Demat account can be opened with any authorized depository participants. These depository participants are trying to woo customers for opening a demat account.
Here in this article, we have listed five most important factors to help you choose where you should open a demat account.
Demat account charges
Three different types of fees are charged to a demat account. These are conversion fee, annual maintenance fee and transaction fee. All these charges differ from one DP to another.
Conversion fee is charged when you transfer shares from physical form to electronic form. If you are new to share market and wants to invest through your demat account then you need not worry about this charge as it will be charged only when you transfer your old physical form of holdings to electronic form.
Annual maintenance charges are charged every year towards maintenance of your account. If you are working for a big MNC or planning to maintain a good balance in your demat account then you can negotiate with your DP. Many DPs have corporate plans in which as an employee of a big company for which the DP has an offer, you will not be charged for annual maintenance.
Transaction fees are charged based on the transaction you perform by selling shares in stock market. There are also DPs who charge a flat rate irrespective of your buying and selling of shares. You have to choose your DP based on your requirements. If you are going to invest a huge amount then this flat rate will be beneficial for you or else you can take any plan based on transaction charges.
Also Read: How to Open a Demat Account in India
Nomination
In case of your death, ownership of shares will be transferred to the person who is declared as a nominee. So nomination place should be filled up with utmost care. You can take your wife as a nominee. If you are not married then any of your parents can be declared as a nominee.
Bank account details
In order to make your demat account fully operational you need to attach it with a bank Account.
Bank A/c will be used to transfer funds and to receive dividends from your shares. If you have not provided correct details of your bank Account or provided a bank A/c which is not attached with your demat account then you can not transact in share market.
You need to make sure that your saving bank account can be used along with your demat account. Banks like ICICI, Axis, Kotak and IDBI are providing 3 in 1 service by which your demat account, trading account and saving account will be opened with them. This 3 in 1 service is a very good to get rid of transfer of funds related problems.
Online access and software
Another most important thing you need to look in is online access and software. The software that you use or the kind of options available for online execution of transactions should be easy for you. If it’s very complicated then avoid it and go for a depository participant whose facility is easy to use.
Support
Back end support from your DP is a must for better investment in share market. During your investment you may face lots of problems for which you need your support team to help you. Sometimes, it may be required for you to take a call over phone. If your DP is not providing that kind of services then you may be in problem. Make sure to have a back end support from your DP.
In India, we have more than 500 depository participant to whom you can approach for opening a demat account. Before selecting your depository participant, you need to do a comparison study among various DPs with your priorities.