The Demat full form stands for a Dematerialised Account. Are you trying to open a Demat account? and have no idea how to do it? Demat account has been a necessity since the introduction of online trading. Over the years, steps to open a Demat account have been made simple and convenient. If you are willing to open a Demat account to begin your trading journey, the good news is that it will require minimal effort from your end. Hence, most individuals can begin their trading journey without additional trouble.
Before opening a Demat account, you must develop an extensive understanding so that you can make appropriate decisions. Here are different things you must know about the account and the steps to open it.
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What is a Demat Account?
As mentioned, Demat is an abbreviation for dematerialization. It is a process of transforming physical share certificates and credit notes into a digital form. With the same, it offers ease and more efficiency in managing the financial instruments and trading capital for deployment.
A Demat account is an account that enables traders and investors to store their financial assets and offers a bookkeeping facility. It allows them to access their stocks, bonds, and other securities anytime to perform trading. Additionally, the bookkeeping facility keeps the investor informed about their overall performance.
Different Types of Charges
Traders need to pay a nominal fee to open and maintain a Demat account. This price for making your trading journey easier may vary with participants and their nature of services. Given below are the major payments a trader needs to make for opening and maintaining a Demat account.
- Account Opening Fee: When opening a Demat account, brokers charge this fee from traders. It may vary with the type of account accessed by traders.
- Custodian Fee: It is the fee traders pay for keeping the financial instruments.
- Maintenance Fee: Traders need to pay this periodically, monthly, or yearly, depending on the broker.
- Transaction Fee: This charge traders and investors pay every time they buy and sell securities. Hence, it varies with the type and volume of transaction.
Different Types of Demat Accounts
The following are the three types of Demat accounts accessed by traders and investors:-
Regular Accounts
It is available for Indian residents willing to capitalize on their investments with share trading and other financial options. Traders need to pay charges per the unique service model, volume of transaction, and other necessary charges levied by the depository and depository participant.
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Repatriable Accounts
It is modeled for NRI (Non-Resident Indian) investors. It enables them to transfer funds from various other nations. However, interested NRIs must have an associated NRE bank account.
Non-Repatriable Accounts
It is also for Non-Resident Indians and offers limited functionalities. Traders can not transfer funds abroad using this account and must have a non-resident ordinary bank account.
Benefits of a Demat Account
The following are the benefits traders can avail of by opening a Demat account:-
No Paperwork Needed: Traders do not need to go through cumbersome paperwork if they wish to open a Demat account. Moreover, it safeguards their interests by keeping their records protected from external and internal threats like tampering, theft, loss, and forgery. The safe and secure digital repository offered by the Demat account makes things more efficient for traders and investors, keeping them protected from procrastination and enabling them to focus on their investment goals.
Efficient Storage and Transfer: Traders no longer need to go through communications to store shares, bonds, ETFs, and other financial instruments. They can trade in the desired volume and keep a check on their asset’s performance with a Demat account.
Benefit of Corporate Actions: Traders may not remain aware of potential stock splits, bonus shares, and dividends they may receive. It may cause them to miss the opportunity or go through a lot of trouble to receive the benefits. The Demat account brings automatic updates due to the corporate actions in the overall balance and holdings.
Single Base for Multiple Investment Roadmaps: Traders can trade in multiple markets and keep a check on the performance of different assets. Additionally, they can monitor the financial performance of their different trading endeavors individually.
Easier Market Acess: Traders do not need to follow irrelevant protocols with a Demat account. They can access markets using their digital device.
Easy Nomination: Traders and investors may choose a nominee for their holdings, and the concerned will receive the needful for any unfortunate incident.
Documents Needed for a Demat Account
The following are the documents required to open a Demat account:-
- PAN Card
- Proof of Address
- Photograph
- Signature on White Paper
- Income Proof
Opening a Demat Account: Step-by-Step Process
Here are the steps you must take to open an account with a broker:-
- Select the depository participant or broker with whom you wish to open the account.
- Submit the documents and details asked by the concerned trading platform.
- Add the bank details.
- Complete the KYC norms, which may include in-person verification.
- Upload the E-signature to proceed further.
- Finally, submit the form and wait till your request is processed.
Frequently Asked Questions
How Much Does it Cost to Open an Account?
Traders and investors may need to pay different charges depending on the Demat accounts they need to open. However, sometimes brokers waive off the charges traders need to open their account.
How Much Time Does It Take to Open an Account?
It usually takes 24-48 hours to open an account for actively indulging in trading activities. However, it varies with different brokers, and some may facilitate an immediate account to traders.
Do I Need an Account for SIP Investment?
No, traders do not need an account to go for their SIP investments.
Can I have Multiple Demat accounts?
Yes, you can have multiple accounts with different depository participants. However, having multiple accounts may result in additional maintenance charges.
