If you’re planning to invest in securities such as shares, mutual funds, or ETFs in India, it’s essential to open a Demat account. Not only does it streamline transactions and make them more cost-effective, but it’s also a mandatory requirement for registering with any brokerage.
Key Points
- There are two ways to open a Demat account in India: online (through a digital platform) and the traditional method (by submitting physical forms).
- Selecting a broker who aligns with your trading style and financial goals is crucial, regardless of the method you choose to open your account.
- Some brokers may charge higher fees for processing physical forms, so it’s important to check all the associated account opening costs beforehand.
Table of Contents
How to open a demat account
Before you begin the Demat account opening process in India, it’s crucial to select the right broker. Your decision should be based on factors such as brokerage fees and charges (discussed in detail later), the platform’s user-friendly interface, and the quality of customer support provided.
In today’s tech-driven era, the method you choose to open a Demat account plays a crucial role. Your broker will assist you throughout the process to ensure it’s as simple as possible. You can either opt for the traditional method, which involves submitting physical forms, or choose the Aadhaar-based, paperless online process, which is faster and more convenient.
Steps to open a demat account
Step 1: Choose a Depository Participant (DP)
A Depository Participant (DP) acts as an intermediary between investors and the depository (such as NSDL or CDSL). Many banks, stockbrokers, and financial institutions in India offer Demat account services. Compare the following factors while choosing a DP:
- Account opening and maintenance charges
- Brokerage fees
- Customer service quality
- Trading platform features
- Availability of other investment options
Step 2: Fill Out the Account Opening Form
Once you’ve chosen your DP, visit their official website or branch to fill out the Demat account opening form. Some DPs also allow fully online account openings through their platforms.
Step 3: Submit Required Documents
You need to submit KYC (Know Your Customer) documents to verify your identity and address. These typically include:
- Proof of Identity: PAN card (mandatory), Aadhaar card, voter ID, or passport
- Proof of Address: Aadhaar card, utility bill, driving license, or passport
- Bank Details: Canceled cheque or bank statement with IFSC code
- Passport-sized Photographs
Make sure all documents are self-attested before submission.
Step 4: Complete In-Person Verification (IPV)
As part of the KYC process, you’ll need to complete In-Person Verification (IPV). This can be done online (via video call) or physically at the DP’s office. During the IPV, you may be asked to display your original documents for verification.
Step 5: Sign the Agreement
You’ll need to sign an agreement with the DP, which outlines the terms and conditions of using the Demat account. Read the agreement carefully to understand the rights and obligations of both parties.
Step 6: Get Your Demat Account Details
Once your application is processed and approved, you’ll receive a unique Demat account number, also known as the Beneficiary Owner Identification (BO ID). You can now start using your Demat account to trade and invest in securities.
Key Tips for Beginners to Open a Demat Account
- Ensure PAN Card Availability: A PAN card is mandatory to open a Demat account.
- Link Your Bank Account: Make sure your bank account is linked to enable seamless fund transfers.
- Choose a DP with a User-Friendly Platform: Opt for a platform that simplifies trading and investment for beginners.
- Understand All Charges: Be aware of account opening fees, annual maintenance charges (AMC), and brokerage fees.
Demat account charges
To open a Demat account in India, you’ll encounter various charges, both during your search for a broker and after completing the registration process. These charges are typically classified into three main categories:
1. Account Opening Fees
This is the fee charged by your broker to set up your Demat account. While not all brokers charge this fee, some may offer free account opening as part of their promotional deals. However, certain online brokers may levy a nominal fee when you choose to open a Demat account for trading in various segments.
2. Annual Maintenance Fee (AMC)
The Annual Maintenance Fee is a prepaid charge that brokers collect to keep your account active throughout the year. This fee usually ranges between ₹300 and ₹800 per year. However, due to growing competition in the brokerage industry, many brokers now offer zero AMC to attract more traders.
3. Transaction Fees
Transaction fees are the charges levied by brokers for processing stock or security transfers (debits and credits) to and from your Demat account. These fees can vary significantly across brokers depending on their services and target audience.
Upstox demat charges
- Account Opening Fees: ₹150 + tax (one-time charge)
- Annual Maintenance Fee (AMC): ₹150 per year + tax
- Transaction Fees: ₹13 + ₹5.5 (CDSL depository charge) + tax for each transaction, which is significantly lower compared to traditional brokerage firms.
At Upstox, we aim to provide competitive pricing to make it easier for you to open a Demat account, ensuring that trading and investing remain both cost-effective and accessible to everyone.
Wrapping Up
- In India, you can open a Demat account online by filling out the required forms on your broker’s website. Make sure to have all necessary documents ready for a smooth application process
- With the growing adoption of digital technology and the rise of cashless transactions in the financial sector, most stockbrokers now offer online account opening through their portals, making the process quick and hassle-free
- The traditional method, on the other hand, requires you to print out physical forms and send them via courier to your broker’s office. While deciding between these two methods, consider the account opening fees and any hidden courier or processing charges that might add to the cost
