“Me bhi ekdin invest karunga!” – We all get this thought. Right?
But that thought rarely converts into action. I’ve seen many ‘aspiring’ investors, who fail to even get off the mark.
Everyone gets inspired after hearing Rakesh Jhunjhunwala’s exciting tale of starting from INR 5000/- in the stock market or Harshad Mehta’s ascend story in Scam 1992. Only a few take action.
In a country of more than 1.3 billion people, we still have 39.3 mn demat accounts as of 2019-end. (Livemint)
You’d be amazed that this figure was a 10-year high.
This means, not many in India are bothered about the stock market. People still fear and see stock market as a ‘satta bazaar’. Still, they want to become overnight millionaires.
The irony- most of them don’t even have a demat account to hold stocks.
No! I am not joking…. Most people who think of stocks as gambling haven’t ever bought a stock in India.
I opened my first demat account in 2014 at the age of 22. Thanks to my job which required me to stay updated with the market trends, I managed to have one quite early.
I developed a saving and investing habit that’s helping me chase my dreams now. (I am a full-time freelancer and writer who loves to sharing)
At that time, there were not many ‘online’ options. But now, there are plenty. (Don’t know if it’s a boon or a bane). You can even open a demat account online without even stepping out of your home.
Today, I’ll share about demat accounts and which one should you choose as a beginner in the stock market. I’ll also try to answer some common queries about demat accounts in India.
What is a demat account?
A demat account is just like your bank account but instead of storing your money, it holds shares in dematerialized form (hence the short form – demat).
Earlier, company shares were offered in the form of physical certificates. But it was made mandatory later. A demat account helps you hold stocks in electronic form.
Why do you need a demat account?
You can’t own or hold a share without having a demat account. Simple!
When the concept was introduced by NSDL in 1996, people were quite skeptical about holding assets electronically. But slowly, brokers and retail investors realized that having a demat account is better than physical shares which were prone to theft and damages.
Your demat account is the first step towards investing in the market. Also, it offers several benefits like:
- Safety and security
- Quick and convenient
- No need of large capital to invest through brokers
- Lower operational and transaction costs
- Automatic and reliable
- Multi-segment asset holding in a single account
You can open a demat account with any registered stockbroker (NSDL/CDSL member).
NSDL/CDSL are depositories that keep a record of your stocks and protect your investments even when the broker goes out of business or bankrupt.
Documents Required to Open a Demat Account in India
Okay! Now let’s begin with the requirements. Before I list the documents required, let’s see who can open a demat account in India:
- Citizen of India
- Domestic Company
- Clearing Member
So, you can see almost everyone is eligible to open a demat account. Now, let’s see what documents you will need to open a demat account in India:
- PAN Card
- Passport Photo
- Personal Identity Card
- Voter ID
- Driving License
- Proof of Address
- Voter ID (with latest photograph)
- Property sale/lease agreement
- Driving license
- Insurance policy document
- Utility or telephone bill (Landline or postpaid)
- Electricity bill (not older than 3 months
- Passbook/latest bank statement
- Proof of Income (for trading in derivatives-F&O)
- Proof of Bank Account
- ITR acknowledgement slip
- Form 16/Salary slip
- Cancelled personalized cheque
- Bank account statement (6 months)
You’ll also have to fill a form and sign a Power of Attorney (POA). POA gives your broker the power to transfer securities on your behalf for settling margins, trades and transfer funds from your account.
Note: You should always sign the power of attorney carefully. Make sure to check the name on the POA document. It should be in the name of the brokerage and not an individual (like the person who is getting it signed on the brokerage’s behalf)
Process of Opening a Demat Account in India
Before we look at the best demat accounts in India, let’s look at the process of opening an account, quickly. Here it goes:
- Choose a depository participant (broker) – You can choose any as per your preference. Check our list of best brokers in the next section.
- Fill an account opening form
- Submit all the required documents and a photograph with the form
- Sign the Power of Attorney & Terms of Agreement
- Pay the applicable charges (annual maintenance fee/transaction fee), if any
After you complete the process (which is online nowadays), you’ll be mailed all the details on how to use, how to trade and manage your account on your email account.
Best Demat Accounts in India
Upstox is also a popular discount broker which is similar to Zerodha in account structure, brokerage charges and everything.
Upstox became popular after they launched an online video ad campaign and are backed by several industry leaders.
5Paisa is backed by India Infoline – a popular full-service stockbroker. It promises low brokerage charges and free research and recommendations to its clients. It has a flat fee structure based on different plans.
Most of their recommendations and trades are powered by algorithms so you need to be smart to invest, without trusting anything blindly.
Remember, never trade on tips.
Zerodha is now the biggest stockbroker that introduced and succeeded with the discount brokerage concept in India.
They don’t charge brokerage on delivery-based trades. The only charges you’ll incur will be on intraday or derivatives trade. It is as close to a zero-brokerage demat account you can find in India and undoubtedly the best demat accounts in India you can get hold of.
Sharekhan is one of the oldest stockbrokers in the country with more than 16 lakh clients in the country.
It has everything you need but its brokerage structure is somewhat costly(minimum 10p/share), especially if you are into low priced scripts.
Before Zerodha, ICICI was the largest stockbroker in India, thanks to the ICICI bank sales team. It made broking popular in India and offered online services to clients.
But its brokerage structure isn’t favorable for a small-time trader or investor, at large. You can say it is one of the costliest stockbrokers in India. Brand names do have their own price, it seems.
Religare is also a popular choice among stock investors and traders in India. It has everything you need- from a mobile app to intraday reporting and multi-segment trading option.
But again, the charges and commissions are on the higher side here too, as seen with other big-time brokers.
Angel broking has a huge offline footprint, just like ICICI Direct or Sharekhan in India. They offer several special perks on account opening and also provide a lifetime free demat account too.
The brokerage charges/commission depends on the security/margin money you deposit on account opening, generally. So, if you’re starting small, be ready to see higher commissions on trades, compared to Zerodha and other discount brokers.
As ICICI bank did with ICICI direct, HDFC bank has its own demat & securities wing- HDFC Security. They have a very good reputation considering the bank’s name attached.
But here too, you’ll have to pay extra charges to use their trading platform and you can expect higher commissions per trade.
All the above options are worthy to be considered. Let’s take a bird’s eye view of the charges and commissions you’ll incur.
Best Demat Accounts in India Compared
|Zerodha||Demat & trading account opening: INR 200/-|
Annual Maintenance: INR 300/year
Other (Equity Intraday or Futures): 0.03% or INR 20/order, whichever is less
|Check the website|
|Upstox||Demat & trading account opening: INR 249/-|
Annual Maintenance: INR 25/month
Other: 0.05% or INR 20/order, whichever is less
|Check the website|
|5Paisa||Pack-based charges (check here)||Flexible (based on plans – check here)||Check the website|
|Sharekhan||Account Opening: FREE|
Annual Maintenance: FREE for first year. INR 400/year afterwards
|0.5% on equity delivery Flexible for other segments (based on segment)||Check the website|
|ICICI Direct||Account Opening: upto 975/- based on the plan.|
Annual maintenance charges: FREE for first year, INR 700/year afterwards
|Flexible based on the plan||Check the website|
|Religare||Account Opening: FREE|
Annual Maintenance: FREE for first year. INR 400/year afterwards
Additional Charges for
Processing: INR 500
|0.5% for delivery|
0.05 for intraday
|Check the website|
|Angel Broking||Account Opening: FREE|
Annual Maintenance: FREE for first year. INR 450/year afterwards
|0.4% of every trade||Check the website|
|HDFC Security||Account Opening: FREE|
Annual Maintenance: FREE for first year. INR 750/year afterwards
|0.55% of every trade||Check the website|
Which is the best demat account in India?
You can open a demat account with any broker. It doesn’t matter much. But still, if you need the best experience, free order delivery and digital experience, you should consider opening a Zerodha demat account.
Is demat account free?
Yes. Having a demat account doesn’t cost you anything – apart from nominal account opening and annual maintenance charges, generally below INR 500/-. If you compare it with the potential of wealth creation, it is nothing.
How can I open a demat account in India?
You can open a demat account by contacting a depository participant or a registered broker. They’ll guide you through the process and get you started.
What is the minimum balance for a demat account?
You don’t need a balance in demat account. You can have zero stocks in your account, too. Your bank account will be linked to your demat account and you can keep depositing/withdrawing money as per your requirement.
Can I open a demat account without a broker?
Yes. You can open a demat account without a broker by directly getting in touch with a depository participant (DP). However, there are limitations to just having a demat account. You’ll need a trading account for buying/selling stocks in the market, which is offered by a SEBI-registered broker only.
There’s no minimum amount to invest in shares. It all depends on the price and number of shares you want to buy. You can even a share if it’s priced at INR 1 or even below.
Can I transfer money from a demat account to a bank account?
Yes. You can transfer money from your demat to your bank online. Your broker/demat account DP will give you access to a console that will allow you to trade and place withdrawal requests after you open a demat account.
Conclusion – the best demat account for beginners in India
You can choose to open an account with any of the above-mentioned brokers. Just keep in mind the charges on delivery and trades. If you’re just starting in stock market, it is advisable to go with a broker which is approachable, trustworthy and gives you the power to trade online.
I was using an old demat account which I closed in 2017 (because it didn’t give me online access) and opened an account with Zerodha in 2018.
I never had to get on a call or visit anywhere (apart from stepping out to courier them my documents). It’s been three years and I still use my Zerodha account for investing in stocks.
They have a great terminal (Kite) and backend console to help me manage everything. And as I mentioned above, deliveries are free. You can check out Zerodha if you are just starting. Or can choose any of the one listed above.
In the end, it’s not your car’s speed that’ll matter as long as you continue moving towards your destination. Choose any one but start building wealth today. And while you’re at it, be careful!
If you’re new to stock market, check out my other blog on mistakes you should avoid as a beginner.
Want to start your investment journey? Explore how you can invest in India with our #FinancialLiteracy Series. Read the first blog on investing in India.
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