The term DEMAT stands for dematerialization. A dematerialized account is an online account that holds all the securities like shares, bonds, FDs, Mutual Funds, exchange, traded funds, etc., of the individual in a dematerialized form.
Until the year 1996, all the traders and investors used to hold their security in the form of paper. After the invention of the internet and technological advancement, traders and investors started holding their securities in digital form. Once the internet became accessible to all people, the situation changed, and now, they do not need to keep their investments in paper.
What is a DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates?
In simple words, a dematerialized account is an electronic account open with the purpose of holding all the securities like stock, shares, bonds, etc. of the individual in an electronic form.
Like a normal bank account that holds your money, a DEMAT account holds your securities. The shares and stocks of the individual at transferred electronically to the DEMAT account of the individual. The transition from paperwork to dematerialization in India started in 1996. In 1996 the depository act passed and allowed for the setting up of depositories like National Security Depository Limited(NSDL) and Central Depository Services Limited (CDSL) that will hold DEMAT accounts. Many people do not know that the National Stock Exchange was India’s first fully automatic stock exchange. National Stock Exchange officially started in 1994, and DEMAT share trading on National Stock Exchange started in 1996.
NRIs in The United Arab Emirates
The United Arab Emirates, although being a small country buried away along the Arabian Peninsula’s coastline, has a rich and colourful history, culture, and way of life that is genuinely unique to the area and the globe.
Although most people are only aware of the country’s recent rise and success, it has been prospering for thousands of years and is home to unique customs.
Here are some of the most fascinating facts about the UAE that will help you comprehend how vibrant this wonderful country is:
Total area: 83,600 Sq. Km
Capital (2012 Est.): Abu Dhabi, 942,000
Largest city: Dubai, 1.978 million
Monetary unit: U.A.E. dirham
Languages: Arabic (official), Persian, English, Hindi, Urdu
National name: Al-Imarat al-‘Arabiyah al-Muttahidah
Population:- 9,272,000(2022 Est.)
Currency Exchange Rate:- 1 USD equals 3.673 Emirati dirham
Abu Dhabi (Ababy), the biggest of these emirates, covers more than three-quarters of the federation’s total geographical area, is the heart of the federation’s oil economy, and shares its southern and eastern borders with Saudi Arabia. Dubai, the port city at the base of the hilly Musandam Peninsula, is the capital of the emirate of Dubai (Dubayy) and one of the region’s most important economic and financial centres, with hundreds of global firms housed in a forest of skyscrapers.
Land
In terms of area, the United Arab Emirates is somewhat smaller than Portugal. Saudi Arabia borders it on the west and south, and Oman on the east and northeast. The exact location of the country’s boundaries has been a source of controversy. Despite the fact that a 1974 secret deal between the UAE and Saudi Arabia is reported to have addressed their three border issues, the pact’s legal status remains unknown. The United Arab Emirates claims a stretch of coastline to the northwest of Qatar that Saudi Arabia asserts was given to it in the 1974 agreement.
Almost the entire nation is desert, with large sand dunes. The oasis of Lw, east of Ardah, includes some of the world’s biggest sand dunes. Al-Ain, about 100 miles (160 kilometres) east of Abu Dhabi, is home to an important oasis. The only other notable relief feature along the eastern half of the Musandam Peninsula is the northern extension of the ajar Mountains (also shared by Oman), which climb to around 6,500 feet (2,000 metres) at their highest point.
Cultural life
The cultural traditions of the United Arab Emirates are based on Islam and resonate with the rest of the Arab world, particularly the Persian Gulf republics. Islamic revival has had an influence on the federation, however Islamic observance in the emirates is often less strict than in Saudi Arabia. Despite urbanisation and the existence of a significant expatriate community, tribal identities in the UAE remain strong, and the family is still regarded as the strongest and most cohesive social unit.
Camels are an essential and intriguing aspect of UAE customs and history since they are a component of traditional UAE culture, nomadic lifestyle, and even cuisine. No trip to the UAE is complete without learning about the importance of camels in Emirati culture and history, from owning camel farms to competing in camel races and even consuming camel milk.
Economy
The economy of the federation is driven by petroleum, which is mostly produced in the emirate of Abu Dhabi. Abu Dhabi is the wealthiest of the emirates, with one of the world’s greatest concentrations of known oil reserves and a considerable contribution to the national budget. Dubai, whose economy is centred on trade rather than oil, serves as a regional commercial and financial centre and is a leader in economic diversification in the country.
One of the most well-known and popular reasons for pride for local Emirati families is the dried date fruit, which comes from indigenous palm trees in the UAE. Many families still hold huge data farms and continue to carry down the techniques for collecting and harvesting these particular dates, which have been cultivated for thousands of years.
Eligibility criteria to open a DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates
Following are the eligibility criteria that an individual is strictly required to meet while opening a DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates.
Age
You need to know that there is no restriction on age. There is no minimum age to invest in the Indian stock market, so there is no need to be 18 years old in order to open a DEMAT account. A minor and an adult are equally eligible to invest in stocks. After submitting the required documents, one can open a DEMAT account in a minor’s name through the parents or the guardian. Here you need to remember that the guardians will be the incharge of the account until the minor or children reach adulthood. Once the minor turns 18, the depository participant will send the advisory to the individual and obtain the Know Your Client (KYC) documents to transfer details to a new account.
Verification of PAN and KYC of NRIs in Abu Dhabi, The United Arab Emirates
A Permanent Account Number (PAN) card is a must-have thing that an individual should possess to open a DEMAT account. You need to submit a copy of your Permanent Account Number (PAN) card with Know Your Client (KYC) documents for opening or DEMAT account. The Know Your Client (KYC) process is shifting to the online platform that uses the Aadhaar card of the individual to verify the details.
How does a DEMAT account works for NRIs in Abu Dhabi, The United Arab Emirates?
DEMAT account holds all the security of the individual in electronic forms, so one cannot trade in the stock market without a DEMAT account. To use a DEMAT account as an NRIs in Abu Dhabi, The United Arab Emirates, you need to know how it works.
There are some basic things that you need to know in order to understand the working of DEMAT accounts: –
Central depository: – They are of two types: Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). These two depositories hold the stock account of the individuals for them.
Unique ID: – Every DEMAT account is allotted a unique ID for identification. The unique ID is necessary for transactions and helps the companies correctly identify the individual to credit shares into their account.
Depository Participants (DP): – Depository participants provide access to the individual stock account held by the central depository. Depository participants are also called brokers who act as intermediaries between the central depository and investor. Depository participants can be traditional banks, financial institutions, or discount brokers.
Portfolio holding: – Portfolio holding carries all the details of the account’s transaction, and those details are automatically updated every time a transaction happens.
Different types of DEMAT accounts for NRIs in Abu Dhabi, The United Arab Emirates
By having a broad understanding of different types of DEMAT accounts for NRIs in Abu Dhabi, The United Arab Emirates, you will be able to choose the ideal account for you. The DEMAT accounts are classified into three categories for NRIs in Abu Dhabi, The United Arab Emirates given below.
All three of them are comprehensively explained below: –
Regular DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates
First is a regular DEMAT account which is needed for investors who reside within India. A regular DEMAT account is used by Indian resident investors and is ideal for those who deal with equity shares alone. In a regular DEMAT account, the shares that an individual buys are safely stored in the digital format, and the shares that the individual sells are taken from it. If you are planning to invest in the future and options, then you don’t need to have a regular DEMAT account because the future and options come with expiry dates; therefore, they don’t need to be stored.
Securities Exchange Board of India (SEBI) has recently introduced a new type of DEMAT account called the Basic Service DEMAT Account (BSDA). Basic Services DEMAT Account (BSDA) is quite similar to the regular DEMAT account, but there is one difference between the two. No maintenance charges are imposed if the individual is holding the Basic Services DEMAT Account (BSDA) within rupees 50,000. If the individual is holding between 50,000 to 2 lakh rupees, then there will be 100 rupees charged per annum. The Securities Exchange Board of India (SEBI) wanted to financially include and aid the investors who are untouched by the stock market, need to open their DEMAT account, and wish to participate in stock markets.
Repatriable DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates
The second is the Repatriable DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates. These types of accounts are used for non-resident Indians. A repatriable DEMAT account allows the individual to transfer their wealth abroad. The investor needs to link the Non-Resident External (NRE) bank account. Once an individual is entitled as a Non-Resident Indian (NRI), they must close their regular DEMAT account. After closing the previous regular DEMAT account, the individual can transfer the shares into a Non-Resident Ordinary (NRO) DEMAT account. In case you are willing to sell the shares, you must know that a restriction on repatriation comes into force. Following the restriction on repatriation, you are allowed to repatriate a maximum of one million USD in a calendar year (January to December).
Non-Repatriable DEMAT account for NRIs in Abu Dhabi, The United Arab Emirates
These are the second DEMAT account option available to the Non-Resident Indians (NRI) in Abu Dhabi, The United Arab Emirates. Non-Repatriable DEMAT accounts do not allow Non-Resident Indians (NRI) to transfer their funds abroad. Non-Resident Indian (NRI) investors willing to hold a non-Repatriable DEMAT account need to link their Non-Resident Ordinary (NRO) savings account with a DEMAT account. Before becoming an NRI, the individual with a regular DEMAT account can transfer to the non-Repatriable DEMAT account category. One can do this without losing shares or even requesting to open a new account.
Things to remember while opening a DEMAT account as an NRIs in Abu Dhabi, The United Arab Emirates
You should always keep the below-given things in mind while opening a DEMAT account as an NRIs in Abu Dhabi, The United Arab Emirates: –
Follow the prescribed rules of SEBI by NRIs in Abu Dhabi, The United Arab Emirates
To open a DEMAT account, then individual needs to select a SEBI registered intermediary that offers a two-in-one service. Two-in-one service means that it works both as a DEMAT account and trading account. Registered brokers at SEBI need to adhere to the prescribed rules and regulations.
Hire a broker or a Firm by NRIs in Abu Dhabi, The United Arab Emirates
The individual needs to select a broker or a firm, and the broker must respond to the demands on time. Always remember that in the stock market, time is everything. In the world of finance, time is money, so having a good broker is a very mandatory condition. A broker can change the game; either he can make you or break you.
Always do detailed research by NRIs in Abu Dhabi, The United Arab Emirates
You should always compare the rates of the brokerage companies and firms as the majority of brokerage or firms charge processing fees. In contrast, some brokerages impose zero fees on certain financial products. Besides, some firms or brokerages have certain financial products for zero brokerage.
How to open a DEMAT account as an NRIs in Abu Dhabi, The United Arab Emirates?
Opening a DEMAT account is a two-step process for NRIs in Abu Dhabi, The United Arab Emirates. After submitting the documents, the individual must fill out the application form.
Step one: Fill out the DEMAT account opening application form by an NRIs in Abu Dhabi, The United Arab Emirates
In the first step, the individual needs to fill out the form. First of all, download and print the DEMAT account opening form and enter all the necessary details in the respective columns.
Next, you must submit the account opening form and the necessary documents to your broker. You should also fill out an updated Know Your Client (KYC) form and submit your identity proof, address proof, and permanent account number with bank proof.
You need to mention your nominee in the DEMAT account opening form. In simple words, a nominee is a person who will become the incharge of your account and its assets if you suffer from any kind of miss happening.
After that, you will come across your Depository Participant (DP) agreement containing the details of the charges you will incur while holding your DEMAT account. The agreement will also contain:
The rules and regulations
Terms and conditions
The duties of the broker
Your rights as an investor
Besides this, you need to do in-person verification. The in-person verification is done to confirm that the details are correct and valid.
Lastly, once all formalities are completed, you will receive a beneficiary owner identity which is also called a unique client code. It is a unique account number that is used in all future transactions.
Step two: Fill out your Know Your Client (KYC) form by an NRIs in Abu Dhabi, The United Arab Emirates
In the second step, the individual is required to do Know Your Client (eKYC).
After the paper registration process, the individual needs to fill Know Your Client (KYC) document.
For the Know Your Client (KYC) form, the individual must have a soft copy of the Aadhaar letter as address proof. After that, the individual needs to fill in the basic details like email id and mobile number in order to receive OTP. Ensure that the mobile number you have given is linked to your Aadhaar card and is correct, as you will receive the OTP in the given mobile number.
After that, you need to enter your Permanent Account Number (PAN) for verification.
Now in the next tab, you need to do validation through the Aadhaar details.
Here you need to enter your Aadhaar number and other details like name, address, age, and gender. On some websites, all the other details will get prefilled once you enter your Aadhaar number.
Lastly, you are required to upload all your documents for account registration.
Documents required to open a DEMAT account by an NRIs in Abu Dhabi, The United Arab Emirates
To open a DEMAT account by an NRIs in Abu Dhabi, The United Arab Emirates, An individual must meet some mandatory requirements. Before opening the account, you should know the documents required to open a DEMAT account and the opening account charges. Following are the necessary documents for the DEMAT account: –
Proof of Identity
An individual can submit his Permanent Account Number (PAN) card, Aadhaar card, passport, driving license, voter identity card, National Rural Employment Guarantee Act (NREGA) job card, or any other document notified by the central government as identity proof. The identity proof should carry your photograph because it makes the identification easy.
Proof of Address
Passport
Aadhaar card
state-issued driving license
voter identity card
NREGA job card
any utility bill (like electricity bill, telephone bill, piped gas bill, water bill, etc., which is not more than two months old are acceptable as address proof.
Bank account statements or post office savings bank statements are also acceptable.
Lastly, you can submit any document issued by the government departments issued by a foreign jurisdiction. Any letters issued by the foreign embassy or Mission in India will also be accepted as proof of address.
Bank Proof
After submitting address and identity proof, the individual must generate proof of bank account. You need to submit proof of bank account that you are willing to connect with your account. For that, you can submit a cancel cheque with your name and send it to the broker along with the account opening form. If you are opening your DEMAT account online, you can upload the picture of the canceled cheque with the IFSC code of the bank to the online portal.
The bank proof you submit should carry your name, the IFSC code of the bank, and the MICR code. If you don’t have any cancel cheques, you can simply send a copy of the front page of your passbook as long as it contains all the above details.
Charges to open a DEMAT account for an NRIs in Abu Dhabi, The United Arab Emirates
While operating and opening a DEMAT account, there are multiple types of charges imposed on the individual, but primarily there are only three types of charges that are generally imposed for NRIs in Abu Dhabi, The United Arab Emirates; they are as follows: –
First is the annual maintenance fee. The annual maintenance fee is charged primarily on a yearly basis. It is levied in advance to keep the account working and provides services regularly as per the demand of the individual. The annual maintenance fee of a DEMAT account can vary from 300 to 800 rupees and may be charged even higher by traditional brokers.
Account opening charges are the second type of charges imposed on an individual while opening a DEMAT account. Different institutes have different charges. The account opening charges of an institute completely depend on its structure, overhead costs, and the service they provide to the individual. Generally, the discount brokers levy a low cost on DEMAT account opening compared to the other traditional banks and brokers.
Dematerialization fees are the fees imposed on some securities that the individual holds in physical form. If an individual holds some securities in physical form, the firm will charge the nominal fee for converting these physical securities into the DEMAT form. This is not a compulsory fee and is applicable only if the individual wants to convert their physical securities into DEMAT form.
The broker charges custodian fees to keep your security safe. The brokers and firms basically charge custodian fees for safe keeping your security. Generally, it is charged yearly depending on the number of assets held by the firm.
Lastly, transaction fee, generally, if you are opening a DEMAT account in a broker’s firm, then they will charge on each transaction. The transaction fee can vary depending on the value of the transaction and the number of stocks, and it is most likely to be a significant proportion of total charges. But nowadays, the scenario is changing, and some brokerages offer zero charges on delivery trades.
