Demat Account : How to Open Demat Account in India

Demat is an acronym for Dematerialized Account. A demat account is a depository account that provides the holder with facilities to trade securities without physically moving them, like shares, stocks, bonds etc. In other words, demat accounts are used to track the ownership of securities.

In India, demat accounts can be opened by either individuals or corporates and there are two types of accounts- Transferable and Non-transferable.

In a transferable demat account, one can deposit shares from a non-transferable demat account or vice versa.

Non-transferable accounts can only hold shares of a single company and cannot be used to hold shares from another company's transferable D-Mart account.

Initial public offerings.

 Bonds.

 Government securities.

Mutual Fund.

Exchange Traded Fund.

HOW TO OPEN A DEMAT ACCOUNT?

First we should decide on a depository account that is any authorized bank.

Submit filled account opening form and KYC form.

There is a need for a signature of yours on the agreement which includes rules, regulations and rights.

 NOTE:

Don’t hesitate to read each and every point before doing a signature.

After submitting it will be signed by an Authorized person.

Don’t forget to take a copy of the same form for future purpose.

Read More: Demat Account : Everything about demat account fees and charges

DOCUMENTS REQUIRED:

Know your customer(KYC)

PAN card

 Bank statement(last 3 months)

 Proof of address

Income tax return or salary

Bank crossed cheque

Aadhaar card

 Passport size photographs

 NOTE:

Demat account doesn’t require any minimum balance of shares.

 You can hold more than one D-Mart account linked to a single PAN.

 When an account is opened you will receive a unique client ID.

TYPES OF DEMAT ACCOUNTS:

 Regular D-Mart account.

 Repatriable D-Mart account.

Non-Repatriable D-Mart account.

Above are the D-Mart accounts available in India

Regular Demat Account:

Traders who are Indian citizens and reside in India use this type of account.

This is provided by depositories such as NSDL and CDSL through intermediaries.

 Charges in this regular Demat account vary as per volume held.

Repatriable Demat Account

By opening a repatriable D-Mart account ,an NRI can make investments in the Indian share market quickly from any part of the world.

Documents required to open this account should be attested at the Indians Embassy of the country where NRI resides.

NON-Repatriable Demat Account :

 This is also for NON-resident Indians.

  But these funds cannot be transferred Abroad.

 If a person already has a D-Mart account before gaining the status of NRL,  he/she should convert it into NRO category.

 NRO stands for Non -Resident ordinary rupee.

BENEFITS OF DEMAT ACCOUNT:

Eliminates the risk of paper based shared certificates .Because we should do a lot of paperwork and bundles of papers were used  to transfer shares.

There may be any type of theft, forgery, loss etc. If we have our shares electronically it would be safe and secure.

Monitoring would be easy .No one will stop buying shares. If we buy Numerous all can seen monitored online is pledge .

These Demat accounts are safe and each one will be governed by concerned authority and depositories.

Demat Account opening charges:

Earlier, the banks used to charge anything between Rs 700 to 900 as opening charges. Despite the opening charges, the prospective investors were flocking towards them for opening Demat account because of the well-integrated banking network and investment services and easy stock market investment through the three-in-one account, that encompass trading as well as a bank account.

However, nowadays the Demat a/c opening charges levied by the Depository Participant (DP) are either nominal or Nil. Brokerage firms and banks make it a point to offer it as an incentive for opening two-in-one accounts or three-in-one accounts.

Demat Account custodian fee (Safety charges):

Most of the Depository Participants (DPs) do pay the custodian fees as one-time charges to the depository, and a number of them do not levy any custodian fees from the investor for maintaining a Demat a/c.

DPs who charge custodian fees do it on a monthly basis. These charges depend on the number of securities that are held in a Demat (otherwise known as a dematerialised) account.

The charges normally are in the range between Rs 0.5 and Rs 1 for each ISIN (International Securities Identification Number).

Demat account annual maintenance charges

Like other charges, some of which are waived off, a Demat a/c holder will have to pay an annual maintenance charge (AMC) to the Depository Participant (DP) for the services rendered. Also known as folio maintenance charges, these charges are to be paid in advance and typically ranges from Rs 300 to 900 per annum. Some DPs may also charge quarterly fees, while others may charge a lifetime fee of over Rs. 2000 and above.

Demat account transaction charges:

The transactions that are happening in your Demat a/cis with the ultimate aim of making a profit out of it. Your DP, for its services in helping you earn money, charges a nominal fee as transaction charges. You will have to pay this per transaction fee each time financial securities comes in or goes out from your Demat account.