Best Demat Account in India with its benefits

A Demat account stands for a dematerialized account that holds on to the financial securities in the electric form. In India, the Demat account is maintained by two depository bodies, National Securities Depository Limited and Central Depository Services Limited. It helps in keeping proper track of all the documents and information of all the investments an individual makes in share, exchange-traded funds, bonds, and mutual funds in one place. Demat Account is a pre-requisite for equity delivery trading in India. Demat Account is also needed while applying for IPO (Initial Public Offering) as the allotted shares are credited to Demat Account.

The purpose of implementing a Demat account is the eliminating troubles associated with paper shares. After the introduction of the depository system by the Depository Act of 1996, the process for sales, purchases, and transfers of shares became significantly easier and most of the risks associated with paper certificates were mitigated. It also helps to minimize the time of transfer of shares.

Depository Participants

A depository participant acts as an intermediary or agent of a central depository and provides namesake services to investors and traders. India currently has two central depositories registered with the apex trading and investment regulatory body SEBI.

– NSDL- National Securities Depository Limited.

– CDSL- Central Depository Services Limited.

A depository participant must, therefore, be registered with either of these two licensed operators to open a Demat account.

Types of Demat accounts in India

There are three types of Demat accounts which are offered by depository participants-

Regular Demat accounts- It is used by Indian citizens for holding the shares purchased online.
Repatriable Demat accounts- It is used by NRIs who transfer the funds overseas. And it needs to be associated with NRE (Non-Resident External) account.
Non- repatriable accounts- It is also used by NRIs but it need not be associated with the NRE account.

Best Demat accounts

The best Demat accounts in India are-

Zerodha Demat Account
Angel Broking Demat Account
Share khan Demat Account
Edelweiss Demat Account
5Paisa Demat Account
Kotak Securities Demat Account
IIFL Demat Account
Motilal Oswal Demat Account
ICICI Direct Demat Account
Karvy Demat Account

Best Bank for Demat Account

Almost all the new-age banks provide the Demat account. Some of them open the Demat account default even for the people who go to them for the opening of a saving bank account. Nowadays, banks provide 3-in-1 Demat accounts in which there are three different types of accounts which are Savings account, trading account, and Demat accounts all linked to a single account.

Zerodha 3-in-1 Demat account.
Upstox 3-in-1 demat account.
ICICI Direct 3-in-1 Demat account.
Kotak Securities 3-in-1 Demat account.
HDFC Securities 3-in-1 Demat account.
SBI Cap Securities 3-in-1 Demat account.
Axis Direct 3-in-1 Demat account.

Benefits of Demat account

It is convenient in share storage and in transferring. It also allows you to store any number of shares so that you can trade-in volumes and monitor the details of all the shares you are holding in a Demat account. It further facilitates the swift transfer of shares while trading online.
The bonus and stock splits are automatically get updated. The company whose shares you are holding if takes an initiative that brings in a changer to its stocks such as bonus issue, stock split, etc., it will be automatically get updated in your Demat account.
Besides the shares, a Demat account can also hold your multiple investments like bonds, mutual funds, exchange-traded funds, government securities, etc.
You can access your Demat account anytime, anywhere through your smartphone or laptop.
Before the advent of the Demat account, the shares existed as physical paper certificates. If you held shares of a company, you had to safe keep a dozen of paper certificates. These were vulnerable to tampering, theft, loss, and forgery. Moreover, the transfer of shares involved lengthy paperwork that was prone to errors and delays. With the introduction of the Demat account, all these shares can now be stored electronically in a safe and secure digital repository.
The Demat account also provides the facility of nomination as per the process described by the depository. And in case of the demise of the investor, the shareholding in the Demat account can be transferred to the appointed nominee.

Documents required for the opening of Demat account

Opening a Demat account requires providing documents that fulfill the requirements of KYC (Know Your Customer). A contract with a stockbroker does not have to be signed. Generally, the documents are:

Permanent account number (PAN) (compulsory)
Bank statement (last 3 months)
Proof of address
Income tax return or salary slip
Bank crossed cheque
KYC
Aadhar card

Process of the opening of Demat account in India

– Choose Depository Participant (DP)

Choosing a depository participant (DP) is the first step to open a Demat account. In India, banks, stockbrokers, and online investment platforms offer DP services. While choosing a DP, it is advisable to go for a service provider whose services and features match your needs and requirements.

– Submit Demat Account Opening Form

Visit your DP’s website and fill out the online Demat account opening form for opening a Demat account. Many depository participants like IIFL offer the ability to open both trading and Demat accounts.

– Fulfill KYC (Know Your Customer) Norms

Once you have duly filled the Demat account opening form, you will be asked to fulfill the Know Your Customer (KYC) norms. This would require you to submit scanned copies of KYC documents such as your identity proof, address proof, bank account statement, and income proof. It is a good idea to have all of the relevant documents by your side before applying since this can help you get through the process faster.

– Go through the Verification Process

After submitting your Demat account opening form along with the requisite proofs, you will be asked by your DP to go through a process called ‘In-Person Verification (IPV). This exercise is mandatory, and it’s carried out to verify the authenticity of your documents. Depending on your DP, you may be asked to be present in person at any one of your service provider’s offices. However, many depository participants now offer IPV services online through the use of a webcam or a smartphone.

– Sign the Agreement Copies

Upon completion of IPV, you will be asked to sign an agreement with your DP. This agreement generally contains all the duties and rights of the depository participant and the investor.

– Get Your BO ID Number

Once this is done, your DP shall proceed to process your Demat account opening form. Upon approval of your application, you will be provided with a unique Beneficial Owner Identification Number (BO ID). This BO ID is used to access your Demat account.