What is a Demat account? Demat account charges
What is Demat account?
Demat account is like a bank account in which instead of money, the shares and securities you buy are kept in dematerialized form. In the past, the investors were given the physical possession of shares, but now the shares are just credited In the Demat account of an investor.
The Demat account number has to be quoted with every transaction you make, which is a mandatory process for placing a market order. You can access this account anytime you want with a Transaction and an internet password. When you make a sale, the number of shares is debited from your Demat account, and then your stock is sold in the stock market.
If you are looking to trade in the Indian share market, there are certain pre-requisites that you have to consider before you start investing. One of them is to have a Demat account.
Demat account is compulsory for every person who trades or wants to buy or sell shares in the share market.
How to open a Demat account?
You can open an online Demat account by following the given below points:
1. Choose a Depository participant: The primary thing you have to do is choose a DP (Depository participant). They are the intermediary between the depositories (the branch of the stock exchange that holds the securities, like CDSL, NSDL, etc.) and you. A depository participant can be a brokerage firm, a bank or a financial institution.
2. Fill the account opening form: After choosing the Depository participant, you must fill the account opening form which will be available with your Depository Participant. You also have to attach photocopies of documents for your proof of identity and proof of address with the account opening form.
3. Sign the agreement: You have to sign an agreement with your depository participant in the format prescribed by the Depositories. It will contain all the rules and regulations you need to follow with your rights and duties as an investor and as a client of the Depository Participant. You will receive a copy of the agreement so that you can read it thoroughly and refer to it in the future.
4. Demat account opening: After all the formalities are completed, your Depository Participant will open a Demat account for you. A Demat account number will be provided, also known as Beneficial Owner Identification Number (BO ID). From now on, every time you make a purchase, your Demat account will be credited with the shares. In case of a sale, the Demat account will be debited with the number of shares you sell in the market.
Demat account charges
Following are the demat account charges that you have to incur on your Demat account:
- Annual account maintenance fees.
- Transaction fees.
- Dematerialization and Rematerialization of securities.
- Custodian fee (for keeping your shares safe).
You does not charge any brokerage on trading with 5paisa.
Documents Required for Demat Account
Here is the list of documents you will require to open a Demat account online:
For proof of Identity: PAN card, Aadhar card, Voter ID, Driver’s license, Passport, Bank attestation, Telephone bills, Electricity bills, IT returns, ID card with name and photograph issued by the State or the Central government departments, colleges affiliated to universities, Public sector undertakings, Statutory or regulatory authorities, Public financial institutions, scheduled commercial banks or professional bodies like CA, ICAI, ICWA, CS etc.
For proof of address: Driver’s license, Voter ID, Aadhar card, Passport, Ration card, Bank statement or passbook, Telephone or Electricity bills, Self-declaration with Supreme court or High court judges, leave and license agreement or agreement for sale, Identity card with address issued by the State or the Central government departments, colleges affiliated to universities, Public sector undertakings, Statutory or regulatory authorities, Public financial institutions, scheduled commercial banks or professional bodies like CA, ICAI, ICWA, CS etc.
Other things to keep in mind
Other things that you should consider regarding a Demat account:
- You can open as many Demat accounts as you wish.
- There is no minimum number of shares you have to keep in your Demat account.
- No charge is levied on the closure of the Demat account. Only the annual maintenance fees are imposed proportionately.
- You can transfer your shares from one Depository Participant to another without any cost.
- You can authorize any other individual to operate your Demat account by availing the facility of Power of attorney.
You can also choose a person from your family or otherwise to get your shares in the event of your demise.
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