Business Mantra News
In this era of digitalization, one should be well acquainted with the nature of Demat accounts.
What is Demat account? : Demat Account is an account to keep custody of Shares and Securities in Electronic Form.
Who can open a Demat Account: Any individual can open Demat account either singly or jointly with another individual.
One who opens Demat account is saved from keeping Shares and Certificates in paper form or other physical forms.
Procedure to open a Demat Account: To open Demat Account, one has to fill application form for opening of account and submit the same to the Depository Participant. Along with form one has to submit KYC form, his proof of identity and address proof for verification.
Thereafter, applicant will be called in person by the Depository Participant for verification of documents and check authenticity of information given by the applicant.
An agreement is formed between the applicant and the depository participant which contains all the terms and conditions. One can have multiple Demat account, if required.
The Depository Participant will open Demat account on payment of requisite fee and issued Beneficiary owner Identity (BOID) i.e. a Unique Account Number.
Depository Participant works as intermediary between the investor and the Central Depository.
After opening Demat account one can keep his shares and stocks in digital form.
This digitalization of shares and stocks has huge benefits as this will unable to put curb on defaulters.
Recently, SEBI has ordered attachment of Bank accounts as well Demat accounts of defaulter Vijay Malaya.
There is tax exemption on transfer of securities from one account holder to another account holder belonging to the same joint holders.