Last updated on 19th Dec 2019
by Team Top Share Brokers
Demat Account is the safest and easiest way of holding securities. Demat Account is managed by National Depositories NSDL and CDSL. An investor cannot directly go to the National Depositories (NSDL and CDSL) to open a demat account. You have to go through the channel of Depository Participant or DP. The demat account can be opened with the broker or bank as they serve as a depository Participant for the national depositories.
Most of the Indian Share Brokers offer DP services along with the trading account. Trading account and demat account are two different entities. It is not mandatory to open a demat account with the same broker. You can link your trading account opened with one broker to the demat account opened with another. 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.
Demat Account not only hold shares but also hold debt instruments like bonds, NCDs, government securities, mutual funds in one place. However if you are an F&O or Intraday trader, then you don't need a demat account.
Many brokers offer free Demat Account opening but apply annual Demat maintenance charges (Demat AMC) which lies between Rs 300 to 700 yearly.
Explanation 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 offers 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 Maintenance charges: Zero
Angel Broking is registered as a Depository Participant with CDSL. You can avail Demat services with Angel to get a fast and paperless transaction.
Angel Broking Demat Account Opening charges: Zero
Angel Broking Demat Account Maintenance charges (AMC): Zero
Sharekhan is the full-service broker offering a 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 PA.
Zerodha, the biggest discount broker in India offers demat account along with the trading account. Zerodha is a 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
Demat Account is like a digital 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.
A Depository Participant (DP) is an agent appointed by the Depository who is authorized to offer depository services to all investors. They are the intermediaries between the depository and the investors. An investor cannot directly open a DEMAT account with the depository. The DP opens the account with the Depository and takes up the responsibility of maintaining the account and updating them as per the instructions are given by the investor from time to time.
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 the 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. The first book is usually free and you have to pay for the additional book if you need one.
As per SEBI regulation, your depository should not charge you for account closure nor for transfer effected through closure and transfer instructions. But you still need to check with your broker.
The credit of shares in your demat account is completely free and debits are charged Rs 13.50 + GST 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 the same depository, you’ll be making an intra-depository transfer. If they belong to the different depository, then it will be called an inter-depository transfer.
Your unique DP Id is a 16 digit alpha-numeric or just numeric number. For the CDSL depository account, all 16 digits are numbers.
For NDSL depository account, the first 2 digits are alpha and the next 14 digits are numbers.
Now, the first 8 digits represent your Demat service provider called DP. It will be the same for all the clients of that broker.
Next 8 digits represent your individual Demat account number with your Demat service provider which is also called beneficiary ID. It will be unique to you.
The bank also provide Demat Service, but opening only demat account will not help. You need a trading account also to do trading. ICICI Bank, HDFC Bank, Kotak Bank, Axis Bank and SBI are among the best bank to open demat account. They also have brokerage service, so you can open 3-in-1 account and enjoy uninterrupted service. List of brokerage house providing 3-in-1 services are ICICI Direct, HDFC Securities, SBI Securities, Axis Direct and Kotak Securities. You can open only Damt account to hold your Mutual Funds, FD and other product with a bank demat account.