What is Demat Account?
A dematerialized account is an electronic account that holds all your securities i.e. stocks, shares, bonds etc in an electronic form. In this Article we shares complete procedure of how to open demat account
You need to go through a depository such as CDSL or NSDL to open an account. You don’t need to hold on to certificates of physical sharing..
Demat account functions as a bank account, where your cash is held, and bank passbook entries are made. Securities are also kept in an electronic form in a comparable manner and are appropriately debited or credited.
Without balance of stocks, a demat account can be opened. In your account, you can have a zero balance.
Why Demat Account Required– Investing in stocks in physical form is very lengthy procedure, lot of paperwork required and risk of getting fake stocks is high.
A demat account holds the certificates of financial instruments like stocks, bonds, securities, mutual funds and exchange-traded funds (ETFs) So, it involves the process of converting physical shares into electronic form and credited to investor’s demat account.
There are two Depositories in India –
By whom the shares are kept by the different respondents in the depository. When purchasing or selling stocks, DP credits or debiting your account as appropriate.
Documents required to open demat Account
Proof of Identity
- PAN Card
- UID (Aadhaar)
- Driving Licence
- Voter Identity Card
- Any document notified by the central government
Proof of address
- UID (Aadhaar)
- Voter Identity Card
- State issues Driving License
- Utility bill provider (electricity, telephone, post-paid
mobile phone, piped gas, water bill).
- Bank account statement.
Proof of bank
You will need to provide evidence of the bank account you want to link to your account. If you have a cancelled cheque that has your name on it then you can send it to your broker along with the account opening forms. Or, if you’re opting for the online account opening process you can upload the cancelled cheque with the bank’s IFSC code to the online portal.
In a bank proof
- Your name
- Bank’s IFSC Code
Some brokers allow you to submit your bank statement which has your name, MICR and bank’s IFSC code or the front page of your passbook as long as it has all the above details clearly visible.
Fields in the demat account form:
- Type of account
- Account holder information
- Second holder details (If required)
- Guardian details
- Bank details (Account no. , account holder’s name etc.)
- Financial details (PAN number)
- Declaration (Holder’s name and signature)
Demat account charges
Demat Account charges can be classified into 3 types:
- Account Opening Fees
- Annual Maintenance Fee
- Transaction Fees
Account Opening Fees is the fees your broker will collect for the whole process of registering your demat account. Not all brokers charge this fee, so you’re likely to come across a few where you would not be paying any such fees. Some internet brokers may pay a nominal account opening fee for trading across various sections.
Annual Maintenance Fee It is a fees that your broker collects to keep your account active throughout the year. While these charges are usually nominal and in range between (Rs 300 – 800 per year), many brokers in the industry have now charge zero fees here as well.
Transaction Fees refers to the fees that your broker will charge for shifting your stocks or other securities to and from your dematerialized account (debiting and crediting). This can vary wildly across brokers depending on their target audience.
How to open Demat Account with Any Broker Online
There are two types of brokers to open a Demat Account.
Full-Service Brokers– Full-service brokers who provide advisory and trading facilities in stocks, commodities, and currencies. These brokers pay commissions on the complete quantity of trade customers executed in percentage terms. Full-service brokers operate out of many offices and branches across the country, which clients can visit in case of any query. Angel Broking, ICICIDirect, Kotak Security, HDFC Security, Sharekhan, Motilal Oswal, are some of the full-service brokers.
Discount Brokers– Discount brokers just provide a trading platform to investors but no advisory. This brokers offer low brokerage, high speed and the state-of-the-art execution platform for trading in stocks, commodities and currency derivatives. Discount brokers have created themselves in the market over the past few years and are competing with full-service brokers who have long been in the sector. Zerodha, Upstox, 5 paisa, Pro Stocks are some of the discount brokers.
- STEP 1 – Firstly choose a broker or Depository Participant (DP) with whom you would like to open a Demat Account.
- STEP 2- Fill an account opening form for this you required passport-sized photograph along with photocopies of the required documents stating proof of address and identity. For verification carry original document also.
- STEP 3- After processing of the application, you will get an account number/ client ID from the DP for access demat account
- Step 4- Demat account holder, required to pay an annual maintenance fee for maintenance of account It is vary for every broker. Broker charged a transaction fee for conducting buying/selling transaction via the Demat Account as we discuss in demat account charges
IF YOU WANT TO OPEN DEMAT ACCOUNT WITH UPSTOX THAN CONTACT US.