Getting a demat account1 min read . Updated: 09 Apr 2007, 01:31 AM IST
Getting a demat account
Getting a demat account
If you have always wanted a decent portfolio, but never managed to build one, because you don’t have a demat account, don’t give up yet. Here are a few tips on how to get a demat account. Demat means a dematerialized account that keeps your shares in an electronic form.
To begin with, you need a depository participant (DP). A depository is a place where the stocks of investors are held in electronic form, and the agents of a depository are referred to as depository participants. Two depositories in India—National Securities Depository (NSDL) and the Central Depository Services (CDSL)—have authorized several DPs to open demat accounts. Information on registered DPs is available on the websites of NSDL (https://nsdl.co.in/) and CDSL (https://cdslindia.com). Or you could visit your nearest bank or broker; most of them offer demat services.
You also need to watch out for the costs involved. NSDL and CDSL websites give detailed break-ups of the charges. A few DPs will charge you an annual cost along with transaction costs, while others only charge transaction costs. Being a volume game, the transactions costs have now fallen to as low as five paise. Annual charges range between Rs200 and Rs500.
It is also advisable to keep your trading (used as an interface for purchase and selling of shares), demat and saving accounts with one company. This would ensure speedy service as well as low costs. Banks such as HDFC and ICICI waive annual charges if you avail of their triple package.
It is not necessary for you to open your demat account with the same DP that your broker uses. You can choose your own. But, many brokers offer special incentives in the form of lower charges for opening a demat account with their own DPs. The most important document you need to open a demat account is a PAN card (permanent account number).
Other documents such as ration card, passport and identity card are needed for identification and address proof.
A demat account can be opened and maintained even with zero balance.
On opening an account, the DP will allot a unique beneficial owner identification number, which you will have to quote for all future transactions.
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