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How to Choose the Best Demat Account in India?

10 Aug 2021 0 COMMENT

Every investor understands the importance of opening a Demat account for holding shares, bonds government securities, units of mutual funds, and exchange-traded funds (ETFs) in a safe place and trading them at the click of a button. However, with so many institutions offering Demat account services, how do you know which one will be the right choice for you? Here, we talk about what you should consider when opening a Demat account.

What is a Demat Account?

Having a Demat or dematerialised account is necessary to start investing in and trading shares and securities. Dematerialisation is how physical shares and securities are converted into digital forms to make buying, holding, and selling of shares easier and faster.

A Demat account lets you trade, hold, and monitor shares and securities in a quick, cost-efficient manner without you needing to worry about fraud, forgery, or damage.

Additional read: ICICI Direct- trading shares online using Demat account

How can I get a Demat account?

Opening a Demat account these days is easy. All you must do is choose a Depository Participant, fill out and submit the Demat Account Opening Form, and undertake the KYC verification procedure. You will receive a Beneficial Owner Identification Number (BO ID) once your application has been approved, using which you can access your Demat account.

Types of Demat Accounts

Demat accounts can be of 4 types.

  1. Single holding Demat account: This account is opened and managed by a single person. They will be the sole account holder and be singly exposed to all the associated profits and risks.

  2. Joint Demat account: A Joint Demat account allows for a maximum of three people to hold an account together. The profits and risks are shared by all the account holders jointly.

  3. Corporate Demat account: A business or commercial setup can open this type of Demat account, which will operate in the organization’s name.

  4. NRI Demat account: There are Demat accounts available for NRIs as well. There are two types:

  • Repatriable account: Repatriable Demat accounts for NRIs who want to transfer their wealth overseas.
  • Non-repatriable account: serve NRIs but consist of an NRO (Non-resident Ordinary) bank account linked to the Demat account. You cannot transfer funds abroad using this account.

How to Choose the Best Demat Account?

You might wonder why you need to choose from Demat accounts since it is just a plain account to hold your shares. However, there are many specific factors to consider before opening your Demat account:

   1. Demat account charges:

Compare the various fees (annual maintenance fee, opening account fee, transaction fee) and find a pocket-friendly bank or DP that doesn’t have too many extra charges.

   2. Demat account opening procedure:

Many DPs these days have moved their account opening procedure online, so you can have your Demat account set up and ready to trade within seconds.

   3. Brokerage charges:

Opt for a depository that doesn't charge brokerage for interday trading (buying and selling shares on a single day).

Also Read: Everything You Need to Know About Demat Account Fees and Charges

   4. Investment services:

Look for a three-in-one service, where one account triples as a savings, Demat, and trading account. Having all three accounts in one place simplifies the entire trading process.

   5. User interface of the trading platform:

The account platform should be seamless and easy to use even for new investors and traders. This ensures you can buy or sell at the right time without feeling lost.

Ease of account opening

Given the modern-day hectic work schedules finding time to visit the bank or stockbroker and dedicate a few hours to account opening seems like a daunting task. Hence, the ease of account opening the DP assures is an important consideration. The DP should allow you to open, access, and manage your Demat Account online. This allows you to open and manage your investment portfolio from anywhere at any time. You can complete your Know Your Customer (KYC) requirement online as well.

The Securities and Exchange Board of India (SEBI) has laid down a uniform code of conduct to be followed for account opening. In exception to the main steps, the account opening procedure differs for every DP. Reach out to your DP’s customer representative or check their website for specific details of account opening.

Conclusion

Opening a Demat account is easy, especially when you know exactly what to look for. Make sure you opt for a reliable institution that offers best-in-class services and is a trusted name.

Disclaimer

ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  Investments in securities market are subject to market risks, read all the related documents carefully before investing. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents are solely for informational and educational purpose.