Q1. What is a depository?
Ans. A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.
Q2. How can I avail the service of a depository?
Ans A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening an account with any branch of a bank in order to utilise the bank’s services. Suggestions on how to select a DP are given in Section IV.
Q3. What are the benefits of participation in a depository?
Ans The benefits of participation in a depository are:
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.;
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
Change in address recorded with DP gets registered electronically with all companies in which investor holds securities eliminating the need to correspond with each of them separately;
Transmission of securities is done by DP eliminating correspondence with companies;
Convenient method of consolidation of folios/accounts ;
Holding investments in equity, debt instruments and Government securities in a single account;
Automatic credit into demat account, of shares, arising out of split/consolidation/merger etc.
Q4. What are the facilities offered by NSDL?
Ans NSDL offers following facilities
Dematerialisation i.e., converting physical certificates to electronic form;
Rematerialisation i.e., conversion of securities in demat form into physical certificates;
Facilitating repurchase / redemption of units of mutual funds;
Electronic settlement of trades in stock exchanges connected to NSDL;
Pledging/hypothecation of dematerialised securities against loan;
Electronic credit of securities allotted in public issues, rights issue;
Receipt of non-cash corporate benefits such as bonus, in electronic form;
Freezing of demat accounts, so that the debits from the account are not permitted;
Nomination facility for demat accounts;
Services related to change of address;
Effecting transmission of securities;
Instructions to your DP over Internet through SPEED-e facility. (Please check with your DP for availing the facility);
Account monitoring facility over Internet for clearing members through SPEED facility;
Other facilities viz. holding debt instruments in the same account, availing stock lending/borrowing facility, etc.
Q5. What is a Basic Services Demat Account (BSDA)?
Ans BSDA is like a regular demat account but with no or low annual maintenance charges.
Q6. What are the conditions to avail the benefit of a BSDA?
Ans Individual persons meeting the following conditions may avail the benefits of BSDA –
Individuals who have only one demat account as sole or first holder (across depositories).
Individuals can be second or third having any other demat account(s).
Value of securities held in the demat account shall not exceed ₹2,00,000 at any point of time.
It is necessary to provide a mobile number and opt for SMS alert facility in order to avail BSDA.
Q7. What are the annual maintenance charges (AMC) for BSDA?
Ans The annual maintenance charges for BSDA, as stipulated by SEBI are as below:
No AMC if the value of holding is up to ₹50,000.
If the value of holding is more than ₹50,000 but less than ₹2,00,000, then AMC not exceeding ₹100 per year may be charged.
For the value of holding exceeding ₹2,00,000, DP may charge AMC as per its regular rates.
The value of the holding for this purpose is determined by the DP based on the daily closing price or NAV for the securities / mutual fund units. If value of holding in BSDA exceeds ₹2,00,000 on any day, DP may levy charges as applicable to regular accounts (non-BSDA) from that day onwards.
Q8. How to Open a NSDL demat account?
Ans Opening a demat account is quite simple. All you have to do is to approach a NSDL DP, which will help you to complete the formalities. You need to fill up a form, submit PAN card and proof of address. In addition, you need to provide details of your bank account.
After your demat account is opened, your DP will provide you DP ID and Client ID, a copy of your Client Master Report containing your demat account related details, tariff sheet and ’Rights & Obligations of Beneficial Owner and Depository Participant‘. DP ID is 8 characters long code, (example IN3XXXXX) allotted by NSDL to all DPs to identify them. Client ID is 8 digit long code used to identify the clients in the system. Combination of DP ID and Client ID makes your unique account number in the NSDL system.
You should verify the Client Master Report to ensure that all your details have been recorded correctly in depository system. If you want to trade in shares etc. (i.e. buy or sell), you would also need to open a Trading / Broking account with any SEBI registered stockbroker. There are many DPs which offer 3-in-1 arrangement for the benefit of investors (3-in-1 is a combination of demat account, trading account and bank account).
Q9. How do I select a DP?
Ans You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be:
Convenience – Proximity to your office/residence, business hours.
Comfort – Reputation of the DP, past association with the organization, whether the DP is in a position to give the specific service you may need?
Cost/ level of service – The service charges levied by DP and the service standards.
For list of DP locations and their comparative charge structure, please visit https://nsdl.co.in/joining/joincharges.php.
Q10. Whether all the DPs are same?
Ans NSDL has specified certain basic eligibility criteria for becoming a DP. The criteria are similar or even higher in certain respects than the corresponding provisions of SEBI regulations. All the DPs are same in the sense they are appointed by NSDL only after grant of Certificate of Registration by SEBI to them. However, the type of services offered, service standards and charges for the services rendered may differ among DPs.
Q11. What should I do if I want to open a demat account?
Ans Once you have decided to open an account with a particular DP, you may approach that DP and fill up an account opening form. You would be required to provide your photograph and self-attested copy of following documents –
PAN Card (for Sikkim residents who may not have PAN, other proof of identity).
Proof of address (any one of Passport, Driving license, Voter’s Identity card, Aadhaar card and NREGA job card).
Copy of cancelled cheque or passbook or bank statement containing your name, account number, IFSC and MICR code.
Q12. What is in-person verification??
Ans It is mandatory to establish the identity of the applicant at the time of opening account as per SEBI guidelines. This is done by the DP’s staff by verifying the affixed photograph on account opening form and the photo seen on document on PAN card with the person seeking to open the account. For Joint account holders, the ’in-person verification’ is required for all the holders.