers directly into your demat account.
Dealing in physical securities involves a great deal of additional costs such as: (i) handling expenses plus (ii) transfer costs due to the levy of a stamp duty and cost to ensure safety of the documents. Several of these costs are also difficult to determine ahead. We provide a clear list of all the expenses required for maintaining a demat account whilst all costs associated with physical securities are entirely eliminated.
Saving transaction time and increases liquidity
Previously, the time to complete securities transactions for securities in the physical form took weeks, if not months. The usage of demat account with us ensures the same process is completed in a matter of days thus saving on time and enabling you to transact quickly and inexpensively therefore enhancing liquidity. It enables pledging of securities, electronic credit of securities during public issue allotments, auto credit of Rights / Bonus / Dividend credit directly through ECS, auto credit of Public Issue refunds in case of partial allotment etc. Demat account also provides you the comforts of receiving holding / transaction details directly through email
Investment consolidation Demat accounts can hold a range of investments from stocks to mutual funds and even government securities or debt instruments such as bonds. We ensure that multiple investments are consolidated at a single place, providing you a bird's eye view, leading to better decision making.
Administrative work reduction Administrative work related to demat accounts is reduced to a large extent, as standing instructions take care of the routine work. In cases where a change must be made to details such as the investor's bank account number or address; you need to do it only once and it will be automatically reflected in all the customer's holdings.
Physical records are slowly being replaced by their electronic forms in all walks of life. The situation is no different when it comes to the field of investments wherein it becomes extremely difficult to handle and maintain documents in their respective physical states. The demat account presents a simplified form by which investments or securities can be handled even by small investors in an effective manner.
Why demat of shares matters?
Once you open a demat account with us you can be rest assured that we will take care of the remaining procedures and activities related to the account. The process of using the demat account reduces the time involved versus a physical transaction, as there is a direct transfer of the securities purchased, to your (the investor's) account in an automatic manner. This does away with the burden or pressure of one actually undertaking several steps that need to be established in the process of ownership of the investments. Once the demat account contains a security there is also no worry of having to safeguard the physical documents and then present them to the concerned authorities at the time of sale.
What demat gives you:
The importance of demat accounts is that it transfers the balance of power to your hands by awarding the facility of choice to select the manner, mode and amount of investment.
Other factors become irrelevant because one can choose whether one wants to buy one share or 1,000 shares.
Similarly, you can choose to buy your entire requirement in one go or in 10 instalments. This will ensure that your investment decisions are focused on achieving your objectives or goals and are not influenced by factors that are administrative or process bound.
The larger the coverage of instruments under the demat account umbrella, the greater the convenience that you will experience.
A depository is an entity that maintains the demat accounts of various investors. It is a central place wherein the securities maintained in the demat account are held whilst also providing different services for the demat account holders. Some facts relating to depositories:
5 facts of depositories:
All records under one roof A depository has details of the holdings of thousands of entities with itself. It maintains all the records related to the investors, change of ownership of the securities and their current holding patterns; hence all the consolidated details are available at one location.
Operates through depository participants The depository appoints depository participants who will deal with investors. For example: we, Kotak Securities, are a DP for National Securities Depository Limited (NSDL) and for Central Depository Securities Limited (CDSL). In order to open an account, Investors must approach the DP.
Basic services Some of the basic services provided by a depository include dematerialisation of securities from the physical to the electronic form and rematerialisation back to the physical form. Various types of transfers of securities both 'on' market and 'off' market are also facilitated. The depository also helps in giving effect to non-cash corporate actions such as stock split or bonus shares.
Special services In addition to the basic services the depository ensures that some auto instructions are implemented. It helps in the stock lending and borrowing process and adds value in the form of payments of dividend through the records maintained for the investors.
Charges The depository does not charge you (investors) directly but it will charge the DPs who in turn will charge you (the investors). There is a common charge for DPs but, on the basis of services they provide, they can in turn vary the charges that they levy for their investors.