The economy of India is going through a paperless mode. Whether you happen to transfer money or availing a bank statement everything has become easy with the advent of the internet. All the transactions can be done via paperless form in a matter of a few seconds. On the other hand if you are looking to invest in stocks, it is possible to do it with the help of a demat account.
More about a demat account
This is an electronic form of account that helps you to keep shares in an electronic form. In the days gone by shares along with bonds were only traded in physical form. To deal with it was hassle prone as the chances of theft was on the rise. In fact the process of dematerialization of shares started in 1996 and the benefits of it have rolled on for years. The demat account operates on similar lines like a bank account.
The charges expected from a demat account
- An account opening charge- Some brokers levy an account opening charge, whereas others might end up providing it for free
- Annual maintainenace charge- there could be annual maintainenace charge that most brokers or banks levy. Some of the brokers tend to waive off the annual charges if you undertake transaction beyond a certain limit
- Transaction charge- it eventually boils down to the number of transactions that you go on to execute through the demat account. Then the broker or bank is going to levy a transaction every month. Even the transaction charges are known to vary according to DPs. Irrespective of the number of shares that you execute some of them go on to charge a flat rate. On the other hand they could end up charging based on the number of scripts.
These accounts are secured as any shares can be sold only through your demat account.
Points to keep in mind when you are opening a demat account
Once you are opening a demat account always provide your correct information about your bank account and nomination details. Do keep in mind that when you are opening a demat account with a DP a couple of account types have to be created. One of them is a trading account with a DP and another relates to a demat account. For intraday transactions you do not need a demat account as it can be executed with the aid of a trading account that is held with the DP
If you are planning to trade in options or futures, you do not have to open a demat account. Once you are planning to sell a share, the broker would put it into your demat account for further settlement. In order to achieve this the broker signs a power of attorney from the account holder at the time of opening an account. Though this is not compulsory but it make the process quicker once you execute a transaction via a broker.
