Demat Trading

Demat Trading

Instead of signing the transfer deed as seller and delivering share certificates to a broker, you shall give your DP debit instruction when you sell your shares in the electronic form. You can trade through any broker of your choice registered with the stock exchanges connected with NSDL but will have to provide the details of your account with the DP. The money would be received from the broker/ paid to the broker in the same fashion as done in case of buying/ selling of physical shares. The DP will provide you a statement updated every fortnight giving details of your holdings.

Shares bought in the electronic form can be pledged/ hypothecated by making application to the DP in the prescribed form. For the purpose of calculation of capital gains tax, the cost of acquisition of shares would be determined on the principle of first in first out. The process of opening an account with a DP is similar to the opening of bank account. Photograph, Introduction and signing the prescribed agreement form are some of the requirements.

If there are any discrepancies in your holdings statement or pass book entries, you can contact your DP. If the problem cannot be resolved at DP end, you can approach NSDL. There is absolutely no restriction to the number od DPs you can open accounts with. Just as you can have savings or current accounts with more than one bank, you can open accounts with more than one DP.
There is no minimum balance required for your account with DP. In fact you could have nil security in your account.

What's the security that a person have with respect to proof of his holdings? Upon opening an account with DP, you sign an agreement where the DP indemnifies you for any misuse of your holdings.

When any company announces right, bonus or dividend for a particular security, the DP will give details of the clients having electronic holdings of that security as of record date/ book closure to the registrar. The registrar will then calculate the benefits due to all shareholders. The disbursement of cash benefits like dividend or interest will be done by the registrar whereas distribution of securities entitlements will be done by the DP based on information provided by the registrar.
The investor retains the choice of receiving the corporate benefits in physical or electronic form. For discrepancies in corporate benefits in the form of securities, you can approach your DP who will then approach the registrar. In case of discrepancies in cash benefits, you will have to contact the registrar directly.