5 Advices From Seasoned Investors On Opening Demat Account

Before doing anything, getting the necessary information about it is extremely important. This certainly holds true for opening a Demat Account. If you are not aware of the certain aspects of this account, then it may create problems for you later.

Knowing what the seasoned investors think about opening a Demat Account can help you take the right course of action. These investors have remained in the field of investment for a long period of time and hence can be easily designated as an expert. Their advice can not only help you in knowing how to open Demat Account but they can even help you see different factors which are quite important but generally go unnoticed.

These are the five things which the expert investors recommend you to keep in mind before opening a Demat Account.

Depository And Depository Participant

Even before knowing how to open Demat Account, it is important for you to know what depository and Depository Participants mean.

A depository is an agency in which an investor opens a Demat Account. Banks or any such financial institution can serve as depositories. An investor must, before opening a Demat Account, check that a depository is signed under a recognised regulatory body. There are only two bodies under which depositories can be registered:

  • National Securities Depository Participant (NSDL)
  • Central Depositories Securities Limited (CDSL)

A Depository Participant or DP acts as an agent or intermediary between you and the depository with which you are going to open a Demat Account. As they are the representatives of the depository, it is not possible to open a Demat Account with them.

How To Open Demat Account

The first and most important thing which the experts recommend is to know precisely how to open Demat Account. Many people think that opening a Demat Account is a cumbersome process and takes a lot of time and effort to open it. This, however, is not true at all.

Given below are the details which will neatly provide you with the step by step process on how to open Demat Account:

  1. Select the Depository Participant through whom you would like to open a Demat Account.
  2. Along with an application form, submit photocopies of important documents including PAN card and Aadhar card for KYC.
  3. Read the terms and conditions pertaining to the Demat Account before signing it.
  4. Your documents will be sent for verification and approval.
  5. Once the approval process is completed, you will be getting a unique beneficiary owner ID (BO-ID), which will be important to access your Demat Account.

Simple though the process is, experts suggest that it is important to keep the required documents handy and that the details should be entered carefully. But what they most stress upon is the necessity of reading the terms and conditions of the Demat Account. You can avoid great inconvenience if you go through this document with the utmost diligence.

Charges Involved

It often happens that people go for a DP who offers a free Demat Account thinking it will not cost them a single penny. This misunderstanding, the experts say, is the most common trap in which beginners fall while applying for a Demat Account.

The free Demat Account is nothing more than a regular Demat Account with only waivers on the Annual Maintenance Charge (AMC), that too for the first year only. It might seem that it is better to go for a DP which at least provides some sort of waivers. But you should first compare the different charges you will incur from different DPs before coming to a decision. These charges are as follows:

  • Account Opening Charge
  • Annual Maintenance Charge
  • Custodian Charge
  • Dematerialization Charge
  • Postal Charge

There is no point in getting a DP who offers a discount on AMC but recovers it from a high dematerialization charge.

Customer Service

It is not just the quality of the product but the post-sale service it entails which manifests its supreme quality. Seasonal investors say the same thing about Demat Account. Many DPs will try to lure you with great offers but the rather important point is how good their customer support service is.

Good customer service can help you easily resolve the problems faced in the Demat Account.

A customer service number which is always found either busy or unreachable serves no purpose. Therefore, you should always go for a Demat Account whose provider ensures you a quality customer support service.

Demat Account In Case You Settle Abroad

Even if you know how to open Demat Account it might come as a surprise that it is possible for you to become an NRI and still enjoy the benefits of Demat Account. For this, you will just have to open a Repatriable Demat Account. With this option, you can easily transfer your shares abroad.

So if you were planning to open a Demat Account but dropped the idea by thinking it is meant only for the residents of India, knowing about repatriable Demat Account can be of much use to you.

Being well versed in something as simple as how to open Demat Account to a little more complex procedure of the Repatriable Demat Account is important. Once you have figured these things out, you are good to go for a Demat Account.

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Christophe Rude

Christophe Rude

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