Are you still holding your mutual fund units in Physical form?

Do you know you can hold the units in your Demat account?

Demat account can offer many advantages like getting a consolidated view of your investments in one place. Since you may hold your mutual fund investments with various mutual fund houses, availing services from various RTAs, tracking and investing among AMCs can become cumbersome over time.

De-materialization: converting physical shares and mutual funds into electronic form that can be held in your Demat Account without the fear of misplacing or damage of the physical certificates. However this is not the case with mutual fund units

WHY DEMATERIALIZATION?

1. A Demat account can help you store your securities like stocks, bonds and mutual funds in electronic form with your Depositary Participant (DP).
2. It reduces the risk of misplacing your certificates and periodic statements, for future reference.
3. Your broker will be your one place contact for all your transaction related queries like KYC update, Capital Gains Statement, Ledger Statement, etc
4. Investing in Exchange Traded Fund (ETF) is only possible through Demat account, as the units of ETF are traded on the exchange platform
5. During unforeseen circumstances like death, transferring of units and holdings in Demat account to nominee is very easy and hassle free. In the other case you may need to submit transmission request of each Folio to individual AMC houses. 

The method to de-materialize is listed below -

1. Ask your broker to provide the De-materialization Form (DRF). You will have to submit 2 copies of the DRF for every scheme/folio. All the copies are to be submitted in original with the copies self attested by the holders.
2. You will also need a copy of your PAN card and your current mutual fund account statement. All these need to be submitted to your broker, after self attesting the documents.  
3. Once the documents are submitted the broker intimates the Depository (NSDL/CDSL) who records these details onto the system after which a Demat Request Number (DRN) is generated. Your broker (Depository Participant) then forwards the stamped DRF to the respective Registrar and Transfer Agent (RTA).
4. The RTA takes at least 20-25 days to send out out the de-materialization and credit the units to your Demat account. Once the units have been dematerialized, they show up in your Demat. You will receive a notice via SMS/Email from NSDL/CDSL, as soon as the units are credited to your Demat account.
5. If you hold units in Demat form, you cannot opt for a Systematic Transfer Plan (STP) or Systematic Withdrawal Plan (SWP). STP and SWP can be a necessary requirement for some investors for better financial planning. However, Systematic Investment Plan (SIP) is permitted.
6. You have to pay annual maintenance charges for holding a Demat account, which is usually in the range of Rs 300-700, besides transaction charges (around 0.05% per transaction).

If you have a question, share it in the comments below or DM us or call us - +91 9051052222. We'll be happy to answer it.

- Avishek Pyne