Archive | June, 2013

You can easily close demat account and transfer shares to other demat account.

22 Jun

Merging 2 demat accounts is easy.

If for some reason you have more than one demat account you can merge them by doing following steps.

  • Choose the one you want to close by charges/service quality/locational proximity.
  • Go to the office of the demat account which you want to close with the following documents,
  1. Photo copy of Pan card.
  2. Holding statement of demat account you want to close and transfer.
  3. Client master of demat account you want to *retain* with nsdl logo(by default you get without nsdl logo…ask for the one with nsdl logo from your preferred depositary participant(one you want to tranfer *to*).
  4. Fill transfer/closure form and give above documents to your depositary participant where you want to close demat account from.

It takes 4 business days to close and transfer.

More importantly it is *FREE*.

If you have more than one demat account with no specific reason it is better to merge them for the following reasons,

  • easy maintainability
  • easy inheritance(our successors can not understand our account complications and one of our demat account may become useless with underlying assets.)
  • savings in annual maintenance fees.

Always open “Either Or Survivor” accounts no “Single” Accounts

1 Jun

Only from this year start, I learnt the importance of “Either Or Survivor” also known as “Anyone or Survivor”.

In short “Either or Survivor” is known as “EORS” account.

“EORS” is NOT “Joint” account. Joint account is typically for company officials where one person can not be given absolute financial power.

EORS is a mode of holding style or how an account can be operated.

When an account is of type EORS *at least* anyone of the holder can sign to execute a transaction. It would be useful in the following scenarios,

  • First holder is in abroad and want to execute something in India.
  • First holder is in serious illness and can not sign.
  • If I understand correctly account number can be retained even after the demise of the first holder(Remember your account number may be persisted in different systems like dividend credit, interest credit, tax return credit etc).
  • If first holder dies second holder need not wait till all legal formalities to access the funds.

 

Now where and all we can open a “EORS” account.

  • Bank
  • Mutual fund
  • Company fixed deposits

As per http://www.sebi.gov.in/faq/faqdemat.html You can not open a demat account in “Either or Survivor” mode… It is very bad in my opinion.

 

What should I do if my account is “Single”?

For banks write one letter and fill the new customer application form for the second holder if he/she does not have account already.

 

For mutual funds there is NO way to change “single” to “EORS”. You need to open a fresh folio with a type “EORS” and sell your single holding and buy in “EORS” holding.

Caution:

  • Unless you trust the second holder do not give EORS access. If you are just married wait for some time to judge your partner before granting EORS.

Even if you are single you can add *trusty* parents as “EORS” holder.

Technical analogy “EORS” is like granting “sudo” access so be careful before granting “EORS” access.

One more Technical analogy EORS is like a “OR” operator between holders, “Joint” is like “AND” operator.

Now list all your financial accounts and migrate them to “EORS”.