1. Who is a DP?
A Depository like NSDL(National Securities Depository Limited) or CDSL(Central Depository Services Limited)provides its services to investors through its agents called depository participants (DPs). These agents are appointed by NSDL& CDSL with the approval of SEBI. According to SEBI regulations, amongst others, three categories of entities i.e. Banks, Financial Institutions and Members of Stock Exchanges registered with SEBI [brokers] can become DPs. You can get a list of DPs from NSDL's or CDSL's office.
2. How do I select a DP? Whether all DPs are same?
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 the office/residence, business hours.
- Comfort - Reputation of the DP, past association with the organisation, whether the DP is in a position to give the specific service you may need
- Cost - The service charges levied by DP and the service standards.
3. What should I do when I want to open an account with a DP?
You can approach any DP of your choice and fill up an account opening form. At the time of opening an account, you have to sign an agreement with DP in a NSDL prescribed standard agreement, which details your and your DPs rights and duties. All investors have to submit following proof of identity and proof of addresses along with the prescribed account opening form.
I. Proof of Identity: Your signature and photograph must be authenticated by an existing demat account holder with the same DP or by your bank . Alternatively, you can submit a copy of Passport, Voters Id Card, Driving License or PAN card with photograph.
II. Proof of Address: You can submit a copy of Passport, Voters Id Card, Driving License or PAN card with photograph, ration card or bank passbook as proof of address.
III. Passport-size photograph: You must remember to take original documents to the DP for verification.
You should remember to obtain a copy of the agreement and schedule of charges for your future reference.
4. Can I open more than one account with the same DP?
Yes. You can open more than one account with the same DP. There is no restriction on the number of accounts you can open with a DP.
5. Am I restricted to having account with only one DP?
No. There are no restrictions on the number of DPs you can open accounts with or the number of accounts you can open with a DP. Depository accounts are similar to bank accounts. Just as you can have savings or current accounts with more than one bank, you can open accounts with more than one DP.
6. Can I open a single account for securities owned in different ownership patterns such as securities owned individually and securities owned along-with my wife?
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 held in your and your wife's name , two different accounts would have to be opened.
7. What do I do if I have physical certificates with the same combination of names, but the sequence of names is different. i.e. some certificates with husband as first holder and wife as second holder and other set of certificates with wife as first holder and husband as the second holder? (example changed from A & B to husband & Wife)
In this case you may open only one account with husband and wife as the account holders and lodge the security certificates with different order of names for dematerialisation in the same account. You will 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.
8. Why should I give my bank account details at the time of account opening?
It is for protection of your interest. Your bank account number will be mentioned on the interest or dividend warrant you are entitled to so that such warrant cannot be encashed by any one else. Further, a DP cannot open the account if bank account number is not given.
9. Can I change details of my bank account?
Yes. Since in the depository system monetary benefits on your security balances are paid as per the bank account details provided by you at the time of account opening , you must ensure that any subsequent change in bank account details is informed to your depository participant.
10. What is 'Standing Instruction' given in the account opening form?
In a bank account, credit to the account is given only when a 'paying in' slip is submitted together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be submitted to receive securities in the account. However, for the convenience of investors, facility of 'standing instruction' is given. If you say 'Yes' [or tick] for standing instruction, you need not submit 'Receipt in' slip every time you buy securities.
11. Can I operate a joint account on "either or survivor" basis just like a bank account?
No. The demat account cannot be operated on "either or survivor" basis like the bank account.
12. Is it compulsory for every investor to open a depository account to trade in the capital market?
Since 99.5 % of the settlement at the stock exchanges is taking place in demat form , an investor buying securities would receive the securities in demat form only. Therefore, investors who actively buy and sell securities need to open a depository account to receive delivery of demat securities.
13. What should I do if my address is changed? Do I need to write to each company separately?
In case your address is changed, you only need to inform the new address to your DP(s). When DP enters the new address in the depository computer system, it will be automatically conveyed to all companies in which you hold shares.
14. Can I close my demat account with one DP and transfer all securities to my account with another DP?
Yes. You can submit account closure request to your DP in prescribed form. Your DP will transfer all your securities, as per your instruction, and close your demat account.
15. What would be the charges for account closure and securities transfer due to account closing?
The charges would be as per the schedule of charges agreed by you at the time of account opening or any subsequent changes there-in.
NSDL is allowing waiver of charges to DPs where all the securities in an account are moved to another account with another DP due to account closure if account name remains the same. NSDL allows waiver of its charges for cases where NSDL charges to the DP are more than Rs 100/-. Your DP may pass on this benefit to you.