These days every other individual is looking forward to a safe and secure method to invest, and hence the role of demat account in share market comes into play. But is there any way of opening a Demat account with depository?
In this article, let’s discuss the ways to have a Demat account with different depositories.
Can We Open Demat Account Directly with Depository?
In the stock market, there are two major depositories, NSDL and CDSL, who primarily perform the role of operating and maintaining a Demat account.
But is it possible to open a Demat account with depositories?
As already told, this depository maintains the Demat account but you cannot directly open an account, so how can you start investing in the share market?
For this, there are different depository participants registered with NSDL and CDSL which act as bridge between an investor and depository.
Depending upon the experience in trading and further on the basis of the requirement you can choose the stockbroker offering you maximum benefits.
Let’s move ahead to know the connection between the Demat account and the depository.
Demat Account and Depository
Now as already discussed, the stock market has different bodies to manage different activities. Here when it comes to managing the Demat account, there are two different depositories, NSDL and CDSL.
These depositories manage the Demat account and make sure that no kind of fraudulent activities take place. Further, it smoothens the process of buying, selling, and transferring shares from one Demat account to another.
To get the Demat account in the respective depository, one has to approach the registered stockbroker. The stockbroker provides the online or offline provision where one has to follow a few steps for KYC verification.
Once this KYC process meets the depository criteria and is being verified, the Demat account is activated.
Let’s understand the role of depositories in the share market:
Act a bridge between public companies and their shareholders.
Eliminates the risk of theft by providing a provision of dematerialization.
Reduces the paperwork and accelerates the process of buying and selling shares in the market.
Thus, you can assure the safety of your holdings with the depository Demat account.
Depository and Dematerialization
Next comes the dematerialization process that eventually makes it possible for the investor to secure the shares and holdings in the Demat account.
But what is the process of dematerialization and how depository convert your physical shares into dematerialized shares?
Let’s have a quick look and gain an understanding of dematerialization.
Dematerialization is the process where you can convert your physical shares into the dematerialized form, thus offering it better security and safety.
Here is the complete process involved in the dematerialization of shares:
In order to dematerialize the shares, one must have a Demat account with any of the registered Depository participants. Here the client has to submit the registered certificates under his or her name to the DP.
DP then intimates NSDL/CDSL electronically and sends the securities to the concerned issuer or R&T agent.
Further depository informs the Issuer/R&T agent electronically to process the request of dematerialization.
On finding the certificates in the order it registers the depositories and then communicates electronically to the respective depositories.
On confirmation, NSDL then credits the securities in the depository account of the investor.
Demat Depository Account Type
Now moving towards the understanding of Demat Account Type, there are different criteria for categorizing the Demat account in India.
Here on the basis of depositories, there are two different types of Demat account with the name of depositories:
NSDL Demat Account
CDSL Demat Account
As already clear, the Demat account with the Depository Participant registered with NSDL comes under the former category while the latter includes the depository participants’ Demat account registered with CDSL.
Let’s have detailed information on the stockbrokers and Demat account services with respective depository participants.
Next is Angel One, the Fintech company that helps you in meeting all your trading and financial needs on one platform. It is a hybrid stockbroker i.e. offering full-broking services at a discounted price.
As per its iTrade Angel Broking plan, you can now trade in the delivery segment for FREE while the brokerage for other segments is flat ₹20 per trade.
Another stockbroker in the Choice Broking. Being a full-service stockbroker, it offers research and advisory services for free thus helping beginner investors and traders to do analysis and pick the right stock.
Its brokerage model differs from the above two stockbrokers but in comparison to the full-service stockbroker, it charges the least with 0.2% in delivery while 0.02% of the turnover value for intraday.
Apart from this, it provides the advanced trading platform Jiffy that makes it easier for traders like you to trade without hassle across segments.
Whether you want to invest in an IPO or looking for a long-term investment in stocks, it is always good to pick a reliable partner.
When it comes to safety, security, and reliability, bank-based stockbrokers like HDFC Securities lead the race. HDFC Securities account opening gives you access to trade across segments. However, the HDFC brokerage is higher in comparison to another stockbroker.
Consider your requirements and open the Demat account with one of the most secure stockbrokers registered with NSDL.
After knowing the Demat account charges and annual fees, let’s learn about the account opening process. With the advancement, almost every other stockbroker registered with NSDL offers an online way to open a Demat account.
Once you meet all the requirements, follow the steps mentioned below:
Visit the stockbroker website with whom you want to open a Demat account.
Click on the link to Open Demat Account.
Fill in the basic details like Name, Mobile Number and City.
Verify it by entering the OTP.
Now enter some more basic details, like income, address, etc.
Provide bank details.
Upload the documents like PAN Card, Bank Passbook
Now verify all the details via the e-sign process, where you need to enter the Aadhar number and the OTP received on the registered mobile number.
Once done, the account gets activated within 24 hours.
Apart from this, NSDL registered stockbrokers also offer an offline method to open a Demat account where you need to download the NSDL Demat Account opening form from the DP’s website and send it along with the copy of self-attested documents to the headquarters or nearest branch.
Next comes the CDSL depository that again performs the role and function of maintaining the Demat account of clients who open a Demat account with the registered DPs.
Opening a Demat account with the depositories makes it easier for you to secure your holdings in the Demat account. Here are some more benefits of opening a Demat account with CDSL.
The depository opens a unique number to each Demat account thus making it easier for clients to debit/credit shares.
It offers a settlement facility that reduces the overall hassle of buying or selling shares. Here the securities bought or sold in any exchange are directly debited/credited to the Demat account without going through the broker’s pool account.
It provides “EASI’, a seamless way for investors to access the holdings and the status of their transactions.
Here is the list of depository participants registered with CDSL:
The name of Paytm is already in the market, and now among many of its services, it introduces the Demat account services for stock market investors and traders.
Registered as a discount broker, it claims to offer trading services at a minimum cost. Other than this, the broker comes up with the plan of Free Demat account for a lifetime by waiving off the AMC Charges.
Reap the benefit of trading with Paytm Money by opening a Demat account now.
Now moving towards the last segment of opening a Demat account with a depository, is which depository to choose and what is the basic difference between a depository account and a Demat account.
Moreover, it is important to understand that is there any difference between the two.
Let’s clear all your doubts by providing you the difference or detail between the depository account and the Demat account.
Since depository account is clearly choosing the depository with whom you want to open an account. So for this let’s clear the difference between NSDL and CDSL
Let’s start with the management process of both the depositories, NSDL depository generally holds and manages the electronic shares, ETFs, bonds traded on NSE.
On the other hand, CDSL holds the BSE-traded securities.
Other than this comes who promotes both the depositories.
On one hand, where NSDL is promoted by India’s Premier Bank and other financial institutions like Industrial Development Bank of India and Unit Trusts of India.
CDSL is being promoted by BSE and State Bank of India. Apart from this, it is promoted by other financial institutions like Bank of Baroda, HDFC Bank, Standard Chartered Bank, etc.
This is discussed in order to make it easier for you to choose the right depository to manage your Demat account. Apart from this, looking at the security, it is always good to pick the one offering high-level security to your holdings.
Recently, there was a theft of securities from the 5 crores CDSL Demat account, now this makes it, even more, choose the right depository for opening a depository Demat account.
So, a depository account is generally the depository you choose to have a Demat account.
Further Demat account is simply to have an account to secure your shares in dematerialized account with any of the registered depository participants. Make sure you pick the stockbroker registered with the depository offering better services and minimal cost of maintaining the account.
However, here again, you can get the list of stockbrokers who are registered with both depositories. Now which depository account you choose depends upon the exchange you pick to trade-in.
Now if you are looking forward to having a Demat account with the depository, consider all the important factors discussed above.
Here however you cannot open a Demat account with a depository but can choose the stockbroker registered with the depository with which you want to operate your demat account.
Why to wait more? Get in touch with us and we will assist you in choosing the right stockbroker and in opening a Demat account online for FREE!