A Demat account holds your shares and other securities in dematerialised form. A trading account is used for placing buy and sell orders online. Therefore, having both these accounts is important to invest seamlessly in the stock market.
The demat charges include account opening fee, transaction charges, custodian fee, and annual maintenance charges. Account opening fee is mostly waived-off by brokers these days. Many brokers also waive off AMC (Annual Maintenance Charges) for the first year. The custodian fee is a small fee charged by the depositories to protect your securities whereas a nominal charge is associated with every demat transaction.
How to select a broker to create a demat account?
Go through these details before selecting a broker to open a demat account with:
Compare the brokerage
Full-service brokers charge a percentage of the trade volume as a brokerage. Discount brokers charge a flat-free irrespective of the trade volume.
The brokerage associated with full-service brokers is higher because they offer advisory services and add-on services whereas discount brokers only provide the basic demat services. However, even discount brokers provide a seamless trading platform and additional services like MTF (Margin Trade Funding) these days. Therefore, go through the service list and brokerage carefully before choosing a broker.
Get an idea about the UI through user reviews
A smooth UI that allows you to navigate through the investment options quickly can elevate your trading experience to a whole new level. To get an insight about the UI (User Interface), you can go through the reviews posted by users on independent app platforms and sites.
Know about the support services
Choose a broker with a competent support team that offers 24/7 access to support services via email, call, online chat, etc. It would help you to get resolution to the technical glitches, demat charges, and other issues that you may face while using a demat account.
Credibility of the broker
Analysing the credibility of the broker is also equally important as you want to provide the utmost safety to your investments. Choose a broker who has years of experience and a solid reputation in the stock market.
How to create a demat account?
Follow these steps to understand how to create a demat account online:
Visit the broker’s website
Visit the broker’s website with whom you are planning to open demat account. Find the application form, open it, and fill all the relevant details correctly.
Submit the application form & documents
Once you have filled the application form, you can submit it online along with the required documents.
Attend the online verification round via video conference
It is not mandatory to attend the verification round personally as many brokers allow you to complete this round online through video conference.
Read the contract papers before signing them
Once the documents are verified, you will be asked to sign the contract papers. Go through these documents carefully to understand the roles and duties of both investor and the demat service provider. It is possible to sign contracts digitally by uploading your digital signature online.
Obtain the BO ID on your registered email address
Upon completing all the aforementioned procedures, your BO (Beneficiary Owner) ID will be sent on your registered email address. This 16-digit ID is your demat account that you will need to access your demat account.
Which documents are required to open a demat account?
Submitting a PAN card is mandatory to open a demat account. Along with that you need to keep the following documents ready before opening a demat account:
- Voter’s ID, Aadhaar card, PAN card, passport, driving licence, or any other government approved ID that validates your identity
- Ration card, electricity bills, telephone bills, property tax receipts, passport, bank passbook, voter’s ID, or Aadhaar card to validate your address
- Photocopy of the Income Tax Return (ITR), recent salary slip, bank A/C statement of the current bank, or cancelled personalised cheque to verify your bank details and income