If you are into the business of share and securities, you must have come across the term DEMAT. Demat is a word derived from dematerialization. Simply put, Dematerialization is the process in which certificates regarding shares, government securities, and funds are held in the electronic form rather than the traditional physical form.
DEMAT account is that account in which physical share certificates of an investor are converted and stored in an electronic form. Like bank account is for money, the DEMAT account is for share certificates. DEMAT account in Nepal is helping paper based stock procedures to the new level making it easier.
Dematerialization has been around for many decades in the world now. The stock markets did not function with DEMAT accounts in the past. Stocks were priced, and traders would shout the prices for trading. Then, there was money exchange process for physical receipts of shares. Thus, there was a huge encumbrance related to paper works. Many times, the trading would get delayed. However, this situation has been changing. Due to technology, dematerialization has come into effect.
NEPSE DMAT Account Nepal
Nepal stocks being Dematerialized
Dematerialization process is being adopted in Nepal as well. It has not been that long since it started in Nepal. Nepal Stock Exchange Limited (NEPSE) is the only stock exchange in Nepal. It was founded in 1993, and it is located in Singha Durbar Plaza, Kathmandu, Nepal. It facilitates the transaction through its members, market intermediaries such as brokers, etc. According to data of 2013, the number of listed companies in NEPSE is 334. The companies include Commercial Banks, Hydro Power companies, Insurance companies, finance companies, etc.
Under the Company Act of NEPSE, the company, CDSCL (Central Depositary System Clearance Limited) was established in 2010. Its main objective is to handle the securities in a dematerialized form so as to free the investors from the hassles of paperwork. According to the data of 2017, the count of CDSCL registered companies in Nepal has reached 202.
Why DMAT account in Nepal?
The significance of dematerialization in this digital area is staggering. Therefore, it is a must to create a demat account in Nepal. With a DEMAT account, you can hold all investments in a single account. It acts as a common bank.
There are no risks of physical hazards leading to loss of certificates. Also, risks of thefts and wrong deliveries are reduced. Paperwork has been reduced significantly. There has been cost reduction too as stamp duty is not needed. Automatic update has made it a lot easier. The odd-lot problem is also sorted out.
Understanding the importance of dematerialization in this technology’s age, creating a DEMAT account can prove to be useful to anyone associated with stock exchange in Nepal.
How to open DEMAT account in Nepal
To open the DEMAT account in Nepal, follow the steps below:
- Firstly find the company that has adopted dematerialization process. 202 companies have been registered in CDSCL. For e.g.: NMB Capital Ltd, NIBL Capital Markets Ltd, Prabhu Bank, NIC Asia, Kriti Capital and Investment Ltd, Nabil Investment Bank Ltd, Laxmi Capital Market Ltd, Siddhartha Bank, Everest Bank Limited, Bank of Kathmandu, etc.
- You have to fill a form to create a DEMAT account with your correct signature. You can also download DMAT Form Online through bank websites line NMB Demat and can fill it online. You will have to take original, and photocopy of citizenship certificate and one passport sized photo. To open the DEMAT account, you will have to pay Rs. 150. Some banks may open the DEMAT account free of charge.
- After filling the form, submit it. It will usually take few days to set up your account after which you will get a unique DEMAT no for the identification which is to be used in transaction process later on.
- To deposit your physical share certificates in your DEMAT account, take them to where you created the account. Fill up the form and submit. This is entered in the system. Then, you can either take your documents to the share registrar of your company yourself or let your DEMAT company do the work. It takes some time to get all the shares deposited in your account.