How to Open a Demat Account in India: Documents Required and Charges
If you want to start trading, you need to know how to open a Demat account. A Demat or dematerialised account makes holding securities and shares easy for investors. It is just like a bank savings account, only here you can store your shares. Through a Demat account, you can have access to your shares at any time of the day, anywhere.
This blog provides a step-by-step guide to opening a Demat account, the documents required, charges and fees, and more. Read on!
How to Open a Demat Account?
You can open a Demat account at your convenience; the entire process takes a maximum of 10 to 15 minutes. Here is the step-by-step guide on how to open a Demat account:
- Step 1: Select a Depository Participant
Decide on a depository participant with whom you want to open a Demat account. When making your choice, check if their services and fees are compatible with your criteria. - Step 2: Fill in the Primary Details
Fill up a Demat account opening form on the depository participant’s website. Provide your name, phone number, email address and PAN Card details. - Step 3: Provide Bank Details
Provide your bank account number, account type and IFSC code to link your Demat account with your bank account. This will also allow you to receive any dividend payments directly in your bank account. - Step 4: Upload the Documents Required
Upload soft copies of the documents to provide proof of address and identity. - Step 5: Identity Verification
Since this whole process is digitised, you can complete this step by yourself at home. You will either be asked to record a short video of yourself reading out the details provided or you will be asked to click a picture of yourself and upload it on their portal. - Step 6: Provide e-Signature
Most depository participants provide the facility of signing your application digitally through the process of e-Aadhaar verification. - Step 7: Submit the Application
Once you have performed all the formalities, submit your application form, and your Demat account will be created shortly.
Documents Required to Open a Demat Account
For a hassle-free experience, make sure you have all the documents mentioned below along with you during the opening process of the Demat account:
- Address Proof: Driver’s license, registered lease agreement, electricity bill, phone bill, passport, etc.
- Identity Proof: Voter card, Aadhaar card, pan card, driving license, etc.
- Bank Account Proof: Bank passbook or account statement.
- Tax and Salary: Tax receipt and payslips.
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Demat Account Opening Charges
The depository participants levy multiple charges and fees for maintaining your Demat account. Some of these charges are recurring, and some are one-time. Some investors might need clarification to comprehend all these applicable charges.
Here are particulars of some charges in tabular format for easier understanding:
| Types of Charges | Amount (Including GST) |
| Account Opening Fee | Rs.300 – Rs.900 |
| Annual Maintenance Charges | Rs.0 (for the 1st Year), Rs.300 – Rs.900 2nd year onwards |
| Dematerialisation of Share Certificates | Rs.17.7 (per certificate) |
| Rematerialisation of Share Certificates | Rs.17.7 |
| Conversion of Mutual Fund Units | Nil |
| Reconversion of Mutual Fund Units into Statement of Account | Nil |
| Destatementisation | Nil |
| Redemption/Restatementisation | Nil |
| Postal charges | Rs.47.20 (per request) |
| Transaction Fees | Rs.1.50 |
| Custodian Fees | Rs.1 |
Why Do You Need to Open a Demat Account?
Given below are a few reasons why you need to open a Demat account:
- Digital storage of shares reduces the risk of loss of documents as it acts as a permanent record of shares.
- People can apply for various bank loans by pledging the securities maintained in their Demat account as collaterals.
- A Demat account eliminates chances of forgery and impersonation.
- An online Demat account enables investors to easily convert their shares into electronic form and vice versa depending on the situation. The only thing that investors need to do is provide their Depository Participants with the required instructions.
- A Demat account enables investors to receive corporate benefits easily, i.e. dividends, refunds or interests provided by companies, which are automatically credited to investors’ accounts.
- People can easily access Demat accounts and engage in investing, trading and monitoring from various devices such as computers, smartphones, laptops and tablets.
Where Can You Open a Demat Account?
Opening a Demat account is easy! You can open it with a DP (Depository Participant) which is responsible for safely storing financial assets like mutual funds, stocks and bonds. You can open a Demat account online by visiting the official website of the depository participant or you can visit their office to do the needful. You can also open a Demat account in your nearest bank branch.
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Things to Remember before Opening a Demat Account
There are four must-know points about opening a Demat account to keep in mind to avoid future discrepancies. Let’s check them out:
- There are certain charges like maintenance fees, conversion charges, transaction costs and others that your DP may levy. This varies from one DP to another. Check such charges beforehand.
- Check whether your DP is a full-service broker or a discount broker.
- A Demat account allows you to add a nominee. So, determine who will be your nominee. It will be the person to whom DP will transfer your investment to your nominee in case of an unfortunate event.
- The software used for running a Demat account is critical to consider before opening a new Demat account. Choose one that has a user-friendly interface and is easily understandable.
Final Word
Follow the opening process of the Demat account carefully to effectively trade in financial instruments, like stocks and bonds. It will make the process effortless, and you could buy or sell securities using the electronic mode. Now that you know how to open a Demat account, go ahead and choose a Depository Participant and take the first step in your trading journey.
However, to start investing, you do not need a Demat account. With Navi Mutual Fund, you can start SIP with just Rs.10, and get exposure to international markets and diverse funds. Download the Navi app to get started!
FAQs
Ans: As per the Securities and Exchange Board of India (SEBI), the stock market regulator, it is compulsory to open a Demat account for this purpose. However, if you’re looking to trade in futures and options, you may not open a Demat account.
Ans: Under the Depository Act of 1996, SEBI has made it mandatory to dematerialise physical certificates to carry out trading. This is mainly because now all shares are available in electronic form. So it is better to deal in a common mode for convenience.
Ans: After you have opened an account with your preferred depository participant, you can buy or sell shares online by providing your details to it. Also, after purchasing the shares, convey the information to your broker so that they can re-credit your account.
Ans: A debit transaction fee is charged at the time of debit of securities. In other words, holders pay it whenever they withdraw shares. It may vary, but some brokers charge a fee of Rs. 9.50 per transaction. In contrast, some charge 1% of the transaction amount.
Ans: There are two types of Demat accounts — Normal Demat account and BSDA Demat account. The latter was introduced to benefit account holders by reducing maintenance costs. So, those investors whose investment amount is not substantial can choose to open a BSDA Demat account.
Ans: Nowadays, some banks and DPs charge nominal or no opening charges for Demat accounts. But this was not the case earlier as banks would charge an amount between ₹700 to ₹900 as Demat account opening charges.
Ans: Yes, there are two types of Demat accounts that NRIs (Non-Resident Indians) can open. These are Non-Resident External or NRE Demat accounts and Non-Resident Ordinary or NRO Demat accounts.
The former is an entirely repatriable Demat account allowing NRIs to buy and sell stocks, bonds and mutual funds in India. To trade and invest in futures, options, stocks, NRIs can open an NRO Demat Account.
Ans: If you submit physical documents of PAN Card, identity and address proof, opening a Demat account will not take more than 3 days of time. Remember that opening a Demat account online is cost-effective, convenient and a quicker process.
Ans: Yes, an individual can open multiple Demat accounts but he/she has to abide by certain guidelines. For instance, you cannot open more than one Demat account with one Depository Participant or the same broker. There is no limit on the number of Demat accounts a person can open with one PAN.
Ans: Yes, a Demat account can be transferred from one broker to another but the broker gets to decide the mode of transfer. While some have set in place an online procedure, others ask their clients to follow an offline procedure.
For offline Demat account transfers, forms are available in the broker’s office. On the other hand, for online Demat account transfers, forms are available on CDSL’s website.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
