When you plan to invest in the financial market, the first and foremost thing to do is to get a Demat account. A demat account can be considered to be a get way to the stock markets. Investments in the share markets has gained a lot of traction in the last few months.
The outbreak of the pandemic and the subsequent lockdown which followed have forced the masses to look for alternate income sources to safeguard their finances during such times and the stock market has always been amongst the most lucrative options for investment.
The Indian markets completely shifted to the electronic trading system in the early 90s which gave birth to the concept of dematerialization in India. Earlier the securities were traded in the form of physical paper certificates. To store dematerialized securities, one needs to mandatorily have a online demat account.
Getting a demat account online is an easy process, however choosing a demat account is not that easy. An investor, especially newbies need to check a number of pointers before finalizing a demat service provider. Today let us take a look at some of the pointers to look for before finalizing any demat account service provider.
1. Trust and Legacy
As an investor, you should always look for strong investor base and presence of local offices at your location. This will eliminate the risk of fly by night providers up to an extent. The demat service provider, also known as the depository participant, should be thoroughly checked for their legacy.
A brief study about the depository participant on the basis of pointers like history of operations including customer base and number of branches is recommended. Online reviews can also help you in analyzing the trust and legacy of depository participants.
2. Security
Your demat account will hold securities which can be worth your life savings, therefore it is important to ensure that the depository participant has deployed the highest level of security and data encryption for you demat account because the data keeps on moving across servers. Any unauthorized and unethical attack on the data and information can cause you troubles. Therefore, check for high grade encryption before choosing and depository participant for your demat account.
3. Easy Account Opening
Opening a demat account is relatively an easy process now. Most of the depository participants provide a seamless online account opening procedure without any paperwork. You should always prefer a depository participant who provides contactless and seamless account opening process.
It is very easy to pen a demat account online by using eKYC. All you need is your PAN card and Aadhar card for eKYC. The UIDAI will authorize the same by sending a One-time password to your registered mobile number for verification and you are done.
4. Ease of Access
Since your demat account will hold all your securities and other holdings, it is important to have round the clock and easy access to your account. In the world of internet, accessing your demat account online is mandatory to check your transactions, portfolio, statements etc.
You can simply use your smartphone to access your demat account anytime from anywhere and dive into your investments.
5. Product Range
The financial markets these days offer a plethora of investment options ranging from stocks, bonds, mutual funds etc. It is recommended to have a single demat account for an easy management of all your investments. Therefore, before choosing any depository participant it is important to check about the type of investment instruments win which you can invest using your demat account.
6. Service Charges
This is one of the most important criteria considered by seasoned investors before choosing a depository participant. There can be certain charges levied on your demat account. These charges can be in the form of account opening charges or account maintenance charges and can differ across different depository participants. Therefore, you must know about these charges before opening an account to avoid any confusion in the future.
Many depository participants are providing free demat accounts to the investors. These accounts do not attract any opening charge or maintenance charge. You can check out such depository participants and choose one as per your need.
7. Broking Service
As per SEBI norms, you are free to choose your demat provider and broker. It is up to you to hold both these accounts with a single company or two different companies. However, it is recommended to have both these services from a single service provider to ease out your investing process.
Conclusion
There are many demat service providers in India. You can choose the best Demat service provider by considering the above pointers. Your demat account is the get way to the world of investments. Therefore, you must be very careful before choosing one for your needs.
Happy Investing!
