Since the introduction of demat accounts into the Indian market in 1996, the stock market has seen a big rise in trading. This account – which is nothing but a dematerialized account makes trading in stocks and debentures a much simpler, low risk affair. Dematerilization basically implies that all the stocks and the shares and the securities are dematerialized and held in the account electronically and one does not need to go through the hassle of extricating certificates for the same.
All investors have to have a demat account as it has been made compulsory by the SEBI (Securities Exchange Board of India). When you want to access your demat account, you need to have two passwords, an internet password as well as a transaction passwords. The two passwords add a double layer of security. Purchasing and sale of securities is done automatically once the transactions are electronically completed and this is the USP of a demat account.
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Process to Open an online bank demat account:
Setting up a dmat account is a pretty simple task. You need to open a demat account when you have registered yourself with a broker or a sub broker. What you need to do is:
- Approach a certified stock broker. There are a lot of those around in India! These include ICICI, Sharekhan, Karvy Finapolis etc.
- These brokers will give you a demat account opening form. What you need to do is correctly fill up this form.
- You will also need to furnish documents for address proof and identity proof in support of the account opening. It’s not a big deal; all you need to do is follow the SEBI guidelines which will be provided to you.
- Furnish your original PAN card while opening a DEMAT account. This has been made mandatory by the SEBI.
But a lot of times people are clueless as to what documents they should submit for the opening of the demat account. These include:
- Your PAN card
- Identity proof- you can choose to give your driver’s license, passport, voter’s ID card or even a ration card with a photo.
- Recent Passport sized photographs (two)
- Address proof- you can submit your driver’s license, Voter’s ID card, Bank statement, Passport, ration card with a photo, credit card with a photo or even a government utility bill of any sort (like your telephone bill or electricity bill).
You will also have to sign an agreement with your DP in the prescribed standard manner which will basically enlist all the duties of the investors as well as his rights and those of the DP’s too. You should keep a copy of the document and also a schedule of the charges which the DP is likely to charge you in the future.
You will also be given an account number also known as the Beneficiary Owner Identification Number (BOIN). Your DP may also choose to change the charges he will levy by giving you about thirty days’ notice.
Dmat Account Charges
The charges you need to pay can be categorized into four distinct classes:
- Account opening fee- often this is optional. This is also fully refundable so you can get back the amount when you close the demat account.
- Annual Maintenance fee- Chargeable in advance and this is basically charged by your bank.
- Custodian Fee – This fee is charged depending on the number of securities present in your demat account in a given year.
- Transaction fee- There are several schemes for paying the transaction fees – it might be a flat rate or a percentage of the transaction.
Opening a demat account might seem like a hassle, but it makes trading much easier.