Do you want to Know What is Demat Account and how to open Demat account in Nepal? Know everything about creating a Demat account in Nepal to get into the stock market.
A Demat account is the most important thing you need to get started in the share market. In this article, you’ll learn about the basics of a Demat account and how you can get one to get into the stock market in Nepal. Let’s first understand what exactly is Demat account.
While the stock market is reaching new records daily, the number of Demat account openers has increased. According to CDS and Clearing, the number of such account openers has crossed 47 lakhs. According to a spokesperson of the clearinghouse, 46.87 lakh people have opened Demat accounts so far. However, he acknowledged that some people may have opened two accounts.
Only two of these accounts can be opened at a time. According to him, there is a provision for cancellation if more than two accounts are opened. “As the market expands, additional investors join in. There will be many new IPOs including new insurance companies. As a result, the number of Demat account holders has also increased.
To replenish their original shares, some have also opened a Demat account. When the stock market hit higher levels, the number of Demat account holders opened even more.
They are unable to apply for IPO shares on Mero Shares as they do not have a Demat account. They are also not allowed to trade in the secondary market. Some people still have their stock certificates at home. So far 9.23 billion shares have been deposited in the Demat accounts of various people.
What is a Demat Account?
Demat is the process of dematerializing physical share certificates. A Demat account is an electronic account opened through depository participants who hold shares in electronic form. Think of it as a bank account, you are assigned a unique Demat account number through which you can apply for or trade your shares. A Demat account has been made mandatory in Nepal and now it is necessary for people to have a Demat account for any transaction in the stock market.
Benefits of opening a Demat account
- It provides quick and easy access to your investments and details through online banking.
- Eliminates the risks associated with physical certificates such as theft, loss, or damage.
- It is a time saver as the securities are stored in Demat form.
- Reduces costs, such as stamp fees, handling fees, and other such expenses
- Easily accessible through the internet using a computer, smartphone, etc.
- Easy-share transfers and highly secure and fast.
- Immediate transfer of securities, settlement cycle, and distribution of shares allotted in the IPO.
- Easy to manage a portfolio and pledge securities.
Documents Requirements To Open Demat Account In Nepal
Before knowing about the actual process of creating a Demat account in Nepal, let us first look at the requirements. Any Nepalese citizen can open his/her Demat account in Nepal and it is quite a simple process. No matter whether you are a minor or an adult, you can create a Demat account. However, there may be slight changes in the required documents.
If you are an adult, you must have the following documents with you to create a Demat account.
- Original and photocopy of citizenship certificate
- passport size photograph
In the case of a minor (below 18 years of age), a guardian can operate the account of the minor till he attains the age of majority. In this case, a photocopy of the citizenship certificate of the guardian along with the photograph of the minor and the birth certificate is required.
How To Open a Demat Account In Nepal
Now let us come to the actual process of opening a Demat account. The process of opening a Demat account is as simple as opening a bank account. You can open a Demat account with a Depository Participant which is permitted by the Securities and Exchange Board.
Let us see the step-wise process of opening a Demat account in Nepal:
Step 1: The investor should submit various documents for opening a Demat account similar to the documents required for opening a bank account.
Step 2: The DP enters the information about the investor in the system of CDSC after the beneficiary submits the required documents.
Step 3: CDSC verifies the entry from the DP and provides the verification letter to the beneficiary.
Step 4: After verification, CDSC opens the Demat account of the beneficiary.
Step 5: After opening the Demat account, the DP provides a 16-digit Demat account number and a checkbook to the beneficiary or investor.
Step 6: After opening a Demat account, the shares held or purchased are credited to this account. Just like money is deposited in a bank account, shares are deposited in a Demat account.
Investors will have to provide a Demat account to the broker company while buying and selling shares. After buying the shares, the shares are credited to the Demat account. When you sell shares, you should write a check and give it to the broker company. The shares sold are then debited from the Demat account.
How To Open Demat Account Online in Nepal
Due to a large number of new investors entering the stock market, many depository participants are providing the service of online Demat Accounts. You can search for banks and financial institutions providing such services in Nepal, fill out and submit an application form from their website and apply for a Demat account online.
Various banks also provide online Demat registration and offline. Here is the Demat form link of various banks which you can fill out online or offline as per the service provided by the bank.
|Name of Bank||DEMATE Form Link|
|BANK OF KATHMANDU LIMITED||Click Here|
|CITIZENS BANK INTERNATIONAL LIMITED||Click Here|
|CIVIL BANK LIMITED||Click Here|
|EVEREST BANK LTD.||Click Here|
|GLOBAL IME BANK LIMITED||Click Here|
|HIMALAYAN BANK LTD.||Click Here|
|KUMARI BANK LTD.||Click Here|
|LAXMI BANK LIMITED||Click Here|
|MACHHAPUCHCHHRE BANK LIMITED||Click Here|
|NABIL BANK LIMITED||Click Here|
|NEPAL CREDIT AND COMMERCE BANK LTD.||Click Here|
|NEPAL BANGLADESH BANK LIMITED||Click Here|
|NEPAL BANK LIMITED||Click Here|
|NIC ASIA BANK LIMITED||Click Here|
|NIBL CAPITAL BANK LTD||Click Here|
|NMB BANK LTD||Click Here|
|PRABHU BANK LTD||Click Here|
|PRIME COMMERCIAL BANK LTD||Click Here|
|SANIMA BANK LIMITED||Click Here|
|SUNRISE BANK LIMITED||Click Here|
This is all about how to open a Demat account in Nepal. Select the appropriate bank from the list and apply for your Demat account. If still, you have any doubts or problems then let us know in the comment section.
Charges for Opening Demat account in Nepal
Initially, its price was Rs. 50 to create a Demat account and you have to pay Rs 100 annually. So you may have to pay Rs 150 while creating your Demat account.
Also an additional Rs. 50 is charged annually for Mero Share. So you have to pay Rs 150 annually to renew your Demat account and Mero share. The fee for renewal can be paid through online wallets like eSewa, Khalti, ConnectIPS, etc.
How many Demat accounts can an individual Own?
In Nepal, a person can own a maximum of 2 Demat accounts. But if you apply for IPO with your two Demat accounts, then both your applications will be considered invalid. Hence it is advisable to create and manage a single Demat account.
What is the difference between a Demat account and a Brokerage account?
The word “Demat” is an abbreviation for “Dematerialized”. It literally means “intangible account” in Nepali.
Earlier, shares of various companies were distributed in the form of tangible or paper certificates. Demat account is fully functional from 2nd January 2072. Presently, shares are transferred in Demat form to the Demat account. Shares purchased in the Demat account are automatically credited like money in the bank account.
The account is credited after the initial share (IPO) is paid out. Similarly, while selling shares in the secondary market, the number of shares in the account gets reduced and gets credited to the Demat account of the buyer. Demat account is where shares are kept after they are bought.
Demat accounts can be opened in many different bank subsidiaries. Such types of accounts are opened by subsidiaries of banks.
These types of accounts can also be opened through brokerage firms. Depository Participant is the entity that opens this account.
There is a total of 76 depository members. To open such an account, you will need your bank account number, a photocopy of your citizenship certificate, and your photograph. This type of account can be opened in any bank or brokerage firm where you do business.
Many banks do not charge any fee for starting a new account. Some companies will be allowed to charge up to Rs. 100. When you open a Demat account, you will be given a 16-digit account number.
List of companies opening Demat accounts in Nepal. Only after you have that quantity (NEPSE) can you fill the primary shares or buy and sell in the secondary market.
After that, buying and selling shares is easy; Transactions are transparent, and bonuses and rights shares are automatically credited to the beneficiary’s account. As a result, you will not need to visit the company to obtain the certificate for such shares.