If you want to enter the Indian stock market and desire to buy some shares then you need to have a Best Demat account. Shares and securities are held electronically in a Demat account instead of the shareholder taking physical control of certificates. A Demat account is opened by the investor while registering with an investment broker (or sub-broker). The Demat account number is quoted for every transaction to allow electronic resolution of trades to take place. Every investor should have an Online trading Demat account for the reason of transacting shares.
In simple words to understand Demat Account, if you have some money, and you want to put it in the bank and for that, you need to have a bank account to keep your money, same as a Demat account is where your shares or securities are kept in electronic form. It is an account where you can store your shares. When you buy shares, that would take place with the help of trading account and then stored in your Demat account. If you wish to sell, they would be taken back from your Demat account to your trading account and sold in open stock markets at BSE or NSE or any other stock exchanges. It also reflects the importance of Demat and Trading Account in India.
Comparison between the Demat and Trading Account in India
A Trading account is an account with which you can place orders on the stock exchange. For buying and selling stocks in the stock market, one must have a trading account.
When an order is placed on the Indian stock exchange and the respective stocks are allocated, they are stored in the digital format in a Demat Account. Demat is extended to “Dematerialized Account” that has the stocks held in electronic form and not in any material form.
What are the documents required for opening a Demat Account?
Documents required for opening a Demat Account
- Passport size photos
- Residence Proof – Any one of Photo Ration Card / Photo Driving License with DOB / Passport copy / Electricity bill / Telephone bill
- Identity Proof – Any one of Passport copy / Photo Driving License with DOB / Voters ID Card / PAN Card / Photo Ration Card PAN card
How to open Demat Account online?
To hold your equities/shares and to commence investing in the Indian share market, firstly you need to open your Demat account. Select the best Demat Account that suits you. Here are several steps to open your Demat Account in India:
Choose a Depository Participant (DP): Go for a Depository Participant (DP) you would like to open your Demat account with; this thing will serve up as the mediator between you and the depository. Depository Participants can be banks, brokers or online investment platforms.
Submit your KYC (Know Your Client) Documents: Submit filled KYC form with passport size photographs, your PAN card, and other photocopied required documents.
- Address Proof
- Pan Card
- Recent Passport sized Photographs
At this time, you will be given the option to name someone as your nominee. They will be allocated with the legal responsibility of your shares if some mishap occurs. The option of one’s nominee can be changed, if required in the future, by refilling the same form.
The KYC form also has the Depository Participant-Investor agreement which includes the terms of the agreement, charges, rules and regulations you will incur whilst holding a Demat account. This form also includes the rights of the investor and duties of the Depository Participants.
Perform In-Person Verification: An In-Person Verification may be conceded out by a person from your DP’s firm to make sure that the information given to you in the form is genuine.
Obtain Beneficiary Owner Identity (BOID) Number: Once your application has been processed and your DP has facilitated the opening of your account, that will give you a Beneficiary Owner Identity (BOID), a unique account number that you can use during future transactions and to the right to use your account.
Any of you can easily open a Demat account to trade in share market. There are various online share brokers with whom you can comfortably open your Demat account and can simply enjoy the online share trading in the Indian share market.
Demat Account is necessary to hold shares/stocks and with the help of Best Demat and Trading Account, traders can easily trade in the share market. Four main types of charges rise on the Demat Account which is given below:
- Account opening charges
- Annual Maintenance Charges (AMC)
- Custodian Charges
- Transaction Charges
Account opening charges – It is the charge given by the traders for opening the new trading account. To easily trade in the stock/share market, Demat account is mandatory. So Investors should make efforts to open the Best Demat account. It is the place where shares of the trader’s stores electronically.
Annual Maintenance Charges (AMC) – Annual Maintenance Charges is the charges taken by the online stock brokers to store the share of the investors for its future trade. Different stockbrokers may have different annual maintenance charges for its customers.
Custodian Charges – It is the amount of brokerage or other financial institution fees that clients have to pay to hold their securities, thereby Custodian minimize the customer’s threat of loss or theft of the share and securities and making them accessible for sale with the brokerage firm if asked by the client.
This fee is charged on the monthly basis and it depends upon the volume of securities (international securities identification numbers – ISIN) detained in the account. It normally varies between Rs. 0.5 to Rs. 1 per ISIN per month.
Depository Participants will not allege custody charges for ISIN on which the companies have paid one-time custody charges to the depository. The majority of the main companies have paid it and so there is no custodian charge to be paid by the retail investor.
Transaction Charges – Transaction costs are fees charged by financial companies or stock broking companies for the buy and sell of the shares.
How does an online Demat Account work?
When investors purchase or sell securities with the help of the broker or another financial intermediary, the intermediary charges a commission or fee for providing this service.
These are costs to the client that usually includes two components:
- The basic costs charged by the mediator
- The spread, or differential, between the price paid by the broker for the security and the price at which he is selling it.
To illustrate, let suppose Mr. Roy buy 100 shares of ABC stock from his stockbroker. He pays $200 for the shares at $2 per share. Stockbroker originally purchased the shares for a total of $180, incurring a $20 spread charged to MR. Roy. In addition, Stockbroker charges a base $20 brokerage commission. Mr. Roy pays stockbroker a total of $220 even though the actual cost of the shares was $180.
But compared to brokerage charges, maintaining a Demat account is very economical and most of the investor would pay the very nominal amount for the same. But a brokerage cost is a different thing. Brokerage cost could make your mind up whether you end up as a winner or loser in the share/stock market.
With the arrival of technology and easiness of data management complex businesses have become more convenient and controlled. This rebellion saw the development of a number of small investors. To open an account in a bank, one can open an account with the Depository Service providers. These accounts are called Demat accounts. By the rules of FEMA, Non-Resident Indians have an opportunity to invest in Indian share markets. Demat accounts play a most important role to NRI clients while investing in the Indian stock market. With the help of the Demat account, NRI’s (Non-Residential Indians) investments in shares are held electronically. Customers can change the shares/stocks if any held in physical form into electronic form and credit the same to Demat account.
Features of NRI Demat Account –
Non-Resident Indians can easily hold a Demat account with Indian banks and there are a small number of features of such Demat accounts when NRIs will come across while opening a Demat account.
Types of account: There are two types of accounts based on the nature of investments made on the shares.
- Repatriated Demat Account
- Non-Repatriated Demat Account
If the shares buy through investment amounts that can be repatriated, they are to be held in a particular Demat account. Correspondingly, shares purchased from non-repatriable funds are to be held in separate Demat accounts.
Investment through Demat: Non-Resident Indians are allowed to make their investments through Demat accounts in Portfolio Investment schemes in India. These schemes permit NRIs to buy securities and shares/stocks from stock market and units of mutual funds and every record associated with these purchases can be held in dematerialized arrangement through the account.
BOID (Beneficiary owner identification number): Beneficiary owner identification number is offered to account holders along with a password. Each and every one transaction of shares between account holders and brokers/DPs can be completed through the internet. The contract note plays a major role in such transactions and it is vital for an account holder to be attentive of transaction method in Demat account.
Joint holding & supplementary facilities: An NRI Demat account can have joint holders; joint holders should be people of India irrespective of the resident status. Nomination facility is also accessible to NRI (Non-Residential Indians) Demat accounts.
Procedure and Documents required opening a Demat account for NRI –
The application form to open a Demat account can be downloaded and filled completely. The following set of documents is to be checked by Indian embassy before they are produced by the financial institute.
- Personalized cheque or (cheque leaf along with Bank Statement or Bank Passbook)
- Passport Copy (Copy of Name, Address and Photo pages)
- Visa Copy (If Passport is issued in India or work permit of UAE)
- PIS (Portfolio Investment Scheme) authorization
Apart from these, you can offer any combination of the following documents as proof of identity, address, sign and bank proof as well.
- Electricity bill (Not more than 2 months old)
- Bank Passbook/ Bank Statement
- Leave and License Agreement
- Telephone bill (not more than 2 months old)
- Banker’s confirmation (from a Schedule commercial bank only)
- Driving license (Name, Address and photo pages)
Joint holders would need a set of all documents mentioned above. The signature of the nominee is required by the bank if there is any nominee to the account. The set of documents mentioned above are in general and there may be more documents required for depending on the bank.
Some of the major bank branches ICICI Direct, HDFC, Kotak Securities etc. also have the subsidiaries which provide the Best Demat and Trading Account facilities. They allow you to invest in various market segments like equities, currency, FNO and commodity market in India. Some of the investors pursue investing with such stock broking divisions of prominent banks, as they think their monetary value is safer within the ambit of such Demat Account providers.
NRI Demat providing banks in India –
- HDFC Bank Limited
- HSBC Bank
- Citi bank
- ICICI etc.
Top Demat Account in India, holds its top position by the virtue of certain factors. The Lowest brokerage charges contribute to such factors. As the Indian stock broker providing the Lowest brokerage and High Exposures presents the Best Demat Account in India. In the List of online trading Discount brokers, Wisdom Capital emerged as the Best Demat account provider justifying the above-stated factor. So for the beginners, it can be the good choice as per its Freedom plans.The other discount brokers in India with similar plans are Zerodha, 5Paisa.com, SAS Online etc.
Best Demat Account as per Lowest Brokerage Charges
When you are all set to onboard as a trader for investing in various market segments, you can choose the broker offering minimal brokerage rate to diminish your outlay. Demat Accounts justifying the above statement are Wisdom Capital, UPSTOX, Zerodha, 5 Paisa etc.
Top Demat Account as per the Best Trading Platform in India
Upward movement in the profit graph during the bull phase is liked by all traders. To have the effective trade experience with easy access coupled with updated stock tips and recommendations, Select the stockbroker availing Best Trading Platform. Zerodha, Wisdom Capital, Upstox are among the ones following the above statement.
Best Demat Account as per the Trending Mobile App
The Online brokers today are technically fine, as they make good efforts in making trading convenient for the investors. The mobile App trading is a good example of the same. The brokers are mentioned in the list described later.
Leading Demat Account in India as per High Leverage value
Leverage is an investment strategy of using the borrowed money to increase the potential return. Sometimes the position set by stock exchanges is so high that trader requires the margin to execute the trade order. Nowadays, the trending high leverage broker in India is Wisdom Capital. Some other Demat Account providers offering the similar plans are ICICI Direct, Trade Smart Online, UPSTOX etc.
Best Demat Accounts in India
Top stock brokers offering Best Demat Account:
List of Discount Brokers providing Best Demat Account in India
- Wisdom Capital
- SAS Online
- 5 Paisa
List of Full-Service Brokers providing Best Demat Account in India
- ICICI Direct
- Kotak Securities
- Angel Broking
- Motilal Oswal
What are the Benefits of Demat Account?
- The whole procedure opens up a world of chances for Non-Resident Indians to create investments in Indian share market in an efficient method.
- The whole process minimizes the physical documentation process that exists in share trading and holding shares/stocks.
- The transaction of shares is reasonably fast and the mode is simpler.
- Counterfeit, loss of physical documents, late delivery and other troubles are reduced in this procedure.
- The concept and consequently the related hassles of odd lots has been efficiently abolished as in the Demat form the market lot for any securities is one share only.