“Dematerialised account “ or Demat account for short is an account that is used for holding and safe keeping of shares and securities just like a bank account that is being used for safekeeping of funds. The shares are being held electronically and this eases the transaction as it does not involve physical transfer of shares. Moreover now a days 99.9% of the transaction are being done electronically and also the Securities and Exchange Board Of India (SEBI) has made it compulsory to have a demat account for trading of shares above 500.But in this era where everything has been revolutionized with the invention of Internet and computers nobody wants to have physical shares as its very difficult to move them.
How to open a Demat Account?
In order to open a demat account first of all, all we need to do is find out a Depository Participant or DP in short. A depository participant may be a bank, a financial institution which needs to be registered with the depository (A depository is an organization that facilitates the holding of securities in electronic form and thus enabling the DP’s to provide services to the investors. The securities are being held in the depositories account). In India there are two depositories namely NSDL (National Securities Depository limited) and CDSL (Central Depository Securities Limited).The depository participant is basically an intermediary between the depositors and investors and they present the services of the depository to the investors or the BO (Beneficiary Owner). We also need to submit the following documents for the opening of the account.
- The completely filled demat account form along with the required passport size photographs.
- Photocopy of PAN card.
- Address proof (Passport, Driving License, Voter ID Card,Ration Card, Bank Passbook, Residence Phone Bill, Electricity Bill, Rental Agreement Insurance Policy).
- Identity proof(PAN Card, Driving License, Passport , Voter ID, Ration Card).
- Bank account details the one that needs to be linked with the demat account.
Advantages of having a demat account
- It’s an easy and convenient way to hold the securities as it allows easy and immediate transfer of the securities.
- Reduced paper and transaction cost.
- No stamp duty cost
- Helps in prevention of forgery of certificates and delay in transfer of certificates.
Comparison of some demat accounts
Annual maintenance/ service charges
|Closure of Account|
|ICICI Direct Demat Account||Nil||Each request form Rs 35 + Rs 2 per certificate||Rs 20 per request||Rs. 500/- (Rs 450/- for customers receiving statements by e-mail )||Nil|
|HDFC Demat Account||Nil||Rs.5/- per certificate +
Rs. 35/- per request
|Rs.30/- per request +
|Level 1 (upto 10 txns.) Rs 750 p.a.Level2(between 11 and 25 txns.) Rs500Level 3(greater than 25 txns.) Rs 300 p.a.
|Data not available|
|Axis Bank demat Account||Nil||Rs.50/- per request +Rs. 5/- per certificate||Rs. 20/- for every 100 securities or part thereof or Rs. 50/- per request, whichever is higher.||Rs.500 p.a.(for debiting DP charges from Axis Bank A/C) Rs 2500 for others||Nil|
|SBICAP Securities Limited(SSL)||Rs850+KRA Charges (Invidual)Rs 1000/- + KRA Charges(Non individual)||Rs.5/- per certificate +
Rs. 35/- per request
|Rs35+RS10for every hundred securities or part thereof,or a flat fee of Rs.10per certificate whichever is higher||Rs 800 for non individualFor individual 1st year- Nil2nd year Holding Less than Rs 50,000- Nil
Holding greater than ` Rs 50,000 & Less
than Rs2,00,000- Rs 350