The Demat account in Nepal started in 2067 B.S. Dematerialization account or commonly known as Demat account is like a bank account. Dematerialization is the conversion of paper certificates into an electronic record for stock transactions. It holds the shares and securities in electronic format. All the records of the investments of the individual in shares, mutual funds, government securities, and many more are kept in this account.
The main purpose of the Demat account is to hold shares to make the trading of shares easy for the customers. Dematerialization has eliminated the need to keep all the paper certificates of the individual. This has minimized the hassle and made the process systematic, safe, and modern.
Demat Account in Nepal
The dematerialization of shares in Nepal started gradually after the formal inauguration of Credit Default Swap (CDS) and clearing on Chaitra 17, 2067. With the launch of the Demat account in Nepal, share trading has been increased at a great rate.
To open such an account, go to the company which has got permission from the Securities and Exchange Board of Nepal (SEBON) for Depository Participant (DP) service.
Currently, stockbrokers, banks and financial institutions, merchant bankers, transfer representatives, and other organizations have been operating such services with the permission of the board. You have to go to a company that suits you and open a ‘Demat’ account.
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Documents Required to Open a Demat Account in Nepal
Anyone can open the Demat account. There are few documents required to create a Demat account in Nepal.
- The photocopy of citizenship of the investor.
- Details of three generations of the investor.
If the investor is a minor, then the guardian must provide the following documents. The guardian will be able to handle all the transactions. Once the minor reaches the age of 18, he/she can take over.
- Passport-sized photos.
- Birth certificate.
- Photocopy of Guardian’s citizenship.
Fee for Demat Account
Rs. 50 is charged to open a Demat account and Rs.100 is charged for the annual operation of the account. Therefore, the total cost will be Rs. 150 for the Demat account.
Also remember that you should renew the account every year and it will charge Rs.100.
Benefits of Demat Account
There are several benefits of Dmat account. Some of them are mentioned below.
- Easy transfer of shares.
- Safe and convenient to hold all the securities.
- Reduced paperwork.
- Reduced cost and time.
- Trade the shares in any quantity.
- Simple and hassle-free.
- Easy access and monitoring.
Frequently Asked Questions about Demat Account in Nepal
1. What is Demat Account?
Demat Account or Dematerialized account holds shares and securities.
2. Is the Demat account mandatory in Nepal?
The Dmat account is mandatory for all types of share transactions in Nepal.
3. How many Dmat accounts one can open?
One person can open up to two Demat accounts.
4. Can an individual buy shares without Dmat account?
No. It is compulsory to have a Demat account for all kinds of share transactions.
5. How long does it take to open a Demat account?
Usually it takes 48 to 72 hours to open the account. This may vary from organization to organization.
6. What does beneficiary mean?
The person who has opened a Demat account to deposit securities.
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