What is a Demat Account? How to open Demat Account 2021?

Opening a Demat account is the first step towards investing in the stock market, mutual funds, IPO and Non-convertible debentures in India.

In simple terms, the demat account is like a bank account. The major difference is, instead of keeping the money, you keep shares, mutual funds or bonds in electronic format in demat account. Keeping stocks and Mutual Funds in the demat account has many advantages including higher security and faster transactions.

Usually, demat accounts have an annual maintenance charge paid by the customer to keep the account active. Even if you use it or not, as long as you hold the demat account, you have to pay the DP.

Can you get a free Demat account service?

Yes, some broker in India offers free demat accounts. Customer doesn't have to pay any yearly charges under this scheme. Some conditions may be applied including onetime fee at the time of account opening or refundable deposits. Check with the broker for more detail.

Steps on how to open a demataccount

1. Select the Depository Participant

First select where you want to open a Demat Account and then select the Depository Participant you want to open demat account with. Most brokerages and financial institutions offer the service.

*Depository Participant is the agent or the registered stockbroker of a depository.

2. Fill up demat account opening form

Then fill up demat account opening form and submit along with copies of the required documents and a passport-sized photograph. You also need to have a PAN card. Also carry the original documents for verification.

3. Read Rules & Regulations

You will be provided with a copy of the rules and regulations, the terms of the agreement and the charges that you will incur.

4. Step 4. In-Person Verification

During the process, an In-Person Verification would be carried out. A member of the DP's staff would contact you to check the details provided in the demat account opening form.

5. Step 5. Access Your Demat Account

Once the application is processed, the DP will provide you with a demat account number and a client ID. You can use the details to access your Demat account online

Here's How

Opening a Demat cum trading account in Zerodha, Angel Broking, Groww, Upstox and other online platforms have become amazingly simple. The process is completely online and paperless and won't take more than a few minutes. Most of these services come with free demat account and zero maintenance charges.

Most of the Nationalised and Private banks offer Demat services as well

Best bank to offer demat account in India

1. ICICI Bank

2. HDFC Bank

3. Kotak Mahindra Bank

4. Axis Bank

5. SBI Bank

They all are very similar in their offering, charges, trading platform and customer services.

Note: Demat accounts are maintained by National Securities Depository Limited and Central Depository Services Limited and the banks act as intermediary.