WHAT DESIGNERS NEED TO KNOW

Designers need to master a wide variety of skills and concepts. What follows is an overview of the nine categories of investigation you can find in most design programs. Not every category is taught in every undergraduate curriculum-the time is just too short. Each program emphasizes certain subjects and teaches others more broadly.

Designers atwork shows different ways to practice graphic design and serves as a counterpoint to this overview of education. A practitioner does not develop expertise in all aspects of design but selects a special area of interest in a particular kind of communication problem. One designer may love print media and therefore prefer magazine or book design. Another may have a great interest in type design or want to design exhibits. Design education is a preparation for practice, so if a certain kind of design appeals to you, think about what kind of learning supports it. Flip back and forth between this section and Designers at work as you consider how your education can prepare you for a particular kind of design practice.

Perception, visual organization, aesthetics

Designers think about visual forms and how they are put together to convey meaning. These forms are a kind of visual language. Points, lines, planes, volumes, spaces, areas, textures and colors, as well as how they are used to create symmetry, proportion and rhythm, are basic aspects of the designer's visual vocabulary.

Form and structure analyzes positive and negative forms.

Form analysis examines how two- and three-dimensional forms create a feeling of space.

Structure and system consider various ways to create order in space. For example, grid system is one way to create a sense of harmony and order.

Visual phenomena explores the intuitive response of the audience to form, color and texture.

Composition and visual framing involves deciding what to include in an image and how elements of an image contrast with one another.

Visual abstraction identifies the key features of an object and simplifies them.

Unity of form looks at relationships among design elements, such as proportion, scale, symmetry and contrast.

Visualizing techniques

Designers need to be familiar with basic tools, techniques and processes to produce images, sketches, models and finished work. They need to use tools with skill and sensitivity. Students learn photography, various kinds of drawing, model making and diagramming as ways to develop their ideas.

Photography, although often regarded as a “truthful” rendering of the world, may convey realism or emotion, as demonstrated in these examples.

Visual translation is the process by which the essence of an image is abstracted in a drawing.

Model making explores three-dimensional forms in order to plan and prototype an exhibition or a new product.

Drawing teaches the student to look and to see as well as to put down meaningful marks on paper.

Materials, tools and technology

Technology always plays a role in the process of designing and in communicating information visually. Designers create ideas in two and three dimensions using various materials such as paper and film. They use tools such as computers, camera and airbrushes and work with the technologies of letterpress and video. The designer's selection of materials and tools can change what an image looks like and what it says.

Blending ideas and production techniques

Designers create solutions to design problems. A part of every solution includes communicating how to get the job done technically: how to get the poster printed or how to create the mechanicals for the package design. The designer must learn to clearly express and transmit ideas and instructions as well as to receive and evaluate feedback. To this end, the student learns to specify technical instructions; to write objectives, briefs and reports; to present ideas verbally, graphically and with audiovisual support; and to listen carefully.

Message and content

Designers address communication problems. They interpret ideas and represent them with images and words. Skill in thinking about and creating meaning with images, type and symbols is essential. The ability to put a persuasive or informational perspective on an idea is also important.

Semantics is the study of how people understand words and images.

Visual metaphor studies symbols. For example, a torch can signal the abstract ideas of victory or freedom.

Persuasion and information examines how to create a memorable visual statement.

Image, symbol and sign explores the ways in which graphic marks, such as handprint or a target, communicate.

Methods, planning and management

These Bill of Rights broadsides demonstrate design planning. Seminars with legal experts helped the students study the judicial processes of the Supreme Court and specific legal decisions. Students then did additional research and experimented with typography, historical imagery and the “re-presentation” of photojournalism to determine how to present their ideas visually to a high school audience. The broadsides communicate difficult concepts by identifying specific elements in the Bill of Rights and the landmark Supreme Court decisions that anchor them.

Design methodology provides a path for the designer in the search for solutions to communication problems.

Design evaluation judges reaction to a design through a testing procedure. For example, observing a child's reaction to a book might answer the questions: Is the book easy to read? Is it appealing? Is meaning communicated effectively?

Design management involves an overview of the process of design, including managing creativity, costs, schedules and quality.

History and criticism

Designers are part of a visual culture that includes art, architecture and design. It is not only interesting but also important to know what has gone before. Designers study the past for inspiration and to understand its themes, styles and technical developments. It is possible to trace how certain ideas, developments in the art and technological advances have influenced particular designers. Criticism helps the designer evaluate the usefulness or beauty of a design.

Design theory

Design theory explores the principles underlying what communicates and why. For example, why does one color communicate happiness to you and fear to someone from another society? What are the ways culture affects the designer and the audience? Design theory seeks to find the unifying principles-which might be intuitive or deliberate-that are the basis for all graphic design. It is where education and practice meet.

Graphic design subjects

Letterform investigations look at the forms of logotypes and letterform found in everyday objects and in typefaces.

Typography examines text messages created for information or expression.

Type and image explores the relationship between the two and the power of each to communicate in relation to the other. Type also becomes images in some applications.

Design systems serve to unify appearance and coordinate production. Visual characteristics, such as the 45-degree angle, the square on its tip, the color and the torn paper, are played out over many pieces to guarantee an easily recognizable relationship.

Symbol and identity systems seek to specifically identify an object for the public and to use that identity in all communications.

Information design clarifies data, helps orient the viewer and guides the search for what is important by establishing a clear visual hierarchy. These qualities are particularly useful in computer interface design.

Diagrams, graphs and maps distill information to make it easily understood. For instance, a three-dimensional form can show the relationships of solid, liquid and gas.

Publication and print design explores the overall structure-pacing, sequence and hierarchy of information-as well as the particular use of text and image found, for example, in the editorial material of magazines and newspapers.

Book design is concerned with both the exterior package of the book (the cover) and its interior contents (the pages).

Poster design combines words and images in a powerful public announcement, whether for an art exhibit, an election campaign, or a circus.

Film and video graphics organize ideas dynamically in time. They communicate by using images in sequence with narration, music and text.

Computer graphics explores the digital world of highly manipulated imagery.

Package design serves multiple function: to protect, display, dispense, store and announce the identity and qualities of a product.

Environmental signage and graphics helps people find their way through streets and buildings and gives clues to the nature of the environment people find themselves in.

Exhibition and display design seeks to involve an audience in exploring an idea in space and time through the use of graphics, objects, text, sound effects and participatory opportunities.

Advertising design is calculated to attract attention, make a compelling pitch to an audience and create a desire for the product.

Graphic Design: A Career Guide and Education Directory
Edited by Sharon Helmer Poggenpohl
Copyright 1993
The American Institute of Graphic Arts

HOW DO DESIGN PROGRAMS DIFFER?

There are hundreds of design programs in the United States, and their content and philosophies vary widely. This gives you a lot of options, but is also means that identifying the particular programs best suited to your needs and interests can be difficult. The following information can help you understand and compare your options.

Graphic design programs are found in a number of different kinds of institutions and in different areas within these institutions. You need to look carefully at each program; its curriculum, the ratio of hands-on design work to academic classes in design or other disciplines, and the type of degree awarded. You also need to assess your short-term and long-term objectives, the kind of college experience you want, and the kinds of career opportunities available after graduation.

Generally, four kinds of institutions of higher learning can prepare you for a career in graphic design. A university will typically offer either a four-year undergraduate program leading to a BS (bachelor of science) or BA (bachelor of arts) degree. Many universities also offer a graduate degree, the MFA (master of fine arts). Within a university, graphic design is likely to be a major in the College of Fine Arts; smaller universities might offer graphic design as a concentration within a fine arts major. Four-year colleges offer only undergraduate programs leading to a BA. Typically, graphic design courses are part of the offerings in a fine arts major.

Art schools, often called schools of design or institutes of design, offer a more intensive design education than colleges or universities. On the undergraduate level, four-year programs lead to a BFA (bachelor of fine arts). In an art school, you will usually find a comprehensive graphic design major in its own department. Some art schools also offer the MFA graduate degree.

Two-year programs leading to an AA (associate degree) are available from community colleges. These programs are often designed to allow students to transfer credits to a college, university or art school program. Check requirements carefully to leave your options open.

Because there are exceptions to these typical programs, you should look carefully at the curriculum and degree requirements of any program you are considering. Always make sure that you understand how the program prepares you both for employment and for additional study.

Particularly important is the number of graphic design courses available versus the quantity of humanities courses (or, in some cases, science courses) available or required. This ratio can be very important to your post-graduate opportunities.

For example, in most college or university programs, students receive a broad liberal arts education. Because their design program may not be as comprehensive as art school programs, college students may wish to supplement their education with internships or concentrated summer programs in graphic design, and then get a graduate design degree. However, because designers work with diverse clients whose messages might involve content from abstract art to zoology, a broad exposure to ideas and a well-rounded education are often an advantage. By contrast, art schools offer fewer humanities and social studies courses than colleges or universities, but students are intensively prepared for current job opportunities.

An associate degree program in a community college gives students the technical skills to become production artists who prepare art for printing. Graduates might work as assistants in the design or printing industry. These programs give students immediately marketable skills, but advancement in the field may be difficult without additional study.

Graphic Design: A Career Guide and Education Directory
Edited by Sharon Helmer Poggenpohl

AIGA update:
There exists another type of two-year program that goes beyond the tech-school education in both intent and result. This type of program is rigorous and likened to a graduate school in intensity and in the fact that most of those who enroll already have four-year liberal arts degrees from reputable universities and colleges. Employing respected industry leaders as instructors, these schools offer intensive, comprehensive design education, with an emphasis on the process of design, especially as it is applied to branding. These schools take an interdisciplinary approach that parallels a real industry representation across all practices including design, advertising, graphic design, media architecture, photography and illustration. Graduates of these schools are prepared to create a single brand experience across all media environments and are capable of moving easily between the various media. The structure of these programs parallels the industry, wherein designers, art directors, writers, media architects, illustrators, and photographers serve as immediate resources for one another. These schools allow for individual attention, the nurturing of each student's particular talents and strengths, and a great degree of self-expression and experimentation.

who becomes a graphic designer

WHO BECOMES A DESIGNER?

There are probably as many kinds of designers as there are kinds of design, so how do you know whether a career in design might be right for you? First, you might take a look at the clusters of characteristics often shared by designers and see if you find yourself reflected there. Begin with the three most common traits designers share: interest in the visual world, curiosity about communication in all its forms and creativity.

Designers tend to be skilled “lookers.” They take in the world both visually and conceptually. They scrutinize color and texture, they look at relationships between things and they find the repetition and rhythm in what they see. Conceptually, designers look at an idea from all sides, searching for an approach with a twist-one that goes beyond the ordinary. These habits of the eye and mind feed their creativity. For designers, the world of objects and ideas becomes an immense playground from which they emerge with fresh ideas and images.

I am an information architect. Architect in my definition doesn't mean style but a kind of rigor in thinking. Information means understanding-and my only passion is to make things that interest me understandable. -Richard Saul Wurman

My early studio exposure to a design studio made me aware of the design profession as an opportunity to apply analytical abilities to an interest in the fine arts. Graduate design programs made it possible for me to delve more deeply into the aspects of design I found personally interesting. Since then, the nature of the design profession, which constantly draws the designer into a wide range of subjects and problems, has continued to interest me in each new project. It's been this opportunity to satisfy personal interests while earning a living that has made design my long-term career choice. -Won Chung

I need to make things that connect in a meaningful, useful, evocative way to others, and I like to indulge in the sensuousness of the material world. I learned that I could use design not only to reach into myself and express my own feelings, but also to reach out to others with images and words that are well researched and thought out, condensed and transformed into a communication that could involve everyday folks in our shared public environment. -Sheila Levrant de Bretteville

I like the way words look, the way ideas can become things. I like the social, activist, practical and aesthetic aspect of design. -Laurie Haycock Makela

When I was a child I was obsessed with drawing. At the age of six, when I was confined to a bed for a year as a result of a childhood illness, I found that the only things that kept me busy were building cities out of clay and drawing. Obviously, the urge toward form-making was an important part of my makeup. -Milton Glaser

As a reflection of their creativity, designers often have an abundance of curiosity. They ask questions, delight in playing the devil's advocate and are often reluctant to accept someone else's habits or customs. Some say they are “off-center”-more self-directed than they are controlled by society or others. Designers also have intellectual curiosity: they want to understand how communication works, and they are not timid about trying out their ideas on their family and friends. They are interested in the visual interpretation of abstract ideas. They draw, they read, they experiment, they make things. They explore culture by participating in it, not only by doing things but also by observing the creative work of others, including attending concerts, seeing films, or just paying attention to life as it goes by. They soak up sensory experience and ideas.

Making things is second nature for designers. Somehow thinking something or saying something just isn't enough. Designers sense intuitively that the process of making something real engages the mind in a different and powerful way: forms and colors change; new ideas emerge. They like projects with definite beginnings, middles and endings because these kinds of projects are tied to development and achievements. Generally, designers dislike routine or maintenance activities. Starting something new and unknown challenges them.

Designers are attracted to things that perform a definite function-things that are useful and beautiful. They are interested in improving everyday life rather than creating art for museums. To designers, the limitations of design and communication are seen as challenges rather than as straightjackets.

As you have seen, there really is no exact, ideal, universal designer type. General characteristics-including creativity, openness to new ideas and a desire to explore the visual world-are more important than specific traits or qualities. Coming from a variety of backgrounds, from all ethnic groups and from locations as diverse as New York City, Great Plains States, Kansas and Tokyo, Japan, designers are different and seek to refine that difference as they appreciate the differences of others.

I became a graphic designer because my best skill, drawing, did not exercise the rest of my mind. -Colin Forbes

When I was growing up, I wanted to be an artist and an actress. This desire lasted until my second year of college, when I became attracted to design. I took my junior year at design school with the ideas of returning to my former college-but I never went back. My destiny was design. -Deborah Sussman

Graphic Design: A Career Guide and Education Directory
Edited by Sharon Helmer Poggenpohl
Copyright 1993
The American Institute of Graphic Arts

WHAT IS GRAPHIC DESIGN?

Suppose you want to announce or sell something, amuse or persuade someone, explain a complicated system or demonstrate a process. In other words, you have a message you want to communicate. How do you “send” it? You could tell people one by one or broadcast by radio or loudspeaker. That's verbal communication. But if you use any visual medium at all-if you make a poster; type a letter; create a business logo, a magazine ad, or an album cover; even make a computer printout-you are using a form of visual communication called graphic design.

Graphic designers work with drawn, painted, photographed, or computer-generated images (pictures), but they also design the letterforms that make up various typefaces found in movie credits and TV ads; in books, magazines, and menus; and even on computer screens. Designers create, choose, and organize these elements-typography, images, and the so-called “white space” around them-to communicate a message. Graphic design is a part of your daily life. From humble things like gum wrappers to huge things like billboards to the T-shirt you’re wearing, graphic design informs, persuades, organizes, stimulates, locates, identifies, attracts attention and provides pleasure.

Graphic design is a creative process that combines art and technology to communicate ideas. The designer works with a variety of communication tools in order to convey a message from a client to a particular audience. The main tools are image and typography.

Image-based design

Designers develop images to represent the ideas their clients want to communicate. Images can be incredibly powerful and compelling tools of communication, conveying not only information but also moods and emotions. People respond to images instinctively based on their personalities, associations, and previous experience. For example, you know that a chili pepper is hot, and this knowledge in combination with the image creates a visual pun.

In the case of image-based design, the images must carry the entire message; there are few if any words to help. These images may be photographic, painted, drawn, or graphically rendered in many different ways. Image-based design is employed when the designer determines that, in a particular case, a picture is indeed worth a thousand words.

Type-based design

In some cases, designers rely on words to convey a message, but they use words differently from the ways writers do. To designers, what the words look like is as important as their meaning. The visual forms, whether typography (communication designed by means of the printed word) or handmade lettering, perform many communication functions. They can arrest your attention on a poster, identify the product name on a package or a truck, and present running text as the typography in a book does. Designers are experts at presenting information in a visual form in print or on film, packaging, or signs.

When you look at an “ordinary” printed page of running text, what is involved in designing such a seemingly simple page? Think about what you would do if you were asked to redesign the page. Would you change the typeface or type size? Would you divide the text into two narrower columns? What about the margins and the spacing between the paragraphs and lines? Would you indent the paragraphs or begin them with decorative lettering? What other kinds of treatment might you give the page number? Would you change the boldface terms, perhaps using italic or underlining? What other changes might you consider, and how would they affect the way the reader reacts to the content? Designers evaluate the message and the audience for type-based design in order to make these kinds of decisions.

Image and type

Designers often combine images and typography to communicate a client's message to an audience. They explore the creative possibilities presented by words (typography) and images (photography, illustration, and fine art). It is up to the designer not only to find or create appropriate letterforms and images but also to establish the best balance between them.

Designers are the link between the client and the audience. On the one hand, a client is often too close to the message to understand various ways in which it can be presented. The audience, on the other hand, is often too broad to have any direct impact on how a communication is presented. What's more, it is usually difficult to make the audience a part of the creative process. Unlike client and audience, graphic designers learn how to construct a message and how to present it successfully. They work with the client to understand the content and the purpose of the message. They often collaborate with market researchers and other specialists to understand the nature of the audience. Once a design concept is chosen, the designers work with illustrators and photographers as well as with typesetters and printers or other production specialists to create the final design product.

Symbols, logos and logotypes

Symbols and logos are special, highly condensed information forms or identifiers. Symbols are abstract representation of a particular idea or identity. The CBS “eye” and the active “television” are symbolic forms, which we learn to recognize as representing a particular concept or company. Logotypes are corporate identifications based on a special typographical word treatment. Some identifiers are hybrid, or combinations of symbol and logotype. In order to create these identifiers, the designer must have a clear vision of the corporation or idea to be represented and of the audience to which the message is directed.

Graphic Design: A Career Guide and Education Directory
Edited by Sharon Helmer Poggenpohl
Copyright 1993
The American Institute of Graphic Arts

places we must see before it dissapears

Many of the world's most wondrous and beautiful destinations are in danger of being destroyed by a combination of environmental and social factors: a warming climate, pollution, strained resources, bulging populations, and booming tourist traffic. Below are some popular locations worth visiting before they disappear.

Glaciers, Glacier National Park

United States and Canada

Glacier National Park contains some of the most beautiful, primitive wilderness in the Rocky Mountains. There are more than 200 glacier-fed lakes, high peaks, sheer precipices, large forests, waterfalls, much wildlife, and a great variety of wildflowers. However, temperature fluctuations have caused glacier growth and depletion. Ten thousand years ago, the area of Glacier National Park was covered by ice up to one mile below sea level. The latest warm period has caused the number of glaciers to decrease from 150 in 1850 to 26 today. If current global warming trends continue, there will be no glaciers left in Glacier National Park by 2030.

Venice, Italy

With as many as 40 floods per year between March and September, Venice is slowly sinking at an estimated rate of 2.5 inches every 10 ten years. Venice, a city of beauty and charm, was built as a collection of 118 separate islands, relying entirely on a canal system of about 150 canals, mostly very narrow, crossed by some 400 bridges. A severe flood in December 2008 brought renewed attention to Venice's vulnerable state and imminent fate as an underwater city.

The Dead Sea

Border between Israel and the West Bank (W) and Jordan (E)

Known as one of the saltiest water bodies in the world and the lowest dry point on earth, the Dead Sea is fed by the Jordan River and a number of small streams. Because it is located in a very hot and dry region, the Dead Sea loses much water through evaporation, causing its level to fluctuate during the year. However, inflow to the Dead Sea has been greatly reduced by the increased use of the Jordan River by Israelis, Palestinians, and Jordanians, who have growing populations and increased agricultural needs, resulting in falling water levels. Currently, the Dead Sea recedes about three feet each year.

Mexico City, Mexico

In the past 100 years, Mexico City has sunk more than 30 feet. The original city was built on the site of a former lake—the Aztecs built the city on a series of aquatic platforms, but when the Spanish conquered the city, they drained the lake, causing it to sink. As the city population ballooned and the demand for water increased in the 20^th century, the government began pumping much of the city's supply out of the underground aquifer that once fed the lake, causing the city to sink further. No practical plan has been made for the future to provide the 22 million inhabitants of Mexico City with the water they need without destroying the city.

Taj Mahal

Agra, Uttar Pradesh state, India

A mausoleum in northern India on the Yamuna River, the Taj Mahal is considered one of the most beautiful buildings in the world and the finest example of the late style of Indian Islamic architecture. The Mughal emperor Shah Jahan ordered it built after the death of his favorite wife, Mumtaz Mahal. The building, which was completed between 1632 and 1638, is visited by three to four million tourists each year. The crowds and air pollution, however, have caused irreversible damage to the building's façade, prompting tourism officials to consider closing the historic site to the public.

Pyramids of Giza

Giza, Egypt

One of the original Seven Wonders of the Ancient World, the Pyramids of Giza, located outside modern Cairo, consist of three magnificent royal tombs guarded by a Sphinx. The Pyramids have been a heavily trafficked sightseeing area for centuries, but the pollution and magnitude of visitors has taken its toll on the ancient structures, which are not protected by Egyptian officials. Although camel and horseback tours are now banned from the site, the structures are still difficult to see through the crowds and vendors.

Little Green Street

London, United Kingdom

Located in the center of London, Little Green Street, is one of only a few surviving streets from Georgian England. Lined with about a dozen 18^th century homes, Little Green Street only stretches a city block in length, but has survived the Blitz in World War II and three centuries of construction. As a perfect example of Regency London, it has been featured in poetry, photo shoots, and music videos, but today it is threatened by construction. Although an attempt to acquire the property failed in 2008, developers' appeals continue, and the threat of Little Green Street's destruction looms ahead.

me

Demat account

Advantages of demat[edit]

A demat account also helps avoid problems typically associated with physical share certificates, for example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. Further, it eliminates the risks associated with forgery and due to damaged stock certificates. Demat account holders also avoid stamp duty (as against 0.5 per cent payable on physical shares) and filling up of transfer deeds.In India it is coming gradually.

Goal of Demats System[edit]

India adopted the Demat System for electronic storing, wherein shares and securities are represented and maintained electronically, thus eliminating the troubles associated with paper shares. After the introduction of the depository system by the Depository Act of 1996, the process for sales, purchases and transfers of shares became significantly easier and most of the risks associated with paper certificates were mitigated.

Demat benefits[edit]

The benefits of demat are enumerated^{[by whom?]} as follows:

• Easy and convenient way to hold securities
• Immediate transfer of securities
• No stamp duty on transfer of securities
• Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. are mostly eliminated)
• Reduced paperwork for transfer of securities
• Reduced transaction cost
• No "odd lot" problem: even one share can be sold
• Change in address recorded with a DP gets registered with all companies in which investor holds securities eliminating the need to correspond with each of them separately.
• Transmission of securities is done by DP, eliminating the need for notifying companies.
• Automatic credit into demat account for shares arising out of bonus/split, consolidation/merger, etc.
• A single demat account can hold investments in both equity and debt instruments.
• Traders can work from anywhere (e.g. even from home).

Benefit to the company

The depository system helps in reducing the cost of new issues due to lower printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors.

Benefit to the investor

The depository system reduces risks involved in holding physical certificates, e.g., loss, theft, mutilation, forgery, etc. It ensures transfer settlements and reduces delay in registration of shares. It ensures faster communication to investors. It helps avoid bad delivery problems due to signature differences, etc. It ensures faster payment on sale of shares. No stamp duty is paid on transfer of shares. It provides more acceptability and liquidity of securities.

Benefits to brokers

It reduces risks of delayed settlement. It ensures greater profit due to increase in volume of trading. It eliminates chances of forgery or bad delivery. It increases overall trading and profitability. It increases confidence in their investors.

Depository Participant (DP)[edit]

Main article: Depository participant

A depository (in simple terms) is an institution holding a pool of pre-verified shares held in electronic mode that offers efficient settlement of transactions. A Depository Participant (DP) is an intermediary between the investor and the depository. A DP is typically a financial organization like a bank, broker, financial yggyinstitution, or custodian acting as an agent of the depository to make its services available to the investors. Each DP is assigned a unique identification number known as DP-ID. As of March 2006, there were a total of 538 DPs registered with SEBI.

Demat conversion[edit]

Converting physical records of investments into electronic records is called "dematerialising" of securities. In order to dematerialise physical securities, investors must fill in a Demat Request Form (DRF), which is available with the DP and submit the same along with physical certificates. Every security has an ISIN (International Securities Identification Number). A separate DRF must be filled for each ISIN.

The complete process of dematerialisation is outlined below:

• The investor surrenders the certificates for dematerialisation to the DP.
• DP updates the account of the investor.

Demat options[edit]

There are many hundreds of Depository Participants (DPs) offering the Demat account facility in India as of September 2011. A comparison of the fees charged by different DPs is detailed below.

There are a few distinct advantages of having a bank as a DP. Having a Demat account with a bank DP, usually provides quick processing, accessibility, convenience, and online transaction capability to the investor. Generally, banks credit the Demat account with shares in case of purchase, or credit a savings account with the proceeds of a sale, on the third day. Banks are also advantageous because of the number of branches they have. Some banks give the option of opening a demat account in any branch, while others restrict themselves to a select set of branches. Some private banks also provide online access to the demat account. Hence, the investors can conveniently check online details of their holdings, transactions and status of requests through their bank's net-banking facility. A broker who acts as a DP may not be able to provide these services.

Fees involved[edit]

There are four major charges usually levied on a demat account: account opening fee, annual maintenance fee, custodian fee and transaction fee. Charges for all fees vary from DP to DP.

Account-opening fee[edit]

Depending on the DP, there may or may not be an opening account fee. Private banks, such as HDFC Bank and AXIS Bank, do not have one. However, players such as Kotak Securities,^[1] Sushil Finance, ICICI Bank, Globe Capital, Karvy Consultants and Bajaj Capital Limited do impose an opening fee. State Bank of India does not charge any account opening charge while other maintenance and transaction charges apply. Most players levy this when re-opening a demat account. However, the Stock Holding Corporation offers a lifetime account opening fee, which allows the investor to hold on to his/her demat account for a long period. The fee is also refundable.

Annual maintenance fee[edit]

This is also known as folio maintenance charges, and is generally levied in advance. as

Custodian fee[edit]

This fee is charged monthly and depends on the number of securities (i.e. ISINs) held in the account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month. DPs will not charge a custody fee for an ISIN on which the companies have paid one-time custody charges to the depository.

Transaction fee[edit]

The transaction fee is charged for crediting/debiting securities to and from the account on a monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank and ICICI Bank peg the fee to the transaction value, which is subject to a minimum amount. The fee also differs based on the kind of transaction (buying or selling). Some DPs charge only for debiting the securities, while others charge for both. Some DPs also charge the investor even if the instruction to buy/sell fails or is rejected. In addition, service tax is also charged by the DPs.

In addition to the other fees, the DP also charges a fee for converting the shares from the physical to the electronic form or vice-versa. This fee varies for both demat (physical-to-electronic) and remat (electronic-to-physical) requests. For demat transactions, some DPs charge a flat fee per request in addition to the variable fee per certificate, while others charge only the variable fee.

For instance, Stock Holding Corporation has charged Rs 25 as the request fee and Rs 3 per certificate as the variable fee. However, SBI has charged only the variable fee, as Rs 3 per certificate. Remat requests also have charges akin to that of demat. However, variable charges for remat are generally higher than demat.

Some of the additional features (usually offered by banks) are as follows. Some DPs offer a frequent-trader account, where they charge frequent traders at lower rates than the standard charges. Demat account holders are generally required to pay the DP an advance fee for each account that will be adjusted against the various service charges. The account holder needs to raise the balance when it falls below a certain amount prescribed by the DP. However, if the holders also hold a savings account with the DP, they can provide a debit authorisation to the DP for paying this charge. Finally, once choosing a DP, it would be prudent to keep all accounts with that DP, so that tracking of capital gainsliability is easier. This is because when calculating capital gains tax, the period of holding will be determined by the DP, and different DPs follow different methods. For instance, ICICI Bank uses the first in first out (FIFO) method to compute the period of holding. The proof of the cost of acquisition will be the contract note. The computation of capital gains is done account-wise.

Indian Banking System First, an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents to serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. An investor must have his/her PAN card in original at the time of opening of the account (mandate effective from April 1, 2006).

All applicants should carry original documents for verification by an authorized official of the depository participant, under his signature. Further, the investor has to sign an agreement with the DP in a depository prescribed standard format, which details rights and duties of investor and DP. DP should provide the investor with a copy of the agreement and schedule of charges for their future reference. The DP will open the account in the system and give an account number, which is also called BOID (Beneficiary Owner Identification number). The DP may revise the charges by giving 30 days notice in advance. SEBI has rationalised the cost structure for dematerialisation by removing account-opening charges, transaction charges for credit of securities, and custody charges vide circular dated January 28, 2005. Further, SEBI has vide circular dated November 9, 2005 advised that with effect from January 9, 2006, no charges shall be levied by a depository on DP and consequently, by a DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his account to another branch of the same DP or to another DP of the same depository or another depository, provided the BO Account(s) at transferee DP and at transferor DP are one and the same, i.e. identical in all respects.^[2] In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP should also be a joint account in the same sequence of ownership.

Disadvantages of Demat[edit]

• Trading in securities may become uncontrolled in case of dematerialized securities.
• It is incumbent upon the capital market regulator to keep a close watch on the trading in dematerialized securities and see to it that trading does not act as a detriment to investors.

• For dematerialized securities, the role of key market players such as stock-brokers needs to be supervised as they have the capability of manipulating the market.

• Multiple regulatory frameworks have to be conformed to, including the Depositories Act, Regulations and the various Bye-Laws of various depositories.

• Agreements are entered at various levels in the process of dematerialization. These may cause worries to the investor desirous of simplicity.

• There is no provision to close a demat account, which is having illiquid shares. The investor cannot close the account and he and his successors have to go on paying the charges to the participant, like annual folio charges etc.

• Most of the Indian investors are laymen and do not know the seriousness of not closing the dp account, after liquidating the holdings. Many DPs are going on charging dp charges to such dp accounts with nil holdings.

• For US persons, a demat account is subject to FBAR reporting

Transfer of Shares between DPs[edit]

To transfer shares, an investor has to fill one of two kinds of Depository Instruction Slip (DIS). The first check made is whether both Demat accounts are at the same depository. There are two depositories: (CDSL (Central Depository Securities Limited) and NSDL (National Securities Depository Limited)). If both demat accounts are not at the same depository, then an Inter Depository Slip (Inter DIS) has to be filled and submitted. Otherwise, an Intra Depository Slip (Intra DIS) has to be filled and submitted.

For example:

• If there is one Demat account with CDSL and the other Demat account with NSDL, then an Inter-DIS is needed. (In case the investor needs an Intra-DIS, the investor should check with the broker, since brokers usually issue an Intra-DIS).
• Now that the correct DIS has been determined, information pertaining to the transfer transaction has to be entered: scrip name, INE number, quantity in words and figures.
• Finally, the investor should submit that DIS to the broker with signatures.
• The transfer broker shall accept that DIS in duplicate and acknowledge receipt of DIS on duplicate copy.

The investor should submit the DIS when the market is open. Accordingly, date of submission of DIS and date of execution of DIS can be same or a difference of one day is also acceptable. The investor also has to pay the broker some charges for the transfer.

Security recommendations[edit]

A Depository Instruction (DIS) is almost like a cheque book, so it can be misused if issued blank. Hence, an investor should exercise sufficient caution while issuing a DIS slip. For example: an investor should deposit only a completely filled-in slip to the broker. Unfilled rows should be cancelled out so that they cannot be tampered with.