Share certificates are dematerialized through the Demat process. Accounts opened through depository participants in which shares are held in electronic form are Demat accounts. The Demat account is like a bank account, and you can apply or trade shares through the unique number assigned to you. Now that Demat accounts have become mandatory in Nepal, any trade on the share market requires a Demat account. What we are going to discuss in this article is how to open a Demat account in Nepal.
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1. Locate Depository Participants – DP
It is important to know who provides the service. Commonly, banks, investment banks, mutual funds, brokerage firms, and so on are provided with the service of a Depository Participant. Learn where a Demat account can be opened. The place you open the Demat account doesn’t matter, but opening it from the same bank would be preferred.
2. Documents must be provided and the form must be filled out
Following that, the form for opening a Demat account will be provided. Forms need to be filled out. In order to complete the form, you must attach a passport-size photograph and a copy of your Nepali citizenship. Providing the guardian with the photo of the guardian, the birth certificate, and proof of citizenship is required in the case of a minor.
3. Pay your fees and submit your application
The opening and annual operating costs of the Demat account are 50 and 100 rupees, respectively. The renewal fee is Rs 100 per year. You can also open a Mero share account that allows you to trade online. Activating your Mero share account requires an additional fee of Rs 50.
4. DEMAT and verification numbers
DP enters the investor’s information into CSDC after it has been submitted to DP. A verification letter is provided by CSDC once the entry has been verified. The CDSC opens the Demat account and provides the investor with a checkbook once the verification has been completed.
5. Activate your DEMAT account and deposit your physical shares
Your physical shares certificates must be taken to the place where you opened your Demat account after your Demat account has been set up. Afterward, you will need to sign and submit a dematerialization request form. You would now receive dematerialized shares deposited in your account, the same way that you would receive a check. Purchasing shares would credit your account and selling them would debit your account.
At the most, one family member can open two Demat accounts. Each family member has to open a Demat account. It is mandatory to have a Demat account before buying or selling shares on the primary or secondary market. Hence, you need to open a Demat account as soon as possible if you don’t have one already.
If this is the case and you haven’t used the DEMAT account for some time, then you need to renew it. Performing secondary market transactions requires a DEMAT account renewal. Your respective banks can also offer automatic renewal systems.