Demat account is not a new word for most of us. At some point of time, we would have opened a demat account with some brokerage or the other. This is to trade/invest in stock market. This is nothing to discuss about. However, demat account can now be used to integrate all your mutual fund investments at a single place.
NSDL (National Securities Depository Limited) has recently enabled the feature of holding mutual fund units in dematerialized form. If you have a demat account already, you can use this to convert your mutual funds into demat form.
Process for Conversion
You can apply for conversion to mutual fund units through depository participant or DP. Here is the process to do so:
- Get conversion request form from your DP.
- Fill up the form.
- Attach this form with statement of account and submit to DP.
- After verification, DP would send these documents to AMC/RTA.
- Finally, AMC/RTA will check these documents, verify them and then credit the mutual fund units to the demat account.
Purchase of units
You can subscribe for mutual fund units through your Stock Broker using the Stock Exchange platform. Upon subscription, your Stock Broker i.e., clearing Member will credit the Mutual Fund units into your demat account.
Sale of units
You can redeem your mutual fund units held in dematerialised form through two different modes i.e., through your DP or stock broker.
(a) Redemption through DP
- Obtain Redemption Form (RF) from your DP.
- Fill-up the RF form and submit it to your DP.
- After due verification, your DP will execute electronic redemption request, which will be electronically forwarded to the AMC / RTA.
- The AMC / RTA will verify the redemption request and if in order, confirm the electronic request and make the payment as per your bank account details available in your demat account.
(b) Redemption through stock broker
For redemption purpose, in addition to placing order through your Stock Broker, you will have to submit delivery instruction slip (DIS) to your DP to transfer the mutual fund units to a designated CM Pool account of National Securities Clearing Corporation Limited.
What are the advantages of holding Mutual Fund Units in dematerialised form?
- You can hold securities such as equity, debt instruments, Government securities and Mutual Fund Units in a single demat account.
- You will receive single transaction statement from your DP, which will display all the securities and Mutual Fund Units held in your demat account.