The Ultimate Guide About How to Open and Close Demat Account

John, content writer | Thursday, 19 January 2023, 12:31 IST

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The Ultimate Guide About How to Open and Close Demat AccountSince March 2020, equity stock markets have seen a bull run. In order to benefit from rising markets, numerous IPOs are also issued during each Bull Run. If you want to manage and trade your equity stock holdings over the long term, you must have a Demat account and this makes it important to know how to open a Demat account. Through a Demat account, you can also invest in bonds, REITs, mutual funds, and ETFs.

What is a Demat Account?

Dematerialization, or simply "Demat," is the holding of securities in digital form. Dematerialization makes it possible to manage investment data effectively. You are allowed to have multiple Demat accounts linked to your PAN and Aadhaar cards if you are an investor. There is no minimum balance requirement for the Demat account, in contrast to a savings bank account. Any Depository Participant (DP), which is often a bank, NBFC, financial institution, or broker, will let you open a Demat account. A DP must be registered with one of India's two depositories, NSDL or CDSL.

How to Create an Online Demat Account?

To set up a Demat account online, follow these steps:

  • Visit the designated participant's official website.
  • Then, select "Open Demat Account."
  • Enter the necessary information, such as your name, address, phone number, etc.
  • In the field visible on the screen, enter the OTP that you received on your mobile device.
  • Enter the information from your PAN card and Aadhaar in the fields visible on the screen.
  • After submitting the information successfully, the DP should contact you by phone or email to finish the account opening procedures.
  • Please have passport-sized photos and scanned copies of your PAN card, Aadhaar card, canceled check, etc. on hand for KYC purposes.

What Are Demat Accounts Charges?

When choosing a DP, Demat fees are important. Transaction charges must be paid by each DP in addition to the annual maintenance price and account opening fee. You should be aware that some platforms also don't charge for maintenance.

Additionally, fees are charged for each transaction made using the Demat account. Depending on whether your DP is registered with NSDL or CDSL, there are different fees for each trade or transaction. For those who trade securities frequently or who are long-only investors, the applicable fee are due changes further.

Can you close your Demat account online?

You cannot close Demat account online. You must take a few easy procedures to close a Demat account:

  • Complete the Account Closure Form first.
  • Once completed, take the closure form and the required documentation to the DP's office (which could be a bank or investment business).
  • The account must be closed within 7 to 10 business days of the form's submission.

Conclusion

A Demat account is required to engage in trading. Demat accounts have fees and maintenance costs, therefore this could cost us money. You should thus close any Demat accounts with a negative balance or that are inactive. Knowing the procedures involved in closing a Demat account will make the process simple and useful when the time comes.

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