Demat account is for security and for keep track of your shares. Its main feature is that they provide immediate transfer of securities and it doesn’t take any stamp duties. It reduces cost on share and gives commodity transactions free. Nomination facilities are available. You will get regular statements of account transactions. There will be no chances of bad delivery. As compare with physical segment the transaction costs are comparatively low. Chances of risk associated with physical certificates can be avoided such as bad delivery fake security, delays, and thefts. Negligible paper works are involved in the security transferring process. You can hold your investments in equity and debts in a single account. Statement of accounts by the investors can be received periodically. The bonus or rights shares will be immediately credited to the investor’s account.
Any Indian citizen above 18 years of age with PAN card can apply for this account. The person who wishes to start this account must have an account in a Federal bank. You only need proof of identity (Voter’s id card, driving license, passport, PAN card), proof of address (passport, voter’s id card, ration card, a copy of passbook, any recent bills), passport size photographs and a copy of your valid PAN card. You can convert your electronic holdings into certificates back if you aspire to get back your shares in a physical form.
If you wish to convert your physical shares into electronic form the investor should open an account with depository participants. For the opening, you must fill up the account opening form. You will get client ID. The client ID with the DP ID gives a perfect identification in the depository system. After opening the account the investor should submit the physical certificates. After that, the certificates will be sent to the companies. They will credit the investors account with DP. The dematerialization balances are shown as balance in the depository account. The balances can be transferred. The securities in the demat can also be converted to physical forms that have called dematerialization.