Demat Account is like a safe where you can hold your shares, mutual Funds, debentures and bonds in an electronic form. A Demat Account holds all the investments an individual makes in shares, government securities, exchange traded funds, bonds and mutual funds in one place. An investor cannot directly go to the National Depositories (NSDL and CDSL) and open the demat account. You have to go through the channel of depository Participant or DP. Demat account can be opened with broker as the brokers serves as depository Participant for the national depositories. So your broker serves in 2-in-1 way by not only providing services related to transaction in securities but also holding securities as DP. Most of the Indian Share Brokers offer DP services along with trading account. Many brokers offer free Demat Account opening but apply annual Demat maintenance charges (Demat AMC) which lies between 300 to 700 Rs yearly. A person can open more than one demat account but more demat accounts attract more AMC charges. So it is in your favor to consolidate all your holdings in one Demat Account.
Now since demat account is required when we want to hold the securities. So you only need demat account for trading in equity delivery. If you are a F&O and Intraday trader then you don't need a demat account.
Explaination Of Demat Charges:
ProStocks offers 2-in-1 account, which includes a trading account and a demat account for seamless transactions between the two. ProStocks is DP with CDSL. ProStocks is the cheapest Demat service provider in India as it offer zero Demat Account opening fee and no Demat annual maintenance charges (AMC). You only need to pay a one time refundable deposit of Rs 1000.
ProStocks Account Opening charges: Zero
ProStocks Demat Account Maintenace charges: Zero
Sharekhan is the full service broker offering 2-in-1 account that includes trading and Demat Account under one roof. Sharekhan is registered as a Depository Participant with CDSL.
Sharekhan Demat Account Opening Charges : Zero
Sharekhan Demat Account Maintenance charges AMC: Rs 400 yearly.ero
Zerodha, the biggest discount broker in India offers demat account along with the trading account. Zerodha is depository participant (DP) with Central Depository Services Limited (CDSL).
Zerodha Demat Account Opening Charges: Rs 100
Zerodha Demat Account Maintenance charges: Rs 300 per year
Here are the steps to open a demat account:
For some reason if you want to switch your demat account from your previous broker to the new broker, say from HDFC Securities to ProStocks, you need to fill Close and Transfer Instruction Slip or Delivery Instruction Slip (DIS) at your previous demat service provider and provide your new demat account number. Also you have to get the Client Master list from your new broker and providing the same to your old broker. They will transfer the equity in off-market transactions at no additional cost.
By first look, DIS looks like a cheque book in which you DP ID details are already filled. This is issued by your broker to you at the time of demat account opening. First book is usually free and you have to pay for additional book if you need one.
As per SEBI regulation, your depository should not charge you for account closure nor for transfer effected through closes and transfer instructions. But you still need to check with your broker.
Credit of shares in your demat account is completely free and debits are charged Rs 13.50 plus service tax per ISIN ( International Security Identification Number).
There are only two National Depositories in India NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Service Ltd.) and your demat account will be with either of these. If your old and current demat accounts are with same depository, you’ll be making an intra-depository transfer. If they belong to different depository, then it will be called an inter-depository transfer.
Your unique DP Id is 16 digit alpha-numeric or just numeric number. For CDSL depository account, all 16 digits are number.
For NDSL depository account, first 2 digits are alpha and next 14 digits are number.
Now, first 8 digits represents your demat service provider called DP. It will be same for all the clients of that broker.
Next 8 digits represents your individual demat account number with your demat service provider which is also called beneficiary ID. It will be unique for you.
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