Demat Account Opening Charges

Only a decade ago, investing in shares was considered risky and the cup of tea of highly experienced investors who had a substantial capital amount to invest. Today, advanced technology has made it possible for retail investors to gain easy exposure to the Indian stock market through online trading and digital trading platforms. Owing to the ease of trading and other investor-oriented features such as financial literacy, stock charts, safety, and transparency, the Indian stock market is witnessing unprecedented demand. However, as the Indian stock market has shifted from a physical system to an electronic one, every investor must open a Demat account to start investing.

The demand has allowed for the opening of the highest ever number of Demat accounts in India. According to SEBI’s data, the number of active dematerialized (Demat) accounts in the country jumped 63 per cent in the past 12 months to 89.7 million in the financial year 2021-22 (FY22). Since equities are capable of providing investors with the highest returns across investment instruments, equity investment makes up for a vital investment for attaining financial freedom. Numerous stockbrokers can assist you in opening a Demat account but come with various charges.

If you are looking to open a Demat account and enter the world of better profits, you should know about all the Demat account opening charges.

What is a Demat Account?

'Demat' refers to dematerialization, a process by which physical securities are converted into electronic format. Therefore, a trader can use a Demat account to hold, transfer, and transact securities without the hassles of dealing with physical securities. As a result, trading has become a safer, quicker, and much more efficient method of storing securities and executing trades.

A Demat account helps manage your equity, bonds, and mutual fund investments. It is similar to a bank account. The only difference is that instead of holding money in a bank account, a Demat holds securities - shares, bonds, or debentures. You don’t need to carry physical shares with you when you have a Demat account. However, opening a Demat account comes with several Demat account opening charges.

How Do Online Demat Account Works?

Demat accounts are primarily used for investing in shares and securities in an electronic form that is more accessible with a Demat account. Specifically, these accounts are meant to convert share certificates from physical to electronic format, thereby providing greater accessibility for account holders. Every stockbroker levies certain Demat account opening charges for the services rendered and the management of the Demat account throughout its lifetime.

Demat accounts work similarly to how bank accounts function. For a Demat account to perform to its fullest potential, it must be linked with a trading account. Your depository participant forwards your 'buy' order to the stock exchange whenever you buy a company's share via your trading platform. The exchange matches your 'buy' request with another trader or investor's corresponding 'sell' request. Once your order is matched, an order from the stock exchange is sent to a clearance house, settling the trade. Once the transaction has been settled, the number of shares you bought gets credited to your Demat account at the end of the trading day. Simultaneously, the Demat account of the seller is debited for the number of shares that were sold.

For an account as important as a Demat, you must know what are the charges for opening a Demat account in India. There are several advantages to opening an online account. They provide protection for your holdings, facilitate transactions, allow faster settlements, enable access to loans, and protect against Demat Account fraud and forgery. As a result of these advantages, Demat accounts have largely replaced paper-based trading in India.

Demat Account Opening Charges: How much does it cost to open a Demat account?

The Depository institutions, NSDL, and CDSL have licensed numerous stockbrokers such as IIFL that offer exceptional Demat account opening services to the customers. They levy Demat account opening charges to open these accounts, which may vary for every participant. However, as the title of the charges is multiple, investors may become confused about what are the charges for the Demat account. To make it easy for you to understand how much is charged for the Demat account, here's a brief explanation of the particulars of each service.

Offline mode:

For those who are more comfortable opening a Demat account physically, you can give a missed call to 080 6671 9101. You will be contacted by a Relationship Manager at IIFL and guided through the entire account opening process.

Conclusion

SEBI has made it mandatory to open a Demat account before an investor can start trading. The account offers numerous benefits over the physical system and protects investor interest in a better way. If you are planning to open a Demat Account, IIFL offers the lowest Demat account opening charges. You can visit IIFL’s website or download IIFL Markets App from the app store to open your Demat account in a matter of clicks. IIFL’s trading app and platform come with comprehensive features to let you trade better than the rest.