Features and Facilities of DP Accounts

Mode of Holding

DeMat accounts can have more than one holders. However, they cannot be operated on an "Either or Survivor" basis like in banks and Mutual funds. If the details of any of the holders need to be changed, then a new order with the desired order of names must be opened. Then the holdings of the old account can be transferred to the new account.

Nomination

By filling up and signing on the nomination form that is provided by the DPs, individuals can make nominations in DeMat accounts. The nominee is entitled to all the holdings of the account incase of death of the account holder. Presently, there can be only one nominee for an account.

A minor can also be a nominee. In such a case, a guardian needs to be appointed on behalf of the minor.

An account holder can change the nomination by simply filling up the nomination form once again and submitting it to the DP.

Power of Attorney [PoA]

PoA is a relatively new concept introduced among DPs who act as trading members as well. In this case, the DP holds a special Power of Attorney to transfer the shares for delivery when shares are sold from the trading account. All the paper work involved in the process of giving physical delivery instructions is eliminated, every time there is a sale.

Corporate Actions

The DeMat accounts reflect all the benefits arising from corporate actions of the securities held by the investor. For instance, if an investor holds 100 shares of Infosys on the ex-bonus date in his DeMat account and the company declares a bonus in the ratio 1:1, then all the extra shares allotted to him will get credited to his DP account automatically.

In case of dividends, the company will directly credit the dividend amount into the bank account, provided the investor’s bank account details are correct and updated with the DP. Else, it will mail the dividend warrant to the address as registered with the DP, with the bank details mentioned while opening the account.

Pledging

Pledging means offering securities to a lender as collateral for a loan. Though the asset will be pledged to the lender, it is still owned by the borrower unless he/she defaults on the loan.

The procedure for pledging is as follows-

• Both the account holder(s) i.e. pledgor and the lender i.e. pledgee must have must have depository accounts with the same depository

• The pledge is initiated by the account holder who submits the details regarding securities to be pledged in a standard format to the DP

• The pledge has to confirm the request through its DP. After creation of the pledge request, the account holders may inform the pledgee and request him to confirm the request.

Freezing Accounts

DP accounts may be frozen by the depositories or participants or by the account holder(s). The Depository or Participant may freeze the account in case of any discrepancy in the account like non-submission of PAN card regulatory action, etc.

A depository account holder can freeze securities lying in the account for as long as he/she wishes. By freezing, the account holder can stop unexpected debits or credits or both, creeping into the account.

The various types of freezing are-

• Freezing for Debit - Here, any debit instruction cannot be passed. But, the credit in the account will be received provided standing instructions are given for the same

• Freezing for all - Here, no transfer from and to the account is possible

• ISIN Freezing - Here, a specified ISIN can be frozen for blocking the ISIN for debit

• Quantity Freezing - Here, a specified quantity of a specified ISIN can be frozen, blocking the specified quantity for debit.