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How To Choose The Best Demat Account?

•6 min read•by Angel One
Ever wondered what a demat account is? Choosing the best one is determined by simple onboarding, minimal fees, seamless bank-broking connection, robust data analytics, and consistent DP service quality.
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For you to become financially independent, you need to start building on your financial assets; these may be anything from equity, mutual funds, bonds, IPOs, debentures, gold, etc. You have to remain invested in a particular financial asset(s) for an extensive period. However, to achieve this, adequate financial planning is required. You need to endure a bit of risk as well as secure yourself to generate the maximum yield from your investment. For investing in the Indian stock market, you need to have a demat account. 

To open a demat account, you have to select a depository that would be best suited for you to trade in the share exchanges. Consequently, you have to choose the best demat account for trading to begin your journey in investing in shares. 

Also read more about what a demat account is? 

Key Takeaways

  • Trading or investing in shares in India requires a demat account, according to SEBI regulations. 

  • Depository Participants (DPs) must provide Basic Services Demat Accounts (BSDA) with limited AMC charges depending on portfolio valuation. 

  • A 2-in-1 or 3-in-1 account structure allows for integrated banking, trading, and demat operations. 

  • Depository Participants offer data analytics services such real-time valuation, alerts, portfolio insights, and transaction tracking. 

Simple Account opening:

The first step should be the simplest, that is, the account opening formality should be extremely simple for you the investor. 

SEBI has directed a detailed process of opening a demat account, which the DP – Deposit Participant(s) must follow. Furthermore, DPs can further simplify this process to a great extent. 

For instance, the best demat accounts offer an e-KYC process, where your identity is validated instantly using Aadhaar data. This purely online process allows your account to be activated rapidly—often allowing you to start trading within 24 to 48 hours. In contrast, the physical account opening process, which involves manual form filling and verification, may take up to 5 days to activate. 

Furthermore, SEBI has mandated every DP to provide investors with the Basic Services Demat Account (BSDA), which promises to provide limited services at reduced costs to retail investors. It gives an option of an online demat account facility. These accounts are also known as no-frills or basic demat accounts. Moreover, SEBI states that every DP will make basic trading accounts available with limited and essential services at reduced costs. 

The Basic Services Demat account makes for one of the best online demat account options for the inexperienced investor. The charges for the BSDA account shall be highlighted in the following point. 

Economical Demat Account Charges:

Another pointer to consider is the price point of the DP and account charges. Opening a demat account has a cost, even if it means that no transactions are carried out throughout the year and your account is idle. Today, banks, financial institutions, depository participants, brokers, etc., most of the time, do not charge any fees for opening a demat account. However, when you calculate the cost of the demat account, you need to consider all the charges. 

Let’s look at all the charges levied to consider for choosing an ideal demat account:

  1. There is an annual maintenance charge AMC that is billed to the investors account year on year
  2. A fee is charged each time there is a debit from your demat account
  3. Charges are applied if you request for a physical copy of your demat holding or physical transaction copy
  4. If your Debit instruction Slip DIS or Demat Request form DRF is rejected your demat account incurs a cost
  5. If you hold shares in physical format, particular DPs charge to convert the share certificates from physical form to an electronic one
  6. If you opt for a BSDA account, the AMC structure is straightforward and provided via a slab basis. If your account value is up to INR 50,000, then there will be a NIL amount levied for AMC. However, for a value holding from INR 50,001 to INR 2,00,000, the AMC fee will be up to INR 100. This seems to be the most accurate fee structure to consider choosing the best demat account

However, some DPs also provide zero AMC demat accounts, wherein they waiver the AMC charges. Moreover, they either offer a limited time no AMC demat account, for instance, providing you with no AMC charges for the first year or a lifetime offer of no AMC demat account charges. These are a few points to consider regarding the charges when choosing or opting for the best demat account in India.

The seamless interface between Banking and Broking:

A very crucial aspect for choosing the best demat account for you should be a seamless process between your bank account and your broking account. This means that, when investing and trading in equities on a day-to-day basis, there is a shift towards the digital platform by investors for the ease of using the internet and trading apps to complete the trades. This requires a proper linkage of your bank account and your demat and trading account. 

2 options are available, 2-in-1 accounts or 3-in-1 accounts. The 3-in-1 account links your bank account, your demat account and your trading account. This is mainly offered by those brokers who have group banking licenses; majority banking institutions provide the 3-in-1 account. 

How does a 3-in-1 account work? (i) The investor transfers a particular amount from the savings bank to the trading account; (ii) the trading account, that has its unique Id carries out the trade that is buying and selling of securities; (iii) the purchase of share credit is reflected in your demat account. The demat account is utilised as a bank wherein the shares bought are deposited, and the shared sold are withdrawn. 

Majority of the time, private DPs or financial institutions which provide the facility to the investors for a demat account as well as a trading account, offer a 2-in-1 account. This account extends a seamless system to transfer money and a link between the trading and demat account, which works most of the time. 

To summarise this tip, as long as the customer is provided with a seamless interface between the bank account, the trading account and demat account for an economical and straightforward transfer of money and service, the purpose is adequately fulfilled. 

In-depth Data Analytics:

A vital factor to keep in mind is the availability of data. Today Depository Participants (DPs), financial institutions, banks, etc., are out-spreading their services beyond the plain vanilla account statements. 

These days DPs provide a host of online data analytics like real-time valuation, direct call to action requests for trading clients, analytics on demat inflow and outflow, timely alerts, dominant market players, industry concentration, thematic concentration, consolidated portfolio outputs among other things. 

In the current day and age, financial analysis is no longer only limited to examining share prices and share behaviour. These analyses are integrated with external factors which play a vital role in the performance of a share such as social and economic trends within the economy, the political environment and volatility, consumer behaviour, preferences etc. All this put together have the probability of affecting the company, industry which indirectly affects the share price. 

Hence, value additions such as data analytics, provide a great advantage for the decision making of the investor in choosing the best demat account available. 

Hygiene factors essential to consider are: 

  1. How efficiently does your DP carry out the transaction? 

  1. Does he provide you with the best possible share price and assist you in tracking the market? 

  1. How quickly does your DP manage the dematerialisation of physical shares? 

  1. Are the demat debit and credits processed on time? 

  1. What is the overall view about the quality of services provided by the DP? 

  1. Are there any service-related complaints of the DP pending with either SEBI, NSDL or CDSL? 

  1. Is there any negative news about the DP and his company? 

These questions determine whether the DP is committed to offering high service standards. 

These are the main features or tips to consider when choosing the best demat account in India: 

  1. The most secure way to trade is through the assistance of versatile Depository Participants. 

  1. The demat account registered with the DP should provide an efficient and quick service. 

  1. Online platforms which are aplenty today are your one-stop destination for all trading and investment requirements on the go. 

  1. Real-Time updates and tracking on mobile apps through online trading and demat account are very much in demand. 

  1. Research reports and recommendations provided by the DP is a value-added service for the investor to assist him through his investment journey. 

There are plethora of companies, banks, financial institutions, Broking companies that offer all the above services or are limited to a few. It is best to keep in mind all the tips when considering how to choose the best demat account and which is the best fit for you. 

Conclusion 

To select the best demat account, consider the DP's reliability, prices, platform performance, and analytical assistance. With SEBI-regulated systems and technology-driven tools, investors can now create and maintain demat accounts with greater ease than ever before. By evaluating features, prices, and service quality, you may choose an account that allows for easy trading and corresponds with your financial objectives. 

FAQs

Yes, a broker is authorised to open a Demat account for you. You can approach any registered Depository Participant (DP), which can be a bank or a broker, to open your Demat account.
Yes, a Demat account can be opened online. All you need to do is choose a broker and fill out the details online. Your details will be validated using your Aadhaar data through the e-KYC process.
Some of the documents required to open a Demat account are PAN Card, Aadhaar/Driving Licence/Passport/ Voter Identity Card/Ration card as proof of identity and address, ITR statements, and a canceled cheque for bank details along with recent photographs.
Usually, there are no charges for opening a Demat account. Angel One offers all its clients the facility to open a Demat account for free. Even SEBI has mandated no Demat charges for accounts with investment up to Rs. 50,000.
Yes, you can have two Demat accounts. In fact, a trader/investor can have multiple Demat accounts provided these accounts are opened with different brokers. This means you can open only one Demat account with a particular broker.
To select the best Demat account for you, ensure that the broker is SEBI-registered and provides quick and efficient services at low costs. Also, compare brokers on the interface of their trading platforms and apps and whether they offer research recommendations and ideas.
The best trading account in India is offered by Angel One. You can even open a 2-in-1 account, i.e., a Demat cum Trading account with Angel One for easily investing in the stock market.
The Demat account best suited for beginners in India is the one, which reliably holds all your securities at economical account charges and provides a seamless connection to banks, like Angel One. You should verify that the depository participant is well-trusted and reputable.

There is no officially stated "No. 1" demat account in India, as preferences differ based on features, cost, and usability. Before selecting a DP, investors often consider costs, platform stability, and service quality. 

Some DPs provide lifelong free AMC demat accounts as part of special programs or schemes, although the limits differ per provider. Before accepting such offers, investors should carefully consider constraints such as minimum holdings or service limits. 

Demat charges vary per bank, broker, and financial institution, depending on AMC, transaction fees, and service structures. When selecting a DP, investors should consider total value, dependability, and regulatory compliance rather than simply the "lowest cost.” 

The most suitable type of demat account type is determined by the investor's trading frequency and portfolio size. SEBI-mandated BSDA accounts are cost-effective for small or beginning investors, whereas active market players choose normal demat accounts with more comprehensive service capabilities. 

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