All you need to know about the Citibank Demat Account.
Just as you have a Bank account for the safekeeping of all your money/cash, the Demat Account is for the safekeeping of all your shares and other eligible securities. The securities are held in this account in an electronic, also called, the dematerialised form. The Demat Account can be opened with a Depository Participant.
There are 2 types of Demat Accounts for NRIs - Repatriable and Non-Repatriable.
The Repatriable Demat Account is for all shares and securities that have been purchased using funds that are repatriable. On sale of these shares, the sale proceeds can be credited to your NRE Bank account.
The Non-Repatriable Demat Account is for all shares and securities that have been purchased using funds that are non-repatriable or purchased at the time when you were a Resident Indian. On sale of these shares, the sale proceeds can be credited to your NRO Bank account.
No, there is no approval required from RBI. This responsibility of giving approvals has been delegated by RBI to Authorised Dealers. Citibank as your Authorised Dealer will therefore give you the approval. This approval will enable you to buy/sell shares and securities in the secondary market on the stock exchange.
- All your buy/sell transactions in the secondary market on any stock exchange in India must be done under the Portfolio Investment Scheme (PIS) as per the regulations under the Foreign Exchange Management Act (FEMA)
You can register for secondary market transactions under the PIS with 1 (one) Authorised Dealer only.
The electronic form is more popularly called the 'dematerialised' form.
The foremost and most important reason to convert is because it is now mandatory to deliver the shares in dematerialised form only, if you are selling the shares. Thus, if you hold physical shares, you may not be able to sell them. Additionally, there are several advantages of holding shares in the dematerialised form:
Elimination of risks associated with physical certificates e.g. theft, loss in transit, mutilation, fire, etc.
Reduction in handling huge volumes of paper.
Elimination of problems related to change of address, transmission, etc.
Faster settlement cycle. You therefore get your money/shares much Faster Periodic statements and hence ease of portfolio monitoring.
Lower costs due to lower brokerage rates charged by brokers and no stamp duty.
There is no minimum lot in case of dematerialised shares. You can therefore buy/sell even 1 share.
Dematerialisation is the process by which your holding of physical share certificates is converted into an electronic record. The shares then reflect as a credit balance in your Demat Account. Dematerialised shares do not have any folio number, certificate number or distinctive numbers i.e., they are fungible.
To dematerialise your shares, you need to submit the physical share certificates along with a Dematerialisation Form (DRF) to your Depository Participant (please also see 'transposition').
Along with the certificates, you also need to submit proof for cost of acquisition of these shares. This could be a copy of the allotment letter, broker contract note, etc.
The share certificates will be sent to the R & T Agent of your company, who will check and confirm if everything is in order. On confirmation, the shares will be credited to your Demat Account.
The process of dematerialisation takes approx. 3 to 4 weeks. This completely depends on the time that the company's R & T agent takes to check and confirm your shares.
The R & T Agent will check the certificates submitted by you vis-à-vis the records at their end. If everything is in order, they will cancel the certificates and the shares will be credited to your Demat Account. The physical certificates will cease to exist hereafter.
In case of any discrepancy e.g. signature mismatch, etc., the certificates will be returned back to you through your Depository Participant. These certificates can be resubmitted after rectification of the discrepancy.
Citibank will send you, periodically, the details of all the shares in your account. You can also log on to Citibank Online or call CitiPhone and check the status of the shares submitted for dematerialisation.
The process of converting the shares from the dematerialised form to the physical form is called 'Rematerialisation'. If at any point of time you want your certificates back, all you need to do is submit a request by filling the Rematerialisation Request Form (RRF) to your Depository participant.
Once the shares have been dematerialised, you are free to -
Continue holding them as free shares in your Demat Account.
Transfer the shares, as permitted under the regulations.
Sell these shares.
Yes, you can open your Demat Account with us. Citibank is a Depository Participant with the NSDL (National Securities Depository Limited).
The following is required to open a new Citibank Demat Account-
Account opening form completely filled and signed by all the holders.
One photograph of all the joint holders with signatures across the photo.
PAN Card copy for all holders (please note: Holder's name on the account opening form should be exactly the same as per the PAN Card).
Address proof for all the holders. A copy of the Passport/Driving License/land line telephone bill or electricity bill (less than 2 months old)/bank statement for the last calendar quarter along with a canceled check leaf from the account can serve as address proof.
Canceled check leaf of the linked Bank account specified in the form (if not already provided as a document for the Address Proof).
One photograph and signature of the nominee (if you are opting for the nomination facility).
Please have all your supplementary documents verified by the local Indian embassy or a local banker prior to handing over the same to the NRI Service Centers.
Since the status of the existing Demat Account is 'Resident Indian', this account will have to be closed and a new account will have to be opened as 'Non-Repatriable Demat Account'. The shares in your existing account can then be moved to this new account before closing the same. The transfer of shares can be done by filling and submitting the Annexure L (share transfer instruction). Along with the same, also required is some proof of cost of acquisition of these shares. This could be the letter of allotment, copy of the contract note or any other document that can establish the cost of acquisition of the shares/securities.
Annexure L is a transfer instruction form, which needs to be signed by all the joint holders of the Demat Account, and submitted to any Citibank branch. The Annexure L is akin to the checkbook for your Bank account.
A personalised Annexure L booklet is sent to you along with your welcome kit at the time of account opening.
No, there is no such condition where you are required to maintain any minimum quantity or value of shares in your Demat Account.
You need to open your Demat Account in the same holder combination, as you own the physical securities. Thus, if you currently own shares in the names of A, B and C - your Demat Account also needs to be opened in the same holder combination. In addition to the above, if you also own shares in the name of A and B only, a separate Demat Account needs to be opened.
However, if you own shares in the names of B, A and C (in this order), then these shares can be dematerialised and credited to the account opened in the names of A, B and C (in this order). A transposition form would also need to be submitted along with the Demat request.
Please note: all Demat Accounts with more than one holder are to be operated jointly by all the holders i.e., these accounts cannot be operated as 'Either or survivor' or 'Anyone or survivor'.
Yes, the joint holders can be Resident Indians. The status of an account is based on the status of the first holder only.
Yes, you will need the services of a broker who will help you execute your buy/sell transaction on the exchange. You need to inform him that you want the shares credited to your Demat Account. You will need to provide him with your Demat Account details. The following documents also need to be submitted to Citibank - Copy of the contract note.
The regulatory authority in India (i.e., Reserve bank of India) has specified that for each individual NRI, the paid-up value of shares, of an Indian company, purchased either on repatriation or on non-repatriation basis, does not exceed 5% of the paid-up value of shares issued by the company concerned.
Further, the aggregate paid-up value of shares of any company purchased by all NRIs does not exceed 10% of the paid-up capital of the company. However, this limit of 10% may be raised if a special resolution to that effect is passed by the General Body of the Indian company concerned. The overall limit is normally tracked by the RBI and an intimation is sent to all the Brokers and Banks. Any purchases done beyond this limit may be reversed at the instruction of RBI - and this may be at a profit or a loss.
Yes, you still need the services of a broker. He can help you sell the shares on the exchange, where the shares of your company are listed. On confirmation from your broker that the shares have been sold, you need to transfer the shares from your Demat Account to your broker's account. The following documents need to be submitted to Citibank:
Copy of the contract note.
Annexure L (transfer instruction) for getting the shares transferred from your Citibank Demat Account to your broker's account.
Copy of the CA Certificate in the specified format (detailing the capital gains on the sale transaction).
Copy of Annexure A (for remittance u/s 195 of the Income Tax Act) - this is required only if the sale of shares/securities is from a Repatriable Demat Account.
Please remember - there are strict deadlines within which you need to transfer the shares to your broker.
In India, we currently follow the T+2 rolling settlement cycle. Simply stated, the broker through whom you have sold your shares needs to deliver the same to the exchange on the 2nd business day after the day of trade. Hence, you need to deliver the shares to your broker, latest by day T+1 i.e., the next business day.
E.g. if you have sold your shares on Monday (Day T), you need to transfer the shares to your broker latest by Tuesday (Day T+1) to enable the broker deliver the shares to the exchange on Wednesday (Day T+2).
If you fail to deliver the shares within the specified time frame, your broker will not be able to deliver the same to the exchange. There will thus be a default. A penalty will be imposed by the exchange and the requisite number of shares will then have to be bought from the 'auction market' (this transaction will normally be at a loss as compared to the normal market). The penalty as well as the loss will be passed on by the broker and must be borne by you.
It is very simple. All you need to do is fill and sign the transfer instruction (Annexure L) - which is akin to a Bank account checkbook - and hand it over to your Depository Participant. Your broker should be able to help you with the type of instruction ('on-market' or 'off-market' instruction) and the relevant details required for such an instruction. In all probability, you will need to do an 'on-market transfer' to your broker by entering the following details:
CM BP ID - Clearing Member Business Partner ID of your broker.
Settlement Number - the settlement number in which your shares were sold on the exchange.
Market Type - the market type in which your shares were sold on the exchange.
All these details will be provided to you by your broker.
Yes, as an Authorised Dealer, if you maintain your PIS designated Bank account us, we are required to deduct tax at source (TDS) on the Capital Gains on the sale transaction. The amount of tax would depend on whether it is a Short-Term Gain (where the holding period is less than 12 months) or a Long-Term Gain (holding period is more than 12 months). The Indian Income Tax regulations specify different tax rates depending on the type of gain. We recommend you seek clarification from your tax consultant for more details. The tax so deducted, if any, is paid to the Income Tax Department and a Form 16A - as proof of deduction of the tax is sent to you.
To transfer shares, you need to give a transfer instruction, in the specified format (Annexure L) signed by all the holders of the Demat Account and hand it over at any Citibank branch. If the transferee account is with a Depository Participant affiliated with CDSL, you need to sign and submit an Inter Depository Transfer Instruction.
There are other documents required, depending on whether this transfer is due to a negotiated sale with the other NRI or a transfer by way of gift or other means where there is no cash payment involved. The following documents will be required:
In case of sale -
Sale Agreement between you and the other NRI indicating the date of sale as well as the price.
Copy of the 'Client Master' issued by the Depository Participant where the transferee has his Demat Account.
In case of a gift -
Letter from you confirming the same with details of the person to whom the gift is given.
Copy of the 'Client Master' issued by the Depository Participant where the transferee has his Demat Account.
Yes, if you have executed a Power of Attorney in favour of some other person, the Power of Attorney holder can also operate your account. A copy of this Power of Attorney, duly notarised, must be given to Citibank.
You can avail the following additional services for your Demat Account:
Freezing the account/any specific security/specific quantity of a security.
In case of -
Dividend - for shares held in the Demat Account, the amount will be directly credited to your linked Bank account via ECS (electronic credit). If the company making the payment is unable to do so via the ECS mode, a check will be sent across by them to your mailing address.
Bonus - the bonus shares will be automatically credited to your Demat Account.
Rights - the allotted shares will be credited to your Demat Account or sent to you as physical certificates depending on the instructions you mention in the Rights application form.
In case you have any Depository (Demat) Account with us:
Please note that the address change request will not be automatically effected in any/all your linked Demat Accounts with us. As per the current NSDL guidelines, change of address in a Demat Account requires a separate request letter signed by all the holders to be submitted along with a copy of the proof of identity (for all holders) and proof of the new address. Please submit these documents to any Citibank branch in India. Please also carry the original documents for verification at the branch. If you are a Non Resident Indian, you may alternately get the change of address request (signed by all the holders) along with a copy (for all the holders) of the proof of identity and proof of the new address, duly attested by your local banker and the same can be sent to any Citibank branch in India. Please visit our website at www.citibank.com/india for the addresses of Citibank branches in India. NRI customers may visit our website at www.citinri.com.