Nepal is a small yet very diverse nation. The people from this amazing country often showcase sheer intelligence, creativity, and the art of investing in the right places. It’s no wonder that demat accounts in Nepal are so famous. Many people are cashing in on the chance to earn more with stocks by opening these accounts. If you are from Nepal or of Nepali origin but based anywhere in the world, this blog will help you know the facts, steps, and insights on how to open a demat account.
How to open demat account in Nepal
Following the official opening of CDS and Clearing on Chaitra 17, 2067, the dematerialization of shares in Nepal began gradually. One can visit a company that has been granted a license by the Securities Board of Nepal (SEBON) to offer Depository Participant (DP) services in order to register a Demat account in Nepal.
With the board’s approval, stock brokers, banks, and other financial institutions, as well as merchant bankers, transfer agents, and other businesses, already provide these services. You must open a demat account with a company that works for you. Two passport-sized pictures and a copy of your citizenship are needed for this.
Physical (paper) certificates for previously purchased shares were used to start trading earlier. However, these can now be electronically credited to the demat account since that clause was eliminated. The business provides a checkbook similar to a bank when a demat account is opened. It is necessary to write a cheque when selling shares. The shares are credited to the investor’s demat account upon purchase.
Why is it a mandate to open a Demat Account for trading in Nepal?
In Nepal, a Demat account is required for all kinds of share transactions. The paper share certificates that the investor owns ought to be dematerialized. They can only trade on the stock market after that. The Nepal Stock Exchange solely deals in demat shares with the aim of establishing a transparent, orderly, safe, and up to date by reducing the number of inconveniences associated with trading in actual (paper) shares.
Following the execution of this clause, the principal issue’s shares are offered in demat format. Your Demat account is immediately credited with the shares you receive. As a result, while applying for a company’s Initial Public Offering (IPO), a Demat account is necessary. You must open such an account if you wish to invest in shares.
How to open a Nepal Demat Account?
With approval from the Securities and Exchange Board to operate as depository participants (DP), everyone including merchant banks, broker firms, and depository banks and financial institutions can open a demat account. The steps involved in opening a bank account and a demat account with CDSC are comparable.
The steps listed below outline how to open a demat account in Nepal:
Step 1: To open a demat account, the investor must provide a number of documentation, much like they would to open a bank account.
Step 2: After the beneficiary provides the necessary paperwork, the DP inserts the investor’s information into the CDSC system.
Step 3: CDSC gives the beneficiary the verification letter after confirming the entry from DP.
Step 4: Following verification, CDSC opens the beneficiary’s demat account.
Step 5: The DP gives the investor or beneficiary a checkbook and a 16-digit demat account number once they start a demat account.
Step 6: The shares that are owned or bought are deposited into a demat account after it has been opened. Shares are deposited in a demat account in the same way as funds are deposited in a bank account.
When purchasing and selling shares, the investor should give the broker corporation the demat account information. The shares are credited to the Demat account following the purchase. You should write the cheque and give it to the broker firm when you sell the shares. The Demat account is subsequently debited for the sold shares.
Demat Nepal Documents Requirements
Anyone can open a demat account in Nepal, regardless of whether they have a share portfolio.
Along with valid types of generations of information, the beneficiary (investor) must present a photocopy of their citizenship. An important thing to note is that one family member’s demat account will not be accessible to the others. To trade shares, each member must create a separate demo account. When a minor is involved, the guardian must provide a photo of the minor, a copy of the guardian’s citizenship, and a copy of the minor’s birth certificate.
Cost of opening a demat account in Nepal
Opening a demat account costs Rs. 50, while the account’s annual operation fee is Rs. 100. As a result, Rs 150 is the initial fee for starting a demat account. Each year, you must pay Rs to renew your account.
The investor with the physical share certificate must first take the shares he or she owns and fill out the information about the shares of each firm before depositing the shares (securities) in the Demat account. A dematerialization form provided by the depository member (DP) should then be submitted by the individual. The form is validated by the relevant company’s share registrar. After receiving the physical shares, it electronically puts them into the beneficiary’s demat account.
Conclusion
As evident enough, opening a demat account in Nepal is a fairly simple process. However, there may be complications if you are not submitting valid documents or skipping the process. Hence, we advise you to tread as per the rules of the government. If you do this, your account will be created in a seamless manner.
Check out more: all you need to know about demat account.
