An introduction to Demat account

by Divesh Singhvi on May 23, 2012

There are a number of people who don’t have demat accounts, especially in SBI and IDFC thread, the number of non-demat account holders is quite large. Many people don’t have any idea about the opening of this account. This is an important account and soon all those people who don’t have demat accounts will be in the lines of account openers because everyone must need to make investments in such bond issues.

Let’s begin with the introduction of demat account, and further we will put light on several other currently available choices in India.

At the time of grandpas, you may notice that they were having a black briefcase filled with all confidential documents including physical share certificates, however, later on, with the advent of technology they transferred all their materialize documents into an electronic briefcase, this is the simplest description of a demat account. A demat account is a kind of electronic briefcase, where you can store all your shares and bonds.

In India, you have two depositories option, you can consider them as banks and their main responsibility is to store your bonds and shares electronically, they are known as NSDL and CSDL.

Being a regular depositor, you cannot deal with these depositories directly and you have a need to access their depository agents known as depository participants (DPs), and are responsible to work on behalf of you.

In India, you can easily access a number of DPs, however, you must opt for the one for your demat account opening that go best according to your budget and convenience. Generally, people prefer to open a demat account and trading account with a single intermediary as this allows you to make inexpensive transactions along with convenience in the beginning. Thus, you can make a Demat account and trading account directly with SBI or ICICI. Having DP and trading accounts in a same institution waived you from paying DP account fees and you are still able to get the services of a depository participant for your electronically stored shares and bonds effectively. You can access DPs in India easily, even NSDL offer you a comprehensive list of competitive DPs and the list of their fees.

A partial list of Indian Depository Participants
Although, you can find hundreds of DPs in India, but here is a list of some well known and competitive DPs along with their annual maintenance charges. Apart from annual maintenance charges, there are lots of other charges but the narration of all the charges here will make it complicated to understand. In the list below, some links are also given for the convenience of customers who by simply clicking on them can access further details. The prices mention here are quite low, however; you must consider the convenience and also check if your bank is offering the facilities of demat account services.

Name Annual Maintenance Charge Detailed Charges
SBI Rs. 400Rs. 350 for customers receiving statements by e-mail Link
ICICI Bank Rs. 500Rs. 450 for customers receiving statements by e-mail Link
HDFC Bank Rs. 750 for less than 10 transactionsRs. 500 for 11 – 25 transactionsRs. 300 for greater than 25 transactions Link
Citibank Rs. 250 Link
HSBC Rs. 750 Link
Sharekhan Rs. 75 per quarter (300 annually)Deposit of Rs. 500 Link
Axis Bank Rs. 500 p.a. for customers authorizing Bank to debit DP charges from bank account maintained with Axis Bank, and 2,500 for others. Link
Karur Vysya Bank Rs. 250 per annum Link
Sharekhan Rs. 300 under two plans, and Rs. 500 under another Link
Bank of Baroda Rs. 350 per annum Link

The method of opening a demat account
Decide that what is the most convenient place for your demat account opening, once you decide, then you have to contact their agent for guidance. The following documents are vital for the opening of demat account, so keep them in hands when you make contact with DP.

Identity proof:
You must have you NIC, Voter card, PAN card, driving license and passport etc. all these things will also prove your residential address.

You also must have PAN card photo copy and passport size photos of the candidate.

The following details will be needed during the opening procedure of your demat account

  • Account holder’s name
  • Mailing address
  • Details of bank accounts
  • Guardian (in case of minor account holder)
  • Standing instructions
  • Nomination declaration

Best Reading:

Conclusion
Demate account is a very secure and convenient storage option for your precious shares and bond certificates. It is very easy to open and affordable also, therefore, all wise investors must have this account.

 

Leave a Comment

Previous post:

Next post: