This article is based on topic suggested by a reader through “suggest a topic” in menu bar.
When you want to trade in equity market, you need to have a demat account. However there is a process to open a demat account. It may start from how to choose a broker, what are the demat charges, the documentation required etc. In this article, I would cover a detailed process on how to do this. I would also recommend some of the best demat accounts in India.
What is Demat Account?
When you want to trade in equity market, you need to have a demat account. Demat account is an account where all the shares purchased by you are accounted in the electronic form. Hence it is mandatory that you need to have demat account in order to trade in stock market.
Who offer demat account services?
Banks and brokerage firm’s offer demat accounts.
How to choose a good broker who is offering demat account services?
Banks and brokerage firms offer the demat account services. There are various features associated with both of them.
Features for demat account services by Bank or group company of bank(3-in-1 account)
- Banks provide savings bank account, demat account and online trading account as part of demat account services.
- You need to deposit your money in the bank account and do online share trading. Once you buy some shares, your demat account would get credited with those shares and your bank account would debited with the amount of such purchases. Same way, once you sell shares, your demat account would get debited to those many shares and your bank account would credited with the proceeds. Generally, the proceeds would take T+2 days (Transaction day + 2 days)
- Banks do not offer stock market recommendations to their customers.
- The demat account transaction charges are very high and ranges between 0.5% to 0.8% of transaction value depending on the broker. The charges reduce based on the volume of the transactions.
- Banks charge demat account opening charges which range between Rs 500 to Rs 700.
- There would be annual fees charged by banks which ranges between Rs 500 to Rs 1,000.
Features of demat account services by Brokerage firms:
- Brokerage firms provide demat account and online trading account as part of demat account services.
- Brokerage firms have tie-up with banks to transfer customer’s money from their account to brokerage firm’s account. Once the funds are transferred, it may take 1 to 3 day’s time to reach brokers account, depending upon the bank and location.
- Once you buy some shares, your demat account would get credited with those shares and your account with broker would debited with the amount of such purchases. Same way, once you sell shares, your demat account would get debited to those many shares and your account with broker would be credited with the proceeds. Generally, the proceeds would take T+2 days (Transaction day + 2 days). Once the funds are reached brokerage account, you can transfer to your bank account. This process also may take 1 to 3 day’s time.
- Brokerage firm offers stock market recommendations to their customers. They suggest several stock picks like large cap recommendations, mid-cap recommendations, small cap recommendations and penny-stock recommendations. They provide variety of research reports.
- The demat account transaction charges are very low and ranges between 0.2% to 0.5% depending on the broker.
- There would be account opening fees and annual fees charged by brokerage firms which range between Rs 500 to Rs 1,000.
- There is a negative point that during market crash, several brokerage firms have closed down their shop. Hence investors need to be cautious about this.
What documentation required to open a demat account in India
- PAN Card
- ID proof. It can be voter card, driving license, electricity or landline bill or ration card.
Some of the banks and brokerage firms offering demat services along with details.
1) ICICI Direct
- Services : 3-in-1 (Savings account, Demat A/c, Online trading)
- Brokerage charges (Delivery): 0.55%
- Brokerage charges (Intraday): 0.275%
- Account opening charges : Rs 975
- Demat annual charges in : Rs 450
2) HDFC Securities
- Services : 3-in-1 (Savings account, Demat A/c, Online trading)
- Brokerage charges (Delivery): Higher of Rs 25 or 0.5% of transaction value
- Brokerage charges (Intraday): Higher of Rs 25 or 0.10% of transaction value
- Account opening charges : Nil
- Annual charges in Rs : Rs 250 to Rs 750 depending on the number of transactions
- Other conditions : You need to open savings bank account in HDFC bank as part of the process.
3) Kotak securities
- Services : 3-in-1 (Savings account, Demat A/c, Online trading)
- Brokerage charges (Delivery): 0.49%
- Brokerage charges (Intraday): 0.049%
- Account opening charges : Rs 750
- Annual charges in Rs : Rs 600
4) SBI
- Services : 3-in-1 (Savings account, Demat A/c, Online trading)
- Brokerage charges (Delivery): 0.50%
- Brokerage charges (Intraday): 0.15%
- Account opening charges : Rs 500
- Annual charges in Rs : Rs 350
5) Sharekhan broker
- Services : 2-in-1(Demat A/c and online trading)
- Brokerage charges (Delivery): 0.50%
- Brokerage charges (Intraday): 0.10%
- Account opening charges : Rs 750
- Annual charges in Rs : Rs 400 (1st year free)
5) Angle broking
- Services : 2-in-1 (Demat A/c and online trading)
- Brokerage charges (Delivery): 30paise
- Brokerage charges (Intraday): 6paise
- Account opening charges : Rs 390
- Annual charges in Rs : Rs 300 (1st year free)
6) Geojit BNP Paribas
- Services : 2-in-1 (Demat A/c and online trading)
- Brokerage charges (Delivery): 0.30%
- Brokerage charges (Intraday): 0.03%
- Account opening charges : Rs 800
- Annual charges in Rs : Rs 400
7) Indiabulls services
- Services : 2-in-1 (Demat A/c and online trading)
- Brokerage charges (Delivery): 0.40%
- Brokerage charges (Intraday): 0.04%
- Account opening charges : Rs 950
- Annual charges in Rs : Rs 450
Readers, I invite for your valuable suggestions and feedback on this article.
If you enjoyed this article, share the link in Facebook/Twitter. The links are provided below.
Suresh
Topic: How to choose a good broker for demat accounts services
- HMA Agro Industries IPO – 10 Key Things Investors Should Know - June 10, 2023
- 5 Mutual Funds with Consistent Positive Returns in 9 out of 12 Months - June 8, 2023
- How to Use Credit Cards to Improve Credit Score? - June 7, 2023
I imparesed this company
I want to open demat account for spending money in Mutual fund.
Hi Suresh,
I have demat account in SBI. I have purchased some shares a year ago. Now i want to buy Mutual fund.
Should i go with SBI deamt a/c only or should i move to some other firm which will provide me low charges.
pls suggest. Thanx in advance
What is the difference between Brokerage charges (Delivery) and Bokerage Charges (Intraday)
Pls guide
Hi Vimmo, Brokerage for delivery is where you take the delivery of stocks i.e. you buy today, but these stocks would come to your demat account in 2-3 working days. On other side, brokerage for intraday is where you purchase and sell on same day. e.g. your buy order would get executed in the morning and sell order is executed before market closes. Generally, intraday charges would be less compared to brokerage charges for delivery.
I have demat account with Tradeplus Online.They are providing lowest brokerage charges and they won the NSDL Star performer award in the year 2013 and 2015.They also providing 5 in 1 account for NRI.So I prefer Tradeplus Online is one of the best broker for demat account opening in india.
Nice to hear that Kamal
Thank you Suresh