UNDERSTANDING A DEMAT ACCOUNT STATEMENT

INTRODUCTION

One of the most important parts of the demat account holding is the review of the demat account statement. The demat account has two types of statements issued by the DP, and which can also be downloaded from the website of the central depository. The demat account holding statement is a statement of stock owned by the investor as on a date. The demat holding statement is always valued at a point of time. On the other hand, the regular transactions of securities coming in and going out are covered in the demat account statement which is a statement of flow over a period of time.

DEMAT HOLDING STATEMENT VERSUS DEMAT ACCOUNT STATEMENT

These are two sides of the same coin, just that one is a flow and the other is a stock. Let us understand demat holding statement with a rhetorical question. As demat holdings are electronic, what is the proof of ownership. The demat holding statement filed regularly is not just proof of ownership but can also highlights any discrepancies in the demat holding statement. The demat holding statement catalogues all the holdings of stock, ETFs, bonds, mutual funds and other such demat assets as ownership in the demat account.

On the other hand, the Demat Account statement is the shares and other securities that were transacted and what moved in and moved out of the demat account. the demat account statement explains the changes in the demat holding statement. The demat account statement tracks the inflow and the outflow of stocks. Stocks come into demat account when a stock is bought in the trading account or when bonus and rights issued or when you get shares via transmission or gift. Shares can also come in when you close a demat account and pull in shares to another demat account. Debits to the demat account happen when you sell shares or when you gift or transfer out shares via off-market trades. In the case of the demat holding statement, it also gives the free holding, the holding under lien, holdings pledged, holdings under lock-in etc.

HOW TO READ THE CONSOLIDATED DEMAT STATEMENT (DCAS)?

Typically, it is quite common to get a consolidated demat account statement (DCAS) from the DP where you have a demat account. This includes the statement of holdings and the statement of transaction consolidated for simplicity. Here is what you must look out for.

a) Firstly, ensure that all the basic details pertaining to the demat account are correct and verify they are updated. This includes basic parameters like name, contact number, residence address, mobile number, email id, nominee details etc. If there are discrepancies, the DP must be intimated urgently.

b) Tally your demat transaction and demat holding statement with the underlying data flows or transaction stack. For instance, you can check the demat account statement with the contract notes issues on a daily basis and also on the basis of the ledger account furnished by the trading account. Each security that is bought or sold or which has a corporate action must be reflected in the transaction statement and also in the holding statement.

c) Verify that all the corporate actions are reflected properly in the demat transaction or account statement. For instance, corporate actions like dividends (interim and final), bonus shares issued with the ratio, rights applied for, buyback of shares, stock splits and scheme of arrangement be verified that credits are received within stipulated time.

d) Understand the demat balance or demat account holdings in a more nuanced manner. It is not just about holdings but about free holdings. In the demat holding statement, the overall holdings in securities are segregated into various categories. There is the ultimate free balance, which is available for sale. The statement also shows the lock-in balance of shares due to private placement, pledged shares, shares under lien, shares under dispute etc. The free balance is normally the net figure and represents the liquidity or your leeway to transact in the markets.

e) Let us now turn to the demat holdings statement, which provides a complete and comprehensive list of all the shares and securities held. These securities include mutual funds, ETFs, gold bonds, government bonds closed ended funds etc. The demat holdings statement is a statement of ownership and hence only assets are reflected here. The F&O transactions or intraday trades do not impact your demat account but they only stay in the trading account. The summary of Demat holdings shows the final outcome of the consolidated picture of different credits and debits to Demat account as well as the net credit balance along with flow in the period.

f) How do demat credits happen and what triggers such demat credits? There are a number of ways you can get credit into your demat account. For instance, you can get credit of share on allotment of IPOs. Demat credits also arise when you buy shares in the secondary market and take delivery on T+1 day (the new rolling settlement order). Demat credits can also occur from corporate actions like rights issues, bonus issues, stock split etc. In addition, you get demat credits on account of getting shares as a gift or because you got shares by transmission or by off market transfer of shares.

g) Finally, let us look at what triggers debits to the demat account. The most common trigger for debit to the demat account is the sale of shares through the trading account. However, you can also gift out shares or transfer out shares through off-market transfers. In addition, transfer out of shares also happen due to buyback of shares or sale of pledged shares, when loan is not repaid on time or additional collateral not brought in as requested by the broker.

MONITOR THE DEMAT ACCOUNT STATEMENTS

The demat account statement is an important tool to track your demat flows and holdings. The bare minimum you must do is to closely monitor your demat account statement. If you find debits or transaction not authorized by you, bring it to the notice of DP and broker immediately. If need be escalate to regulators. Also, once you buy or sell shares, it must reflect by T+1. These are basic monitoring checks.

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