Opening a Demat account is the first step toward investing in India’s stock markets. While the trading account enables trades, it allows one to keep shares. In an electronic form, you keep shares and other securities in a Demat account. It is like a bank account in a way. The only difference is it holds share balances while the bank account holds cash balances.
The Demat account is also connected to your trading account, so make sure you hold your Demat and trading account at the same place for convenience.
It can be quite a task to find the best Demat Account. Hence, consider the following factors –
- Ease of opening: SEBI has required a comprehensive procedure to open a Demat account that should be followed by the service provider. However, to some degree, even service providers can simplify the process. For example, the Demat account can be started via the e-KYC process, whereby the Aadhaar data can be used to authenticate the entire account opening process.
- Maintenance costs: It can incur expenses, even if it means your account stays idle. There are no charges today for opening a Demat account. You ought to look at the entire spectrum of factors when estimating the costs. There is an annual maintenance fee that is billed annually to your account. Furthermore, costs incur if you request a physical copy of the holdings or a copy of a physical transaction. Additionally, the requests are charged per certificate basis. When you go for Demat account opening, you need to look at all these costs.
- Online analytics: Gradually, Depository Participants (DPs) extend their services beyond the basic statement of account. DP’s have started providing online analytics such as direct call-to-action for trading customers, concentration in the market, real-time valuation, inflow/outflow analytics, timely warnings and thematic focus, among other services. These are value additions, but as a customer, you must ask for these additional benefits.
- Smooth interface: At a time when the stock trading is moving rapidly towards internet and device trading, the need for a seamless interface with banking and broking is becoming vital. There are two-in-one accounts and three-in-one accounts. The three-in-one account combines your bank account, Demat account, and trading account and is recommended by brokers who also hold group banking licenses.