Better investment choices can help you build wealth for the future. Some people might depend on buying/selling assets like real estate, vehicles, and machinery to build wealth. On the other hand, many people succeed by investing in the Indian share market. Investing in financial securities has its advantages, from higher returns to fewer storage hassles. To begin trading in the Indian share market, you must first open a Dematerialisation (Demat) account. Novices and young traders must understand the meaning and usage of a Demat account. Let us discuss the documents required and the charges applicable for a Demat account.
Understanding the Basics of a Dematerialisation Account in India
There is a misconception that you don’t require a Demat account for share market trading. For the same rationale, some of you might be interested in understanding the Demat account charges. Some investors might think a trading account is ample to start share market trading. You can use a trading account only for buying and selling stocks, derivatives, and other securities in India. When you decide to hold securities for some time, a trading account will be useless. It is where you need a Demat account to hold securities before selling them for a high return. Having only a trading account might be beneficial for intraday traders, who buy and sell securities on the same day.
Usually, your Demat account will be linked with the trading account to prove seamless transfer facilities. When you buy and hold securities, they are converted into electronic format and stored in a Demat account. A SEBI-authorised stockbroker or depository participant can help you open a dematerialisation account and start trading. If a trader has only a Demat account and no trading account, his investment choices will be limited. However, you can still make a few investments with only a Demat account, like IPOs and rights issues. Stockbrokers usually demand a few documents to open a Demat account in your name. Similarly, you must understand some charges associated with a dematerialisation account in India.
Understanding the documents required for a dematerialisation account
To open a Demat account in India, the stockbroker or depository participant will demand a few documents. These documents are necessary for the Demat account KYC process and identity verification. On not submitting the required documents, your request for a Demat account might get cancelled. Here are the documents required for Demat accounts in India:
- PAN card
- Aadhaar card
- Voter ID card/driver’s license/utility bills
- Bank account information
- Bank account statement
Besides the above documents, the stockbroker might ask you to submit passport-size photographs and signature proof. Also, the documents required for Demat accounts might change from one stockbroker to another. Whether you apply for Demat account online or offline, these documents are essential.
Are you familiar with the dematerialisation account charges?
Your Demat account will come with some charges, which are as follows:
- You might pay some amount to the service provider for opening a dematerialisation account. However, a reliable stockbroker like Religare Broking will help you open a Demat account free of cost.
- To maintain your Demat account, the stockbroker will ask for an AMC (Annual Maintenance Charge). AMC might differ from one stockbroker to another in India.
- For every transaction made via your Demat account, a brokerage charge will be applied. However, zero-brokerage Demat accounts are available for traders in India.
- Stockbrokers might apply dematerialisation charges to convert securities into electronic format. Similarly, rematerialisation charges might be applied to convert financial securities into a physical format.
- Some stockbrokers might apply DIS (Delivery Instruction Slip) charges for transferring the securities from your Demat account to another account.
In a nutshell
Before choosing a stockbroker for trading activities, it is essential to consider the Demat account charges. Religare Broking applies minimal Demat account charges on traders. Also, you get to open both Demat and trading accounts for free with Religare Broking. So understand the working of a Demat account and invest now!