How do dividends get credited to a demat account? Here's a step-by-step guide
Declaration of Dividend: When a company announces dividends, it specifies a record date. Investors who hold shares of that company on or before the record date are eligible to receive dividends. Verification of Eligible Shareholders: The company or its registrar verifies the shareholding records as of the record date to identify eligible shareholders who are entitled to receive dividends.
Calculation of Dividend Amount: The dividend amount per share is calculated based on various factors such as the company's profits, dividend policy, and the number of shares held by the investor. Dividend Crediting Process: Once the dividend is calculated, the company transfers the total dividend amount to the designated bank account of the Depository Participant (DP) or Registrar and Transfer Agent (RTA). Crediting to Demat Accounts: The DP or RTA then processes the dividend payments and credits the respective amounts into the bank accounts linked to the investors' demat accounts.
Notification to Investors: Investors receive notifications or statements from their DPs or RTAs informing them about the dividend credit. The statement details the dividend amount credited to their bank account, along with any applicable tax deductions. Reflecting in Demat Account Statements: The credited dividend amount is reflected in the investor's demat account statement, providing a record of the dividend income received.
It's important to ensure that your bank account details are correctly linked to your demat account to facilitate the seamless crediting of dividends. Investors should stay informed about dividend declarations and record dates to ensure they meet the eligibility criteria for receiving dividends. It allows you to anticipate when to expect
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