Narad Speak  Stock Ideas

Analyst Meet  Leader Speak  Latest Results

Feedback :  Trading Queries info@5pmail.com  DP Queries dp@indiainfoline.com

FAQ

I. General

What is a depository?

A depository can be compared to a bank. A depository holds securities [like shares, debentures, bonds and units] of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.

How can I avail the service of a depository?

A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to utilise the services offered by a 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.

For your information, India Infoline Securities Private Ltd is a DP.

II. Benefits

What are the benefits of a Demat Account?

The benefits of participation in a depository are: ·

1. Immediate transfer of securities.

2. No stamp duty on transfer of securities.

3. Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.; reduction in paperwork involved in transfer of securities.

4. Reduction in transaction cost.

5. Nomination facility.

6. Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately.

7. DP eliminating correspondence with companies does transmission of securities.

8. Convenient method of consolidation of folios/accounts.

9. Holding investments in equity and debt instruments in a single account.

III India Infoline DP service

Why should I choose India Infoline as my DP?

The reasons for choosing India Infoline as your DP include

1. Promoted by India Infoline Group, which has made a mark in the Indian financial service space.

2. Professionally managed by a team with impeccable educational and professional track record

3. Most competitive rates

4. Branches across multiple locations where instruction slips can be handled

5. Complete range of services offered in DP

6. Thanks to network linkages with 5Paisa.com, India's leading online trading portal, and operating your 5Paisa account becomes very easy and simple

What should I do when I want to open an account with India Infoline Securities Pvt. Ltd?

The process of opening an account with us is similar to the opening of a bank account. You can approach any outlet of India Infoline Securities Pvt Ltd of your choice and fill up an account opening form. At the time of opening an account, you have to sign an standard DP Client agreement. All investors have to submit their proof of identity and proof of address along with the prescribed account opening form.

1. Proof of Identity : Your signature and photograph must be authenticated by an existing demat account holder with the same DP or by a bank manager. Alternatively, you can submit a copy of Passport, Voters Id Card, Driving Licence or PAN card with photograph.

2. Proof of Address : You can submit a copy of Passport, Voters Id Card, Driving Licence, PAN card with photograph, ration card or bank passbook as proof of address. You must remember to take original documents to the DP for verification.

3. Passport-size photograph.

Can I open more than one account?

Yes, you can open more than one account . There is no restriction on the number of accounts you can open with a DP.

Am I restricted to having account with only one DP?

No. There are no restrictions on the number of DPs you can open accounts with or the number of accounts you can open with a DP. Depository accounts are similar to bank accounts. Just as you can have savings or current accounts with more than one bank, you can open accounts with more than one DP.

Do I have to keep any minimum balance of securities in my account with my DP?

No. The depository has not prescribed any minimum balance. You can have zero balance in your account.

Can I open a single account for shares held in different combination of names?

No. The demat account must be opened in the same combination in which the securities are held in the physical form. e.g.; if one share certificate is in the Joint name of Mr. A & Mr. B and another certificate is in the sole name of Mr. A. You will have to open two accounts, one in the joint name of Mr. A & Mr. B and another in the sole name of Mr. A.

What do I do if I have physical certificates with the same combination of names, but the sequence of names is different. i.e. some certificates with Mr. A as first holder and Mr. B as the second holder and other set of certificates with Mr. B as first holder and Mr. A as the second holder?

You have two options. Option One. You can open only one account in the name of Mr. A as the first holder and Mr. B as the second holder. Then, you can send certificates to the company to effect transposition (i.e. change the order of names on the certificate from Mr. B as the first holder & Mr. A as the second holder to Mr. A as the first holder to Mr. B as the second holder). Once the transposition is effected and you receive the certificates back, you can give it to your DP for dematerialisation in the account of Mr. A as the first holder and Mr. B as the second holder. There is no stamp duty payable on such a transposition. Option Two. You can open two accounts. One account with Mr. A as the first holder and Mr. B as the second holder and another account in the name of Mr. B as the first holder and Mr. A as the second holder. You can demat certificates in both the accounts separately. Once the demat is done, you may keep only one account by transferring securities from one account to another. DP may charge for this transaction. You may chose any one of the options depending on your convenience and cost.

Can someone else operate my account on my behalf on the basis of a power of attorney?

Yes. If you authorize any person to operate your account by executing a power of attorney and submit it to DP, that person can operate the account on your behalf.

Why should I give my bank account details at the time of account opening?

It is for protection of your interest. Your bank account number will be mentioned on the interest or dividend warrant you are entitled to so that such warrant cannot be encashed by any one else. Further, a DP cannot open the account if bank account number is not given.

Can I change details of my bank account?

Yes. You may change the bank account details by submitting a written Request with all the holders signature on the request.

What is 'Standing Instruction' given in the account opening form?

In a bank account, credit to the account is given only when a 'paying in' slip is submitted together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be submitted to receive securities in the account. However, for the convenience of investors, facility of 'standing instruction' is given. If you say 'Yes' for standing instruction, you need not submit 'Receipt in' slip everytime you buy securities. If you are particular that securities can be credited to your account only with your consent, then do not say 'yes' [or tick ] to standing instruction in the application form.

Can I operate a joint account on "either or survivor" basis just like a bank account?

No. The demat account cannot be operated on "either or survivor" basis like the bank account.

Is it compulsory for every investor to open a depository account to trade in the capital market?

An investor who buys securities from exchanges connected to NSDL may receive his delivery in the dematerialised form as dematerialised securities can be delivered in the physical segment at the option of the seller. Therefore, those investors who buy securities from these exchanges should necessarily open a depository account to take delivery of demat securities. Also, SEBI has made it compulsory for all categories of investors to settle trades in demat form with respect to a select list of scrips since Jan 4, 1999. Therefore, investors trading in these scrips will necessarily need a depository account to settle their trades. The list of scrips is being continuously expanded by SEBI. Therefore, every investor who trades in securities may have to open a depository account.

What should I do if my address is changed? Do I need to write to each company separately?

In case your address is changed, you only need to give a written request along with the requisite proof .It will be automatically conveyed to all companies in which you hold shares.

V. Nomination

Who can nominate?

Nomination can be made only by individuals holding beneficiary accounts on their own behalf either singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate.

Can joint holders nominate?

Yes. Nomination is permitted for accounts with joint holders. But, in case of death of any of the joint holder, the securities will be transmitted to the surviving holder(s). Only in the event of death of all the joint holders, the securities will be transmitted to the nominee.

Can a NRI nominate?

Yes, NRI can nominate directly. But, the power of attorney holder cannot nominate on behalf of NRI.

Can a minor nominate?

No, a minor cannot nominate either directly or through its guardian.

Who can be a nominee?

Only an individual can be a nominee. A nominee shall not be a society, trust, body corporate, partnership firm, karta of Hindu Undivided Family or a power of attorney holder.

Can there be more than one nominee?

No, at present only one nomination can be made for one depository account.

Can a minor be a nominee?

Yes, a minor can be a nominee. In such a case, the guardian will sign on behalf of the nominee and in addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be given.

Can separate nomination be made for each security held in a depository account?

No. Separate nomination cannot be made for each security. Nomination can be made account wise and not security wise.

Can a NRI be a nominee?

Yes, NRI can be a nominee subject to the exchange control regulations in force from time to time.

What is the procedure for nomination?

The nomination form duly filled-in should be submitted to the DP either at the time of account opening or later. The account holder, nominee and two witnesses must sign this form and the name, address and photograph of the nominee must be submitted.

Can the nominee be changed?

Yes, the nomination can be changed anytime by the account holder by simply filling up the nomination form once again and submitting it to the DP. The account holder, nominee and two witnesses must sign this form and the name, address and photograph of the nominee must be submitted. In case of joint holders, all joint holders must sign.

What is the procedure for transmission to nominee in case of the death of the account holder?

In case of the death of the sole holder or all the joint holders, the nominee must submit a duly filled-in transmission form and give the notarised copy of death certificate and an affidavit in the prescribed format. After verifying these documents, the DP will transmit the securities to the account of the nominee.

VI. Dematerialisation

What do you mean by dematerialisation?

Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor's account with his DP. In order to dematerialise certificates, an investor will have to first open an account with a DP and then request for the dematerialisation of certificates by filling up a Dematerialisation Request Form [DRF], which is available with DP and submitting the same along with the physical certificates. The investor has to ensure that before the certificates are handed over to the DP for demat, they are defaced by marking "Surrendered for Dematerialisation" on the face of the certificates.

Can I dematerialise any share certificate?

You can dematerialise only those certificates that are already registered in your name and are in the list of securities admitted for dematerialisation at NSDL. All the scrips included in S&P CNX NIFTY and BSE SENSEX have already joined NSDL. This list has more than 2800 companies and is steadily growing. You can get an updated list of these companies on our home page, www.5paisa.com.

What precautions should I take before defacing a share certificate?

Before defacing the share certificates, you must ensure that it is available for dematerialisation. You must therefore check with your Depository Participant (DP) whether the ISIN (code number for the security in a depository system) has been activated and made available for dematerialisation by the depository. If yes, then you may deface the share certificate. The certificates are defaced by marking "Surrendered for Dematerialisation" on the face of the certificate. The diagram given below shows the proforma of a defaced certificate.

What if I deface the share certificate of a company, which is not available for demat?

You will have to apply to the company to issue the duplicate share certificates or else wait till the time the company joins the depository. Therefore you should first check up with your DP whether the security is available for demat before defacing the share certificates.

Can I dematerialise share certificates that have been sent for transfer?

Yes. Securities sent for transfer can be dematerialised under the " Transfer cum Demat Scheme", provided the company offers this facility. Briefly, the process is as follows: On completion of the process of registration of securities sent for transfer, the company or its R&T Agent will send an option letter to the investor, providing an option to dematerialise such securities. The investor may exercise this option by submitting demat request form together with the option letter to the DP. Then Company or its R&T Agent would confirm the demat request in the usual manner. SEBI has made it mandatory for all companies which need to be settled compulsorily in demat form to offer this facility.

Do my dematerialised securities have distinctive/ certificate numbers?

No. Your dematerialised securities do not have any distinctive or certificate numbers.

Can I dematerialise odd lot securities?

Yes. Odd lot share certificates can also be dematerialised.

How long will the dematerialisation process take?

Dematerialisation will normally take about 30 days.

VII. Rematerialisation

Can my electronic holdings be converted back into certificates?

Yes. If you wish to get back your securities in physical form, all you have to do is to request your DP for rematerialisation of the same. 'Rematerialisation' is the term used for converting electronic holdings back into certificates.India Infoline as a DP will forward your request to NSDL after verifying that you have the necessary balances. NSDL in turn will intimate the registrar who will print the certificates and despatch the same to you.

Will I get back the same certificates after rematerialisation?

No. You may not be allotted certificates with the same distinctive and certificate numbers.

VIII. Trading / Settlement

What is the procedure for selling dematerialised securities?

The procedure for selling dematerialised securities in stock exchanges is similar to the procedure for selling physical securities. Instead of delivering physical securities to the broker, you instruct us to debit your account with the number of securities sold by you and credit your broker's clearing account. This delivery instruction has to be given to us using the delivery instruction booklet

How can I purchase dematerialised securities?

The procedure for buying dematerialised securities in stock exchanges is similar to the procedure for buying physical securities. Investor may give a one-time standing instruction to receive credits into his/ her account or may give separate instruction each time in the prescribed format. The transactions relating to purchase of securities are summarized below: ·Investor purchases securities in any of the stock exchanges connected to NSDL through a broker. · Broker arranges payment to clearing corporation. ·Broker receives credit of securities in clearing account on the pay-out day. ·Broker gives instructions to DP to debit clearing account and credit client's account. ·Investor receives shares into its account. However, if standing instructions are not given at the time of opening the account, investor will give 'Receipt Instructions' to its DP for receiving credit. The investor should ensure that the broker transfers the securities purchased from the clearing account of the broker to the investor's depository account, before the book closure. If the securities remain in the clearing account of the broker, the company may give corporate benefits to the broker. Therefore, the investor may collect benefits from its broker.

What do you mean by 'Market Trades' and 'Off Market Trades'?

Any trade done and settled through a clearing corporation is termed as the 'Market Trade'. The trades are done through stock brokers on a stock exchange. The 'Off Market Trade' is one which is settled directly between two parties without the involvement of stock exchange or broker.

How do I come to know about the settlement deadlines?

The depository participant with whom you have your demat account will prescribe you the deadline to be followed. SEBI has advised the DPs to instruct their clients to submit the settlement instructions at least 24 hours i.e., one working day prior to the pay-in date and atleast two days (one day in case of auctions) prior to pay-in date for rolling settlements.

Can I trade in odd lot securities?

Yes, you can trade in odd lot shares.

When I buy shares, in what time should I receive the securities from my broker?

The broker is expected to transfer the securities to you within two working days after securities are received in his pool account, provided you have made the requisite payment to the broker.

How can I transfer securities from my account?

You will be given a booklet containing forms called "Delivery instructions". You can fill up these slips and submit to your DP for transferring securities from your account. You may transfer securities to any account by writing the account number details of the party to whom you wish to transfer your securities.

What precautions do I need to observe with respect to Delivery Instruction Slips [DIS]?

The following precautions are to be taken :- ·Ensure and insist with your DP to issue DIS book; do not use loose slips. ·Ensure that DIS numbers are pre-printed and DP takes acknowledgment from you for the DIS booklet issued to you. · Ensure that your account number [client id] is pre-stamped. ·If your account is a joint account, all the joint holders have to sign the instruction slips. Instruction cannot be executed if all joint holders have not signed. ·Do not leave signed blank DIS with anyone viz., broker/sub-broker. ·Keep the DIS book under lock and key when not in use. · If only one entry is made in the DIS book, strike out remaining space to prevent misuse by any one. ·Please fill in target account -id yourself; also please fill in all details yourself.

What is 'execution date' given in the delivery instruction form?

Execution date is the date on which securities will be actually debited from your account. If execution date is written on the delivery instruction, your DP will enter the same in the DPM system [computer]. Then DPM system will remember the date and will debit your account only on that date. You may issue the instruction well in advance of the date on which you want the securities to be debited from your account.

What benefit do I get by giving delivery instruction form with a future execution date?

By giving a future dated instruction you cover the risk against non-execution of instruction due to lack of time or last minute rush.

What is the importance of record dates to me?

In case the securities bought by you are yet to be transferred into your account by your broker as on record date, you will not be entitled to receive corporate benefit such as dividend or interest since your name does not figure in the list of beneficial owners. Hence you must ensure that securities bought by you are transferred into your account before the record date announced by the company.

Can I buy and sell shares through Depository Participant?

No. Shares can be bought and sold only through a stock broker. DP helps in delivering the shares against a sell transaction or receiving the shares for a buy transaction.

IX. Public Offer

Is it possible for me to get securities allotted to me in public offerings directly in dematerialised form?

Yes. In fact, in the public issue application form of depository eligible companies, there will be a provision for you to indicate the manner in which you want the securities allotted to you. All you have to do is to mention your client account number and the name and identification number of your DP and any allotment due to you will be credited into your account.

Is the probability of allotment of securities higher if I opt for dematerialised securities?

No. The probability of allotment remains the same irrespective of the form in which you may seek the allotment.

What is the advantage of getting allotment in demat form?

SEBI has announced that the shares of all companies going in for public offer will have to be compulsorily settled in demat form by all investors. It is therefore advantageous for an investor to prefer the allotment in demat form, so that the shares have higher liquidity.

X. Corporate Benefits

Who will give me the benefits arising out of my holdings, say a bonus or a dividend?

The benefits will be given by the company. When any corporate event such as rights or bonus or dividend is announced for a particular security, NSDL will give the details of all the clients having electronic holdings in that security as of the record date to the Registrar/company. The registrar will then calculate the corporate benefits due to all the shareholders. The disbursement of cash benefits such as dividend/ interest will be done by the Registrar/company. Non-cash benefits will be distributed through NSDL by crediting the entitled quantity of shares into share holder's account.

In case of discrepancies in corporate benefits whom do I contact?

You can approach your DP who in turn will contact the registrar for clarifications regarding allotment of securities. In case of discrepancies in cash benefits you will have to directly contact the company or its R&T Agent.

In what form will I get my non-cash corporate benefits if I do not mention my choice?

If you do not mention a choice, you will get the corporate benefit in the form in which you presently hold the securities.

How will fractional bonus entitlement be credited to the individual investor's account?

As in the physical environment, the fractional part of a bonus entitlement would be paid in cash and the remaining whole part would be credited to the investor's account.

How will the investor confirm that bonus/rights entitlement is credited into the account?

An allotment advise will be sent by the issuer/ their R&T agent for bonus/ rights entitlement. The transaction statement sent by the investors DP, will show the bonus/ rights credit into the account. The quantity shown in the advise and the transaction statement should match.

XI. Pledging

Can I pledge dematerialised securities?

Yes. In fact, pledging dematerialised securities is easier and more advantageous as compared to pledging physical securities.

India Infoline does not give loans against shares but a investor can pledge his shares through some other DP even though he has Demat account with IIL.

What should I do if I want to pledge electronic securities?

The procedure is as follows: ·Both you (pledgor) as well as the lender (pledgee) must have depository accounts; ·You must initiate the pledge by submitting to your DP the details of the securities to be pledged in a standard format (available with your DP); ·The pledgee should confirm the request through his DP; · Once this is done, your securities are pledged ·All financial transactions between the pledgor and the pledgee are handled outside the depository system.

How can I close the pledge after repayment of my loan?

After you have repaid your loan, you can request for a closure of pledge by instructing your DP in a prescribed format. The pledgee on receiving the repayment will instruct his DP to confirm the closure of the pledge.

Whether pledgee can be in a different DP?

Yes. The pledgee can have an account with a different DP of NSDL.

Can I change the securities offered in a pledge?

Yes; if the pledgee [lender] agrees, you may change the securities offered in a pledge.

XII. Charges

What will be the charges for account opening and other depository related transactions with India Infoline Securities Pvt Ltd ?

SCHEDULE -A

Fee Schedule for D P Services

The management reserves the right to change these rates after giving a notice of one month.

XIII. Transmission

In the event of death of the sole account holder without nomination, how can the successors claim the securities lying in the beneficiary account?

In the case of transmission, the claimant will have to fill in a transmission request form, (which is available with the DP) supported by documents like death certificate, succession certificate, etc.. The DP, after ensuring that the application is genuine, will transfer securities to the account of the claimant. For this, the claimant must have a depository account. The major advantage in transmission of dematerialised holdings is that the transmission formalities for all securities held with a DP can be completed in one go, unlike in the case of share certificates, where the claimant will have to interact with each issuing company or its R&T Agent

XIV. Inter Depository Transfers

If my depository account is with NSDL, can I receive my securities from an account holder having account with some other depository in India?

Yes. Inter depository transfers are possible.

Can I freeze my account?

Yes. The depository system provides the facility to freeze the depository accounts for any debits or for both debits and credits. In an account which is "freezed for debits", no debits will be permitted from the account, till the time it is defreezed. This is the additional security feature for the benefit of the investors.