For investing in the Indian stock market, a Demat Account is a must. It’s similar to a bank account, except that instead of capital, shares are deposited. Buying and selling stocks is easier with a Demat account, which eliminates time-consuming paperwork and ineffective delays. To open a Demat account online, you must approach the DPs (Depository Participants). Choice Broking provides you the platform to open a free Demat account with low brokerage charges.
Documents Required to Open Demat Account Online
Opening a Demat Account for trading in the Indian stock market is as simple as opening a savings bank account. A Demat account may be opened with a bank or a depository participant (DP). To open Demat account online or offline, you’ll need the following documents besides the application form:
- Duly filled application form
- Photocopies of a passport, a pan card (mandatory), and a driver’s license as ID proof.
- Photocopies of a passport, a phone bill, a driver’s license, or a voter ID card will suffice as proof of residence.
- Passport size photographs.
- Information about the bank account that will be linked to the Demat account.
- Fee for opening an account
Demat Account Opening Charges
There are some charges and fees to open a Demat account online, below are mentioned all that with explanation. Read all that before choosing to open a Demat account.
Demat Opening and Documentation Cost
This is a one-time charge that must be charged when a Demat account is opened. It depends on the depository participant whether the stock broker takes account opening fee or not. Most banks and stock trading brokers do not charge any fees to open Demat account online, but some will charge a small fee for the stamp paper used to execute the contract with the broker.
Annual Maintenance Charges
The cost of annual repairs must be paid at the beginning of the year. Some banks and brokers can charge a monthly or quarterly fee.
The custodian fee is calculated annually and is based on the number of shares in the account.
The charge for debiting shares from your DP account is known as a transaction fee. According to SEBI, a broker or bank cannot charge a fee for crediting shares. So, don’t be misled by agents who pretend to give “free share credit.” The transaction fees vary from 0.02% to 0.04% of the transaction value, with a minimum fee of Rs.12 to Rs.25 per transaction.
Pledge Creation Fees
Pledged shares are equity shares that are available in an investor’s Demat account and collateral for loans. The pledgee (to whom a pledge is given) has the right to keep the shares until the pledgor pays the dues after the pledge is created.
In the default case, this pledge is used to recover the dues.
The broker charges a pledge formation fee every time a customer puts shares on the pledge in his Demat account.
Pledge Invocation Fees
If the pledgor cannot repay the loan to the pledgee as agreed, the pledgee will apply an instruction slip to DP to start the invocation of the pledge. The shares are passed from the pledgor to the pledgee when a pledge is invoked.
Dematerialization is the method of converting securities paper certificates into electronic form and storing them in a Demat account. To convert the shares, the broker charges a fee. Some brokers charge a flat fee per certificate, while others charge depending on the securities’ value.
The method of Rematerialisation is the inverse of dematerialization. With the Rematerialisation phase, all securities in dematerialized form can be transformed back to physical certificates.
The client must contact the Depository Participants with whom he has a Demat account to request the Rematerialisation process. The customer is charged a fee by the broker for Rematerialisation and courier costs.
Many online brokers initially charge lower rates, but they may increase them later. As a result, rather than deciding solely based on cost, weigh all factors, including service, convenience, and the pace and volume of transactions, when selecting a broker or bank to open a new Demat account online.
There are several charges associated with opening a Demat account online. It is important to understand the various Demat trading charges because they can affect your investment earnings. To attract investors, new entrants in the market can charge less than existing stockbrokers. When it comes to stock market investing, however, choosing a reputable broker with an excellent track record is more important than finding the cheapest one.