Invest Wisely with a Demat Account: Benefits, Features, Charges, and Types
What is Demat Account and How it Works?
Have you come across people who still hold physical share certificates that their parents or grandparents purchased and now their heirs struggle to get them transferred or sold? There was a time when investing in stock markets meant visiting a broker and filling in lengthy physical forms.
Buying and selling shares involved exchanging physical share certificates, long transit time and physical safekeep.The market regulator SEBI, over the years, has introduced many initiatives and reforms to make it simpler and easier for anyone to invest in stock markets. Introducing a demat account is one of them.
A demat account or dematerialised account is an electronic account that holds financial securities of different kinds e.g. shares, bonds, debentures, mutual funds etc.
It is mandatory to have a demat account to transact in shares, bonds and other securities traded in stock markets. When you buy a security it is credited to your demat account and when you sell, the security is debited from your account.
You can open a demat account with a SEBI registered broker, bank or financial institution. A demat account is opened with a trading account which enables you to buy or sell shares online. A demat account is also in converting your securities from physical form into electronic mode.
Rematerialising is also facilitated through demat accounts via depository participants.
Advantages of Opening a Demat Account
A demat account offers many benefits to investors, let’s have a look.
Convenience: You can open a demat account online or with simple documentation within a day or two. With a demat account, you can monitor your securities online. There is no need to visit your broker or check any physical statement to monitor your holdings, at the click of a button you can buy or sell securities.
Cost Saving: Since demat account opening and transaction process is online, there are no handling or transit charges involved, hence demat account is cost effective compared to the time when the stock investment and transaction process was offline. Many brokers offer zero account opening fee for demat accounts.
Safety: With physical shares investors faced theft and safety risk. The physical shares are prone to wear and tear, loss, damage, theft etc, a demat account holds securities safe for several years without any risk. Demat accounts are regulated by SEBI and respective depositories, giving investors complete peace of mind.
Single Repository: You can hold different types of securities e.g. shares, bonds, mutual funds, ETFs, IPO subscriptions etc in a single demat account. This makes record keeping and tracking the portfolio easy anytime anywhere.
Speed: Transactions in online mode are swift, the settlements are real time and there is no delay in credit or debit of securities in your demat account. Demat enables fast and seamless transactions in stock markets.
Anytime Access: You can be anywhere in the world and you can check your holdings, portfolio value or transact with your demat and trading account. There is no need to contact your broker or physically visit any office to manage your portfolio.
Most Common Terms Used in a Demat Account:
In India, there are two depositories under SEBI’s regulation - NSDL (National Securities and Depository and CDSL (Central Depository Services Limited). When you open an account your demat is maintained with one of the two depositories.
Generally brokers offering trading accounts are registered with one or both depositories, thus offering trading and demat accounts.
Features of Demat Account
Things You Should Know Before Opening a Demat Account
Who is eligible to open a demat account?
Individual
- Resident Individual
- NRIs
- Minors (with parents or guardian)
Non - Individual
- Companies/Corporates
- Trusts
- Banks
- Mutual Funds
- Partnership Firms
- Limited Liability Partnership
- Societies
Demat Account Age Limit
PAN Card
What documents are required to open a demat account?
Proof of Identity
Proof of Address
Proof of Income
Types of charges when opening an Demat account
Factors to consider when choosing a broker to open a demat account
- AMC Charges: AMC charges vary from broker to broker. Some brokers offer free demat accounts, while others charge a monthly or annual fee.
- Brokerage Charges: Brokerage charges are the fees that you pay to the broker for each trade that you make. Brokerage charges also vary from broker to broker.
- Customer Service: It is important to go with a broker that offers good customer service. You should be able to get in touch with a customer service representative if you have any questions or problems, especially when you are a new investor.
- Trading Platform: The trading platform is the software that you use to trade stocks. It is important to choose a broker with a trading platform that you are comfortable with.
- These days brokerage platforms use advanced technology to enable features and applications that help you make smart trading decisions like options strategy builder, pre-defined options strategies, basket order, MTF at attractive interest rates etc.
Conclusion
There are statutory documents required to be submitted e.g. PAN card copy, identity and address proof, income document and passport size photograph. Online broking platforms now offer e-kyc and completely paperless demat account opening process. Open demat account online with zero account opening fee.
FAQs
What are the types of demat accounts?
What are the charges for opening a DEMAT account? Is it free?
Can NRIs open a demat account?
Is nomination facility available in a demat account?
Can I open multiple demat accounts?
Can demat account be opened jointly?
Is demat account compulsory to apply to an IPO in India?
Can I hold mutual funds in a demat account?
Can we withdraw money from a demat account?
What are the fees and charges for opening an account with Rupeezy?
- Zero demat account opening charge
- Competitive brokerage structure
- Zero brokerage on equity intraday trading
- MTF PayLater Facility at one of the best interest rates in the industry
- Advanced trading features like Basket Order, e-IPO, Reports & Analytics, Options Chain, Trade through charts, TradingView TV Terminal, Options strategy builder at zero cost!
What is the time taken to open a demat account online?
What do you mean by dematerialization?
What is the difference between demat and trading account?
Do I have to pay for using the platforms?
How to open a demat and trading account?
You can open an online demat account in a jiffy these days without even filling a physical form. Online trading platforms help you open a completely paperless demat and trading account within a day. You need to sign up, upload digital copies of your identity documents like Adhaar, PAN, address proof and a canceled cheque.
SEBI has facilitated online account opening through e-authentication. You need to submit income proof to activate F&O trading. You can also visit the branch office of a SEBI registered broker/sub-broker, fill a form, submit documents and open an account.
Select a broker that offers good services at reasonable charges. Many online platforms offer trading facilities in multiple segments and offer discounts and special offers on various services. Rupeezy offers online demat and trading account with zero demat account opening charge. Visit rupeezy.in to know more.
How to Open a demat account with Rupeezy?
- Go to Open a Demat Account & fill in your details.
- Upload your PAN, Aadhaar copy
- Add your Bank Details.
- Complete e-verification process.
- Sign agreement and documents digitally.
- Submit your application.
- Upon activation, log into your account with the User id and password.
- Start investing and trading.
What are the charges in Rupeezy for Call and Trade?
Get FREE call & trade experience with us! Unlike other brokers who charge for this service, we offer ZERO fees for call & trade, prioritizing an exceptional customer experience. Your needs matter to us, and that's why there are 0 charges for call & trade. Join us for a seamless and cost-free trading experience today!
Which Demat account is best in India?
There are many entities that offer demat accounts in India. These are banks, traditional brokers, online platforms etc. Before choosing a platform, consider the fixed charges like AMC, recurring charges like brokerage, platform features, platform feedback and ratings, interface etc.
These days online platforms offer advanced trading features like Basket Order, Options Strategy Builder, Trading Directly from Charts etc. Rupeezy offers a free demat account, paperless account opening and advanced trading features at zero cost.
What are AMC Charges with Rupeezy?
AMC, short for Demat Account Maintenance Charges, are the fees that you pay to your Depository Participant (DP) or brokerage firm to maintain your Demat account. These charges cater to the operational costs incurred by the DP in maintaining your account and providing you services throughout the year.
The fee varies from one DP to another. Rupeezy charges a nominal MMC or Monthly Maintenance Charge of Rs 25 per month.
Are AMC charges compulsory?
Yes, AMC charges are typically compulsory for all Demat account holders. These fees cover the costs incurred by the DP or broker in maintaining your Demat account and providing services.
Does Rupeezy offer free AMC in Demat Accounts?
Some brokerage firms offer zero AMC for demat accounts as part of their promotional campaigns to attract new customers. These offers can come with certain conditions, like a minimum number of transactions or maintaining a particular account balance.
So while it is possible to have an AMC-free Demat account, be sure to understand the terms and conditions before you sign up. Rupeezy charges a nominal Monthly Maintenance Charge (MMC) of Rs 25 per month. Check Rupeezy’s detailed charge structure.