How to open a DEMAT ACCOUNT & Demat Account Charges?

The growth which our economy has seen in the last few decades has been commendable. And with growth in the Economy, the disposable income of people has also increased. With higher salaries, people now want to invest in Stock Markets and a question most of the Potential Investors are asking is How to Open a Demat Account and Online Share Trading Account?

In this article we try to highlight – How to open a Demat Account?

How to Open a Demat Account?

1. The first and foremost step is to approach DP or depository participant with whom you want to open your Online Demat Account. Like a bank or broker, depository participant acts like an agent between the investor and depository.
2. Secondly, you will have to fill up online demat account opening form and attach documents for proof of your identity and address. The documents that you will need are: PAN Card, Any identity proof (like voter’s id, driving license, passport etc), Any residence proof (like ration card, driving license, etc), Self attested passport size photograph.
3. You will have to sign a pact with your depository participant in which all the rules and regulations will be written to be followed by the investor and DP both. Your DP will give you the copy of the agreement.
4. Once the agreement is signed and the verification of your documents will be done, in about 15 days you will get your online demat account number. It is also known as BO ID that is beneficiary owner’s identification number. All your future transactions will be done with this ID.
5. Now that you own a demat account, you can step into the world of stock exchange and start investing your money in mutual funds, shares, debentures, insurance, retirement funds etc. it should be noticed that unlike every bank account where we have to keep a minimum balance, demat account does not require you to have a minimum number of securities. You can open a demat account with zero amount and also you need not have any minimum balance to maintain the account. You may have zero balance in your online demat account.

Apart from the procedure to open a online demat account, one should also know the Demat Account charges

Demat Account Charges

There are mainly 5 types of Charges that are levied on Demat Accounts

1. Demat Account Opening Charges

Usually the Demat Account is opened Free of Cost and No Charges are levied on the same. However, they may collect annual charges upfront at the time of opening an Free Demat Account. Not all Banks/DP’s provide free Demat Accounts and it is always advisable to check the account opening charges before opening a Demat Account

2. Annual Maintenance Fee

This charge is mainly folio maintenance charge which is levied well in advance. If they are offering you good services, the Maintenance Fee would be high, else it would be low

3. Custodian Fee

The Custodian Fee is charged for safely keeping your Shares in the Demat Account and is charged based on the number of securities in your account. This is generally charged yearly and majorly depends on the number of securities in the Demat account. It may vary from Rs. 0.5 to Rs. 1 per ISIN (number of securities) for a month.

4. Transaction Fee/ Brokerage

The Transaction Fees is the fee which is charged for trading of shares. Whenever, you buy or sell a security, a brokerage would be payable by you which would depend on the scheme you have opted for as the charges vary from Scheme to Scheme.

5. Dematerialization Fee

In case you have share certificates in physical form, the bank would also be charging you a very nominal fee to convert these physical shares into online form. These Charges are not applicable for all Account Holders and are applicable only for those who have Physical Shares and opt for converting these Physical Shares (if any) into Demat Form

You may note that these charges may not remain same every month as DP can also revise them. It is always highly advisable for the Investor to cross check the Account Charges levied by different Service Providers before opening a Demat Account.