Money

Demat Account Concepts Made Easy

Dematerialization is mandatory and you need to open an account before you may invest in the share markets. Most financial institutions are registered depository participants (DPs) and offer dematerialization accounts.

Dematerialization accounts are similar to a savings bank account. However, instead of cash, you will hold various investments, such as equities, mutual funds, debt products, and securities in this account.

Let us understand some commonly used demat account concepts.

  1. Transfer, closer, cum waiver (TCW)

You may transfer your holding from one account to another without paying additional charges. When you choose this option, the beneficiary accounts with the transferor and transferee DPs are identical. In case you want to transfer a joint account, you need to open a new one with the same names.

TCW process

  • All account holders must submit completed form to the DP and the corporate accounts must be signed by authorized signatory
  • Form must be signed in the presence of a DP’s official
  • At least one joint holder must sign in the presence of a bank representative
  • A stamped and signed copy of the master list from the central depository where the new account is being opened must be submitted
  • All unused instruction forms must be cancelled and returned to the existing DP
  • Submit and verify self-attested ID proof by a bank official

It is important that the names and order of the same are identical in the old as well as new accounts.

  1. Depository

A depository is a central location where all the securities are held in an electronic form. There are two depositories namely Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL). You may open your account with either one of these depositories.

  1. Dematerialization

All physical certificates are converted to an electronic form. All transactions are compulsorily executed in the demat form. You must submit the Dematerialization Request Form (DRF) along with the physical certificates to the DP. These are verified and sent to the company or registrar. On successfully completing the dematerialization procedure, the same number of securities is credited to your account.

  1. Transmission and transposition cum demat

In case the certificate is in the name of a deceased individual, you will need to submit the transmission cum dematerialization form and the death certificate. In case the names on the physical certificate do not match the joint account names, a transposition cum dematerialization form must be submitted.

  1. Re-materialization

When electronic holdings are reconverted to the physical form, the procedure is known as re-materialization. A duly signed Re-materialization Request Form (RRF) must be submitted.

  1. Freezing and de-freezing

You may submit a request to freeze your account. To de-freeze, the account, a duly completed form must be submitted.

  1. Closure

As an account holder, you must submit a form to the DP. All your holdings must be either converted or transferred before closure.

Now that you know the basic concepts, you may start investing in the equity markets and earnhuge profits.

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