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How to Open a Demat Account ?

How to Open a Demat Account ?

A Demat account is an abbreviation for a Dematerialisation account. Having a Demat account simplifies the electronic form of holding shares and securities. Notably, the purpose of this account is to convert share certificates from physical to electronic form, allowing account holders greater accessibility.

A trader can retain, transfer, and transact securities using a Demat account without dealing with real securities. Trading has consequently evolved into a much safer, faster, and more effective way to execute trades and store assets.

Many brokers allow free Demat account opening. Select the broker that suits you the best

Procedure to Open a Demat Account

Broker selection is the first and foremost step in the Demat Account Opening process. The broker can be chosen depending on several factors, such as customer service, fees charged by different brokerage houses, simplicity of the user interface, etc.

Documents Needed for Opening a Demat Account

The following documents are required to open a Demat account:-

  • ID Proof
  • Resident Proof
  • PAN
  • Passport size photos

Demat Account Opening Process

There are two ways to open a Demat account- online and the traditional offline way.

Opening Demat Account Online

The easiest method to open a Demat Account is online at ease and convenience. You can sign up online and complete the registration process easily. The only essential requirement is having an Aadhar Card along with your mobile number linked to it.

  • To open a Demat account, go to the website.
  • After entering your basic information, click Sign Up.
  • If you are asked to provide your documents, keep scanned copies of your most recent bank statement, Aadhaar, PAN, cancelled cheques, and PAN on hand.
  • To verify your identity, enter your Aadhaar details and the one-time password (OTP) you receive on the linked mobile number.
  • It ought to finish there. Your Demat account needs to be set up at this point.

Process of opening a traditional/offline account

  • You will be given an account opening form when you visit your broker's office or meet with one of its employees.
  • You must complete this form and attach proof of identity and proof of address. Photocopies of relevant documents can be used to submit these proofs.
  • After that, you'll be required to sign an agreement with your broker. This document will outline your responsibilities as a trader/investor, as well as the responsibilities of your brokerage firms. Make a copy of this document for future reference.
  • After your broker has verified and processed your documents, you will be assigned an account number, much like a bank account number. This is known as the Beneficial Owner number.

Charges of A Demat Account

You can encounter several different account costs when looking for your ideal broker and after completing the registration procedure. The three types of charges include-

  • Account Opening Charges
  • Annual Maintenance Charges
  • Transaction Charges

These charges have been discussed below in detail-

Account Opening Charges

Account opening fees are the costs your broker will charge you for opening your Demat account in its entirety. You might come across a few brokers where you wouldn't pay such fees because not all brokers impose this price.

Some online brokers may charge a small opening fee to open an account and trade on several segments.

Annual Maintainance Charges

Your broker will often charge you an annual maintenance fee to keep your account open throughout the year. Even though these fees are typically small (between 300 and 800 rupees each year), many brokers in the sector now charge no fees.

There is fierce rivalry in the brokerage market due to the drive to offer traders the best rates and services.

Transaction Charges

Transaction Fees are the fees your broker will charge you when you move your stocks or other securities to and from your dematerialized account (by debiting and crediting them). Depending on their target market, brokers' definitions of this can differ greatly.

Fees Charged by Upstox

Account Opening Fees- INR 150 plus tax

Annual Maintenance Fees- INR 150 plus tax

With Transaction Fees that are considerably less expensive than those charged by huge traditional brokerage firms (INR 13+5.5+tax, where INR 5.5 represents CDSL's depository fees), Upstox continues to keep prices down.

Points to Remember at the Time of Opening a Demat Account

Most people know how to open a Demat account online and complete the necessary processes. However, a few things to remember when setting up a Demat account.

  • Link your Demat account to your trading account: Since the Demat account is useless without it, it is recommended that you link it to your trading account. A depository participant like India Infoline, which provides Demat and Trading accounts under one roof, is an alternative you could consider.
  • Watch out for all the Demat account fees: Read the charges statement before submitting your Demat account opening form (opening and AMC charges). Knowing the costs upfront helps to guarantee that you are getting the best bargain possible and that there are no unexpected fees.
  • Enter your information accurately: Before sending in your Demat account opening form, remember to review the information to ensure there are no errors or blank fields. Your application could be rejected if there are mistakes.
  • Set forward your nomination: Having a nominee for your Demat account is crucial because it simplifies future share transfers.

Conclusion

Registering a Demat account online is the most crucial step in your desire to invest in the stock market and generate higher returns than other investment tools. Setting up a Demat Account is a very simple process.

It can be registered both through the online method and through physical form submission. Keep ready all the documents and get your Demat Account opened in the simplest way possible.

FAQs

What are the factors based on which the brokers can be chosen?

The broker can be chosen depending on several factors, such as customer service, fees charged by different brokerage houses, simplicity of the user interface, etc.

What are the documents required for opening a Demat Account?

The different documents required for getting a Demat Account opened include:-

  • ID Proof
  • Resident Proof 
  • PAN
  • Passport size photos

What are the different types of charges levied by stock brokers?

The three types of charges levied by stock brokers include-

  • Account Opening Charges - Account opening fees are the costs your broker will charge you for opening your Demat account in its entirety
  • Annual Maintenance Charges - Your broker will often charge you an annual maintenance fee to keep your account open throughout the year.
  • Transaction Charges- Transaction Fees are the fees your broker will charge you when you move your stocks or other securities to and from your dematerialized account.

What are the facilities available in the Demat Account?

Dematerialization and Rematerialization of securities- Transforming securities into different forms is an easy process through a Demat Account. You can provide your DP (depository participant) with the necessary instructions for dematerialization or getting the physical share certificates changed into digital form. On the other hand, you can request the conversion of electronic securities back to their original physical form, depending on your needs.

Access with multiple options- Because a Demat Account operates electronically, it can be accessed through multiple media. We can use a smartphone, computer, or other portable devices. 

Accessibility of Corporate Actions- You may be able to take benefit of perks related to holding securities by having a Demat Account. Every Demat account holder automatically receives access to any interest, dividends, or refunds that a corporation offers its investors. The shareholders' Demat Accounts are also updated with information regarding company actions like bonus shares, etc.

What are the Depositories in India through which we can open a Demat Account?

NSDL (National Securities Depository Services Ltd.) and CDSL (Central Depository Services Ltd.) are the Depositories in India through which we can open Demat Account

Can one buy shares without Demat Account?

No, you cannot purchase shares without a Demat account. This is due to an order issued by the Securities and Exchange Board of India (SEBI) in 1996 that stated all investors must have a Demat account to transact in stocks or shares.

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