Nepal Stock Exchange: How do I open a DEMAT account in Nepal?

What is a DEMAT account?

Demat is a process of dematerializing physical documents in an electronic form. A DEMAT account is used to hold and manage securities such as stocks, bonds, mutual funds, and other financial instruments in electronic form.

Previously the market used to operate traditionally. In traditional markets, securities were issued in paper form, and investors had to possess and transfer these paper certificates physically. The introduction of DEMAT in Nepal has simplified processes and minimized document loss and damage risks linked with paperwork. It has accelerated trading and facilitated smoother circulation of paperwork in the stock market.

Opening a Demat account is required for stock market trading and is enabled by depository participants (DPs), which might be banks, financial institutions, or stockbrokers who have registered with depository services.

Documents required

Demat account opening is a straightforward process. To open a DEMAT account you must have a bank account which is necessary for money transactions. After that, you can apply the demat account opening application on the same bank or any other Depository bank and financial institutions, merchant banks, and broker companies offering DEMAT services. Here SEBON acts as a Depository participant (DP)

The cost of opening a demat account is Rs. 50 and Rs.100 for the renewal each year. That is, when opening a demat account, you have to pay Rs. 150.

Documents required

• Citizenship Certificate of the investor (including details of three generations)
• Recent passport-size photo
• Bank Details

In the case of minors, parents/guardians should submit

• Photo of the account holder
• Birth certificate
• Copy of the parents/guardian’s citizenship

How to open a DEMAT Account in Nepal?

You can open your demat account online or by visiting the bank physically. The process of opening a demat account is very similar to the bank account opening process.

Follow the below steps to open a DEMAT account:

Step 1: Visit a particular bank’s website, where you can find a form to enter your details.

Step 2: After submitting the form, the information is reviewed and entered by the Depository participant (DP) into the system of CDSC.

Step 3: CDSC verifies the form and opens the demat account for the beneficiary.

Step 4: Then CDSC writes a verification letter to the beneficiary providing the 16-digit demat account number. (8-digit DP Identification Number, 8-digit Client Identification Number)

After that, your account will be active and the shares you have issued or bought will be safely stored on your account.

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Benefits of Opening a DEMAT Account

Opening a Demat account offers the following benefits:

• Electronic Holding: Securities held in electronic form.
• Convenient Trading: Facilitates online trading in the stock market.
• Quick Settlement: Faster and smoother settlement of transactions.
• Safety and Security: Eliminates risks associated with physical certificates.
• Portfolio Management: Provides a consolidated view of an investor’s holdings.
• Dividend and Interest Crediting: Automatic crediting of income from securities.
• Accessibility: Can be accessed from anywhere with an internet connection.
• Reduction in Paperwork: Minimizes paperwork associated with trading.
• Multiple Asset Classes: Can hold various types of securities.
• Loan Against Securities: Some investors can use holdings as collateral for loans.

FAQs

In conclusion, the DEMAT account is the process of converting all paperwork into an online electronic form. A DEMAT account is essential in today’s world for participation in the stock market. The process of opening a DEMAT account is straightforward. It has become significantly easier and beneficial because it facilitates the storage of paperwork and documents online, enhancing security. You can follow the given steps to open a DEMAT account.