- A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.
A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening an account with any branch of a bank in order to utilise the bank’s services. Suggestions on how to select a DP are given in Section IV.
The benefits of participation in a depository are:
- Immediate transfer of securities;
- No stamp duty on transfer of securities;
- Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.;
- Reduction in paperwork involved in transfer of securities;
- Reduction in transaction cost;
Nomination facility; - Change in address recorded with DP gets registered electronically with all companies in which investor holds securities eliminating the need to correspond with each of them separately;
- Transmission of securities is done by DP eliminating correspondence with companies;
- Convenient method of consolidation of folios/accounts ;
- Holding investments in equity, debt instruments and Government securities in a single account;
- Automatic credit into demat account, of shares, arising out of split/consolidation/merger etc.
NSDL offers following facilities :-
- Dematerialization i.e., converting physical certificates to electronic form;
- Rematerialization i.e., conversion of securities in demat form into physical certificates;
- Facilitating repurchase / redemption of units of mutual funds;
- Electronic settlement of trades in stock exchanges connected to NSDL;
- Pledging/hypothecation of dematerialized securities against loan;
- Electronic credit of securities allotted in public issues, rights issue;
- Receipt of non-cash corporate benefits such as bonus, in electronic form;
- Freezing of demat accounts, so that the debits from the account are not permitted;
- Nomination facility for demat accounts;
Services related to change of address; - Effecting transmission of securities;
- Instructions to your DP over Internet through SPEED-e facility. (Please check with your DP for availing the facility);
- Account monitoring facility over Internet for clearing members through SPEED facility;
- Other facilities viz. holding debt instruments in the same account, availing stock lending/borrowing facility, etc.
BSDA is like a regular demat account but with no or low annual maintenance charges.
Individual persons meeting the following conditions may avail the benefits of BSDA –
- Individuals who have only one demat account as sole or first holder (across depositories).
- Individuals can be second or third having any other demat account(s).
- Value of securities held in the demat account shall not exceed ₹2,00,000 at any point of time.
- It is necessary to provide a mobile number and opt for SMS alert facility in order to avail BSDA.
The annual maintenance charges for BSDA, as stipulated by SEBI are as below:
- No AMC if the value of holding is up to ₹50,000.
- If the value of holding is more than ₹50,000 but less than ₹2,00,000, then AMC not exceeding ₹100 per year may be charged.
- For the value of holding exceeding ₹2,00,000, DP may charge AMC as per its regular rates. The value of the holding for this purpose is determined by the DP based on the daily closing price or NAV for the securities / mutual fund units.
- If value of holding in BSDA exceeds ₹2,00,000 on any day, DP may levy charges as applicable to regular accounts (non-BSDA) from that day onwards.
Opening a demat account is quite simple. All you have to do is to approach a NSDL DP, which will help you to complete the formalities. You need to fill up a form, submit PAN card and proof of address. In addition, you need to provide details of your bank account.
After your demat account is opened, your DP will provide you DP ID and Client ID, a copy of your Client Master Report containing your demat account related details, tariff sheet and ’Rights & Obligations of Beneficial Owner and Depository Participant‘. DP ID is 8 characters long code, (example IN3XXXXX) allotted by NSDL to all DPs to identify them. Client ID is 8 digit long code used to identify the clients in the system. Combination of DP ID and Client ID makes your unique account number in the NSDL system.
You should verify the Client Master Report to ensure that all your details have been recorded correctly in depository system. If you want to trade in shares etc. (i.e. buy or sell), you would also need to open a Trading / Broking account with any SEBI registered stockbroker. There are many DPs which offer 3-in-1 arrangement for the benefit of investors (3-in-1 is a combination of demat account, trading account and bank account).
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 your office/residence, business hours.
Comfort – Reputation of the DP, past association with the organization, whether the DP is in a position to give the specific service you may need?
Cost/ level of service – The service charges levied by DP and the service standards.
N.B.
For list of DP locations and their comparative charge structure, please visit https://nsdl.co.in/joining/joincharges.php
NSDL has specified certain basic eligibility criteria for becoming a DP. The criteria are similar or even higher in certain respects than the corresponding provisions of SEBI regulations.
All the DPs are same in the sense they are appointed by NSDL only after grant of Certificate of Registration by SEBI to them. However, the type of services offered, service standards and charges for the services rendered may differ among DPs.
Once you have decided to open an account with a particular DP, you may approach that DP and fill up an account opening form.
You would be required to provide :
- Your photograph
- Self-attested copy of PAN Card (for Sikkim residents who may not have PAN, other proof of identity).
- Self-attested copy of Proof of address (any one of Passport, Driving license, Voter’s Identity card, Aadhaar card & NREGA job card).
- Copy of cancelled cheque or passbook or bank statement containing your name, account number, IFSC and MICR code.
It is mandatory to establish the identity of the applicant at the time of opening account as per SEBI guidelines.
This is done by the DP’s staff by verifying the affixed photograph on account opening form and the photo seen on document on PAN card with the person seeking to open the account. For Joint account holders, the ’in-person verification’ is required for all the holders.
Health insurance, also called, medical insurance or simply medi claim, covers the cost of an individual’s medical and surgical expenses. The individual pays a fixed sum (premium), every year for the health cover.
- Personal accident policy
- Group Insurance policy
- Travel Insurance
- Marine insurance
- Commercial insurance
The process of evaluating risks for insurance and determining in what amounts and on what terms the insurance company will accept the risk.
The main difference is in the flexibility in the choice of investments. In the case of unit-linked life insurance, the insurance company would usually offer a choice of different funds (say, with a differential mix of bond and equity investments) in which the policyholder can opt to invest his/her contributions
In the case of traditional life insurance, the policyholder is usually offered a guaranteed sum assured. In addition, non-guaranteed bonuses in the form of a share in the profits of the fund may also be offered depending on whether the policy is a participating policy or not. The premium amounts are usually fixed at the outset and the same quantum of premium needs to be paid throughout the term of the policy
with a pre-determined amount in case of your death during the contract term.
A whole life Insurance plan is a policy you pay till death of the policy holder and term life is a policy for a fixed amount of time.
Term Insurance
Unit linked insurance plan (ULIP)
Money back policy
Endowment plan
Whole life plan
| Plan Type | Features |
|---|---|
|
Deferred Annuity |
Systematic premium or one lump sum premium over the tenure
Pension begins after completing the term
No taxation (unless you withdraw the corpus) |
|
Immediate Annuity |
Only lumpsum investment allowed
Pension begins immediately after investment
Income Tax exempts tax on the premiums
The nominee can claim the pension or the corpus after the passing of policy holder |
|
With Cover Pension Plan |
Comes with a ‘cover’ policy – policyholder’s dependents are entitled to a lump sum after he/she expires
The insurance amount is not large a most of the premium goes towards building the corpus |
|
National Pension Scheme (NPS) |
Launched and managed by the central government
Your money will be distributed in equity and debt markets as your preference.
Withdraw 60% when you retire, and the rest should be used to buy the annuity
The tax levied on the 20% of the corpus you withdraw upon maturity |
|
Pension Funds |
Better returns once it matures.
Regulated by the government body, Pension Fund Regulatory & Development Authority (PFRDA)
Currently, 6 fund houses in India are authorized to offer pension funds. |