How to open Demat Account?
What is a Demat Account?
Every news on the rise or fall in the stock market arouses the interest of many. And the first step to take the plunge is to open a Demat Account. The number of Demat Accounts has seen a significant increase in the last year.
With the help of a Demat Account, investors can hold shares and securities such as Initial Public Offerings, Bonds, Government Securities, Mutual Fund units and Exchange-Traded Funds (ETFs) in an electronic format. A Demat Account is also called a dematerialised account.
Apart from assuring the security of the aforementioned financial investments, a Demat Account also facilitates ease of their maintenance and handling.
How Does a Demat Account Work?
A Demat Account can be opened with a Depository Participant (DP). The DP acts as an intermediary between you and the depository NSDL or Central Depository Services (India) Limited (CDSL).
You must fill out the necessary paperwork and open a Demat Account with the DP. Once the account is opened, you can transfer shares from your physical share certificate to your Demat Account. The shares are then stored electronically in the Demat Account, in a dematerialised form.
You can buy and sell Shares, Mutual Funds and other securities through the Demat Account. Once the trading is completed, the Shares are credited or debited to your Demat Account.
How to Open a Demat Account Online?
Step 1: You will first need to find a DP that offers Demat Accounts. Your bank, stockbroker or financial institution may offer this service.
Step 2: Once you have chosen a DP, you will need to complete an application form and submit it with the necessary documents. This includes identity and address proofs, such as a passport, driving licence, voter ID and utility bills.
Step 3: You will also need to submit other documents, such as your bank details, PAN card and a cancelled cheque.
Step 4: Once the documents are validated and your account is approved, the DP will activate your Demat Account.
HDFC Bank offers a quick, simple, paperless process to open a Demat Account. You can access several benefits with an HDFC Bank Demat Account, such as Relationship
Manager services, easy fund transfers, discounts and preferential pricing, low brokerage plans and much more.
Charges for Opening a Demat Account
· Account opening charges: The charges you pay for opening a Demat Account. This charge is usually a one-time fee and can range from ₹200 to ₹500, depending on the bank or broker.
· Custodian charges: The fees that you pay for the safekeeping of your securities. This charge is paid annually and can range from ₹500 to ₹1000.
· Annual maintenance charges: The fees that you pay to maintain your Demat Account. This charge is paid annually and can range from ₹200 to ₹500.
· Transaction charges: The fees you pay for each transaction. This charge is usually a flat fee and can range from ₹25 to ₹50, depending on the bank or broker.
· Depository charges: The charges you pay for the services provided by the depository (e.g. NSDL or CDSL). This charge is usually a flat fee and can range from ₹10 to ₹ 20.
· Brokerage charges: The fees you pay for the services provided by the broker. This charge is usually a percentage of the transaction value and can range from 0.25% to 0.50%.
All of these charges can vary from one bank or broker to another. Hence, it is important to compare the charges before opening a Demat Account. You must also remember that the charges can change over time.
Documents Required to Open a Demat Account at bank branch
1. Identity proof: Aadhaar card, PAN card, driving licence, voter ID, etc.
2. Address proof: Aadhaar card, driving licence, voter ID, passport, utility bills, etc.
3. Cancelled cheque: To link your bank account with the Demat Account
4. Photographs: Two passport-sized photographs
5. Signature proof: PAN card, bank account statement, etc.
6. PAN card: Mandatory for opening a Demat Account
Factors to Consider for Opening a Demat Account
1. Brokerage and fees: Research and compare the brokerage fees and other associated costs that come with a Demat Account.
2. Trading platforms: Investigate the trading platforms available with the broker. Make sure they offer the features and tools that you need.
3. Customer service: Check out the customer service offered by the broker. Make sure they have a good reputation for providing timely and helpful service.
4. Reputation: Do your due diligence and research the background and reputation of the broker. Look for customer reviews.
5. Security: Make sure the broker has a secure trading platform and that all your funds and personal data are kept safe.
6. Financial stability: Investigate the financial health of the broker. Make sure they are well-capitalised and able to meet their obligations.
7. Research tools: Ensure the broker provides the research tools and analysis that you need to make informed trading decisions.
A Demat Account is a great way to securely store and handle your financial investments. Before opening a Demat Account, it is important to research the broker and compare the associated costs and fees. Additionally, make sure you understand the security measures the broker has in place to protect your financial data and investments.
Are you looking to open Demat Account? Click here to get started! HDFC Bank DigiDemat Account offers you a safe, online, and seamless mode to keep track of your investments.