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How to Choose the Best Demat Account?

How to Choose the Best Demat Account?

Demat Account- When was it Introduced, and What is it?

The Securities and Exchange Board of India (SEBI) introduced a Demat or dematerialization account in 1996. The issuance and holding of shares and securities are stored in an electronic format- not as physical certificates. A Demat account is mandatory for investing or trading in the Indian stock market or securities.

Every depository participant (DP) must provide investors with a Basic Services Demat Account (BSDA). It enables retail investors to avail themselves of basic services at a minimal cost.

A Demat account functions in the same way as a normal bank account. When you buy stocks, they are credited to your Demat account. When they are sold, the Demat account is debited.

Demat accounts are maintained by two depositories in India, namely-

National Securities Depository Limited (NSDL) and Central Depositories Services Limited (CDSL). Every stockbroking firm in India is registered with either of these depositories.

Factors to be considered when Choosing the Best Demat Account in India

1. Ease of Opening an Account

Starting, one of the foremost considerations in choosing the best Demat account is the ease of opening an account. There are three options for Demat accounts available in India-

i)Regular Demat Account: Citizens in India generally use the regular Demat account. This allows them to hold shares and stocks electronically instead of dealing with a bulk of paperwork.

ii)Repatriable Demat Account: Such an account enables NRIs to invest in the Indian Share Market from anywhere in the world. However, they need an associated NRE (Non-resident External) account and have to strictly adhere to FEMA (Foreign Exchange Management Act) rules.

iii) Non-repatriable Demat Account: This account is also for NRIs but does not allow them to transfer funds abroad. This is because an associated NRO (Non-resident Ordinary) account is required in this regard.

Opening a Demat account has been simplified through e-verification and registration. You must submit your PAN/Adhaar, verify your bank details, and eSign the documents to start. To open an account online, trade must be carried out within two days and less than five days for offline mode.

2. Software and User Interface

Tech-smart solutions are an absolute must-have for the best Demat account. One of the features of some of the best Demat accounts for beginners is the presence of a software and mobile application that enables a smooth user interface and a seamless trading experience. A DP that smoothly links our trading account, Demat, and bank accounts are ideal.

A good trading platform- free of glitches- is a must-have for investors or traders. It allows a smooth trading experience and has the necessary market research and analysis tools, helping investors make informed decisions. Therefore, do not opt for the cheapest broker and minimum fees at the cost of a shabby trading platform and look for the best app for the Demat account.

3. Standard and Quality of Service Provided by the DP

When looking for the best Demat account, the need for a good DP cannot be emphasized enough. Some important points to consider in this regard are-

  • The time it takes for physical shares to get dematerialized
  • How prompt is the customer complaint redressal mechanism
  • Does it have claims pending with SEBI, NSDL, or CDSL?
  • Assistance in tracking the market
  • Efficiency in carrying out transactions

Both the quality of primary and ancillary services offered are important from an investor’s point of view.

4. Associated Charges

The different types of costs associated with a Demat account are as follows-

  • Opening Fees: This refers to the cost incurred in opening the Demat account. Today most DPs, banks, and brokers do not charge a fee when opening an account.
  • AMC (Annual Maintenance Charge): This is the amount billed annually, even if the account has remained idle during the year.
  • Charge for Physical statement: This is the charge levied for a physical copy indicating your Demat holdings and the transactions that have taken place.
  • DIS rejection charge: This is the penalty in the event of rejection of the DIS (Debit Instruction Slip).
  • Conversion Charges: DPs charge a certain amount for converting physical shares into electronic ones or simply dematerialization.

5. Data Analysis and Ancillary Services

In a digitalized world, the importance of data is paramount. The competition is fiercer, with customers now aware of the numerous options available. Therefore, financial institutions, banks, and depository participants have made it a point to go above and beyond informing investors about share prices and behaviour.

In a data-driven landscape, in-depth analysis of real-time valuation, Demat inflow and outflow, and market players provided by DPs is an essential add-on service. Having a holistic understanding of share prices and their link with external factors- economic, social, and political, is preferred by investors. Such important value additions should be considered while choosing the best Demat account in India.

The Endnote

After looking into the abovementioned aspects, zero in on a Demat account that checks all the boxes above. The assistance of good DPs, transaction security, quick and easy complaint redressal, and user-friendly interface all play a vital role in determining your success. Registering with a trusted name like Upstox allows for a seamless experience and allows you to trade with confidence.

How to Choose the Best Demat Account


How to open a Demat account online?

The following steps are involved in opening a Demat account online-

Step 1: Submit the Demat account opening form after filling in the requisite details.

Step 2: Upload the documents like PAN/Adhaar and the bank details.

Step 3: E-sign the documents and complete the e-verification process.

You can open a trading and Demat account online with Upstox.

Is Annual Maintenance Charge (AMC) mandatory, and what happens on non-payment?

Yes, the annual maintenance charge is the amount billed annually to pay the depository participant for the service provided. It is a compulsory levy and charged even if no transactions occurred during a given year.

In case of non-payment, you will receive reminders via e-mail, SMS, and phone calls. If you still fail to make the payment, your account is dormant or inactive. You may reactive it after payment of the AMC due.

Who is eligible for opening a Demat account?

Anybody can invest in the stock market,t and there is no minimum age to get started. All you need is a PAN card, to begin with, and online stock trading. An account can be opened by a minor’s parents or legal guardian until the minor attains the age of majority. After that, the individual will have to submit his KYC documents, and his details get transferred to a new account.

Click here to know whether you are eligible to open a Demat account online.

What parameters should you consider to choose the best Demat account?

To choose the best Demat account, you can look into the following aspects-

  • DP charges and brokerage
  • Tools for market research and analysis
  • Portfolio management services
  • Types of accounts offered
  • The target audience it caters to (i.e., is it beginner friendly or not)

For instance, Upstox offers easy accessibility, quick onboarding, and smooth functioning and helps you make informed decisions using multiple features.