5 Things To Check  When Opening A Demat Account 

Charlotte Miller

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If you want to trade stocks, having a demat account is necessary. A demat account is equal to a bank account in terms of equity. The demat accounts hold your shares in custody just as a bank account as cash.

It makes it obligatory that you have a demat account before the start of trading in shares. To do this correctly, however, you must check the following list before opening a demat account.

You need to keep several things in mind if you want to open an Indian demat account. Read ahead to understand them better.

Factors To Check Before Opening A Demat Account

  1. Make sure the same broker handles your demat and trade transactions.

Generally, your trading cum broker demat account is typically opened one at a time, so that will not be an issue. If your broker has no DP licence, what’s the matter? Then you must ensure that once you sell shares with your broker, you submit the debit instruction slip (DIS) to your broker on time. It may result in a wrong delivery and losses unless you submit the DIS on time. This procedure will become easier and simpler if your broker and DP are the same.

When selling or crediting the demat account to purchase it, you can use online trading and give your broker access to a power of attorney. You can avoid many problems by having your trading and demat accounts in the same place.

  1. Calculate the amount of the demat charges involved

You’ve probably seen DPs advertise the option to open a free demat account regularly. Please remember that this is just one of the costs of maintaining a deposit protection account. And there’s the annual maintenance fee they charge you every year. This is usually based on the value of the shares in custody. Additionally, each time you sell shares, the shares get debited from your demat account, and the DP has to pay a charge to the NSDL or CDSL, which also gets debited from your account.

In addition, if you require a physical statement, a piece of duplicate information, or a statement of holdings or transactions for evidence, DPs shall also charge you. When your DIS is rejected for technical reasons, the DP will again charge you with a penal offence. To obtain a comprehensive picture, it is necessary to consider the total of all these charges in calculating the overall cost of your demat account.

  1. Complaints pending against the DP 

It’s more of a hygiene issue, and that will show how passionate the DP is about its service standards. Only open demat accounts with DPs who have a few complaints pending before SEBI concerning the quality of service. Well, that’s not a good sign. In addition, they look for negative feedback on their data protection services on social media and discussion forums.

  1. What is the strength of the demat technology platform? 

Most brokers now offer access to your trading and demat accounts via a single platform. All transactions are seamless, including funding a bank account, demat accounts, debits on the demat accounts, and credits from your bank account. Ensure the DP is equipped with a robust technology platform that ensures your entire demat process runs as smoothly as possible. Usually, when you sell shares, your demat account is debited the next day, and if you buy a share on that date, it’s credited to T+2 days.

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  1. Simple banking, brokering, and custody 

Only if your broker is also a bank can all three leading banking, brokerage, and custody activities fully integrate. It’s not all that important, though. You’re free to go if your brokering and custody are seamless. You can load funds using NEFT, RTGS, UPI, or an authorised payment gateway. Remember, many brokers charge you a nominal fee to use the payment gateway, so it is best to use the NEFT, RTGS, or UPI method, which is usually free. The fewer administrative issues you must deal with, the more seamless these three activities are.

Some basic checks and balances will prevent you from having a bad DP account in the wrong place! The best product offering is the three-in-one Trinity account that Kotak Securities offers. These accounts include a savings bank account, a demat account, and a trading account, all linked together for seamless transactions. This provides a convenient place for resident Indians and non-NRI customers to invest and trade on the stock market.

Kotak Securities is one of the biggest stock exchange firms in India. In the BSE and the NSE app Kotak Secures offers the trading of equity F&O and contingent F&O segments.