What Is A Demat Account?
Earlier, when traders wanted to buy and sell stocks, it involved a process of yelling the prices and exchanging money for Physical Receipts/Certificates that attested ownership to the buyer. The Depository Act 1996 introduced Dematerialization or Demat, whereby these Physical Certificates were converted into securities to be held electronically; thereby mitigating the risk involved and tedious nature of the earlier process.
Demat Account (Meaning)
So, what is a Demat Account and is it the same as a Trading Account?
When you want to start investing in the stock market, there are two main accounts that come into play – a Demat Account and a Trading Account. While it is easy to confuse between the two, they serve two different purposes and are indispensable to conduct trade transactions across the Stock Market.
A Trading Account facilitates trading transactions in the stock market, whereas a Demat Account stores all the shares that have been bought by you. The Demat Account not only stores stocks but other investment securities such as Mutual Funds, Bonds, ETFs, etc. There are essentially three types of Demat Account, i.e., Regular (used by Indian Residents), Repatriable (Demat Account for NRI that permits the transfer of funds outside India) and Non-Repatriable (Demat Account for NRI, which does not facilitate fund transfer outside India).
How Does A Demat Account Work?
The Demat Accounts are managed by the Depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). They are responsible for ensuring the security of your shares held in the dematerialized form. However, you cannot open a Demat Account directly with the Depositories.
You can open a Demat Account with the Depository Participant who is a member of CDSL or NSDL. The DP is a mediator between you and the Depository and could be any Financial Institution, Broker, Custodian or a Bank that is a member of the CDSL or NSDL. When it comes to trading, people choose to go the broker route, which makes it important to mention the two distinct types of Brokers that you can open a demat account with.
First, is the Discount Broker. They only provide you with a platform to trade in. More often, than not, it is investors who possess trading expertise that opt for Discount Brokers. A Full-Service broker on the other hand, not only provides you with a trading platform but other services such a research reports and stock recommendations. It is the best
What is the Importance/Benefits of a Demat Account?
- As compared to earlier, when physical certificates were issued for shares bought; Dematerialization or storing securities in an electronic form, reduced the chances of theft and forgery.
- Today, they are easily transferable, as opposed to the practice of sending it to the Registrar or Company following which it was transferred. This also reduces the possibility of them getting lost in the manual process.
- Reduces the cost that came with the buying of stamp duty (0.5% per stock).
- It allows for nominating individuals, a practice not followed earlier; which is mandated by the Securities and Exchange Board of India (SEBI). If one does not want to add a nominee, a written declaration would be required for the same.
- Removed the odd lot problem, where there was a restriction on the minimum number of shares sold. Which means it is now possible to sell even one share.
- It does not just hold Equity, but Debt Instruments as well, i.e., one Demat Account can be used to hold securities and other instruments, which does not require an investor to hold separate accounts.
What is the Demat Account Opening Process?
Mentioned below is the procedure and the documents required to open a Demat Account Online and Offline.
What are the documents required to open a Demat Account?
- PAN Card: A PAN card has been made mandatory to open a Demat Account by the SEBI.
- Aadhaar Card: Serves as both proof of identity and address. Aadhaar number is required to speed up the account opening process via eSign.
- Cancelled Cheque: Required as a proof of having a bank account.
- Passport Sized Photograph: A Know Your Customer (KYC) compliance.
- Proof of Income: Required to trade in Derivatives and Commodities. Following documents can be used as Income Proof: Last 6 months of Bank Statement, Latest ITR Statement, Latest Salary Statement or DP Holding Statement)
How to open a Demat Account Online?
Opening a Demat Account online is completely safe as it compliant with the security measures mandated by SEBI.
- You need to choose the Depository Participant.
- Fill the online form that would require your Basic Details, Address Details, Economic Details and Bank Details.
- You also have the option to add a Nominee.
- Then, you will be required to upload the above-mentioned documents.
- Complete the in-person verification, an online process that avoids you the hassle of physically meeting with your broker.
- Choose eSign, which speeds up your account opening process.
- If you are KYC Verified and have opted for eSign. You should get a unique Trading Code/Client ID within approximately 4 hours of successfully completing your registration.
- Lastly, you will be required to courier the DP the signed copy of the Power of Attorney, which will be mailed to you on your registered email ID at the time of completing registration.
How to open Demat Account offline?
If you would like to open a Demat Account offline, you will be required to fill and physically sign the Know Your Customer (KYC) Form and along with all the relevant documents courier it to the Choice Equity Broking Head Office.
Choice Equity Broking, KYC Department,
Choice House, Shree Shakambhari Corporate Park,
Plot No: 156-158, J.B. Nagar, Andheri (E),
Mumbai – 400099, India
Call – +91 84 2424 2424
Demat Account Opening Charges
There are four main charges associated with the Demat Account. These include – Account Opening Charges (fee charged by the Broker at the time of opening the Account), Safety/Custodian Charges (fee charged to safeguard the shares held by you in electronic format), Annual Maintenance Charges (fee charged to maintain the Demat Account. It is done on a yearly basis) and Transaction Charges (brokerage fee charged on trade transactions by the broker). Please note* All these charges vary from broker to broker. Mentioned below are the Demat Account Charges associated with Jiffy.
|Demat Account Opening Charges||Rs. 0 (Zero Opening Fee)|
|Demat AMC Charges||Lifetime Free|
|Custodian Charges||Rs. 0 (No Cost)|
|Brokerage Charges||Trade with as less as 2 Paisa*|
To know Demat Account Charges in detail, please visit here.
Best Demat Account in India
You can open a Demat Account with any of the Depository Participants listed on NSDL and CDSL. Choice Equity Broking is a part of the renowned Choice Conglomerate; a depository participant with the CDSL (Central Depository Services Ltd.) and is a member of NSE, BSE, MCX-SX, MCX and NCDEX. It is also registered with AMFI as a distributor of Mutual Funds.
Get the advantages of a full-service broking firm minus the hefty commission fee and trade with its state-of-the-art online trading platform – Jiffy. Mentioned below are a few reasons why Choice Broking offers the best Demat Account in India.
- Demat Account Opening is free of cost.
- No Demat Annual Maintenance Fee for a lifetime.
- Get up to 10X Margin on trades.
- Trade with the lowest brokerage fee on transactions, i.e., as less as 2 Paisa* (the lowest as compared to full-service brokers). You can visit the List of charges to understand the brokerage charged in detail. [insert link here]
- Get in-depth market insights with Free Fundamental Reports (Short Research Notes, IPO Update, Result Update, Economy, Sector Specific, Stock Specific, GDP Reports, IIP/CPI Reports & RBI Monetary Policy) and Technical Reports (Pick of the Week, Morning Tea, Equity, Techno Call, Traders Choice, Commodity One Pager, Commodity Insight, Derivative Direction, Choice Sparks, Special Report, Weekly Index Report, Weekly Reports & Options Ranneeti) that are also available on WhatsApp.
- Free Daily Stock Recommendations.
- Call for trade facility is also provided.
- Online (Phone and Email) as well as Offline (in over 20+ branch office PAN India) Customer Support provided.
- With the implementation of the
eSignfacility, it is possible for a trader to start trading (buying shares) within approximately 4 hours of account opening, if the individual is already KYC Verified.
Open a Free Demat Account with Free Lifetime AMC and Zero Custodian Charges with Jiffy.
What you need to know about Choice Broking’s Trading Platform – Jiffy
The online trading platform Jiffy can be accessed across Android, iOS and the Web. It allows Traders/Investors to trade across four different segments, i.e., Equity, Derivatives, Currency and Commodity in one place. Further, the app and web are designed with a clean and simple user interface that does not compromise on the depth of data offered and provides seamless navigation and easy functionalities. Some noteworthy features that require a mention have been listed below.
- You can make informed decisions with market rich data, i.e., Top Gainers/Top Losers/Top Value/Top Volume across Equity, Derivatives, Currency, Commodity and IPOs.
- Advanced technical charting helps you analyze real-time price movements with various chart types as well as Historical and Intraday Data.
- You can analyze scrip entry and exit points to predict support and resistance levels using the Standard and Fibonacci Pivot Points/Indicators.
- It allows you to keep a track of all the scrips that you are interested in by adding them to the WatchList.
- A well-organized portfolio lets you manage your Positions and Holdings effectively.
- You can set alerts on scrips to get notified when it reaches the desired price, ideally suited to positional traders.
- It alerts you when there is a 5 – 10% up and down in your holdings.
To know more about the Jiffy Trading App, please visit here.