How to open a DEMAT Account ? What is 3 in 1 Account ?

The growth which our economy has seen in the last few decades has been commendable. And with growth in the Economy, the disposable income of people has also increased. With higher salaries, people now want to invest in Stock Markets and a question most of the Potential Investors are asking is How to Open a Demat Account and Online Share Trading Account?

How to Open a Demat Account?

1.      The first and foremost step is to approach DP or depository participant

with whom you want to open your Online Demat Account. Like a bank or broker, depository participant acts like an agent between the investor and depository.

2.      Secondly, you will have to fill up online demat account opening form and attach documents for proof of your identity and address. The documents that you will need are: PAN Card, Any identity proof (like voter’s id, driving license, passport etc), Any residence proof (like ration card, driving license, etc), Self attested passport size photograph.

3.      You will have to sign a pact with your depository participant in which all the rules and regulations will be written to be followed by the investor and DP both. Your DP will give you the copy of the agreement.

4.      Once the agreement is signed and the verification of your documents will be done, in about 15 days you will get your online demat account number. It is also known as BO ID that is beneficiary owner’s identification number. All your future transactions will be done with this ID.

5.      Now that you own a demat account, you can step into the world of stock exchange and start investing your money in mutual funds, shares, debentures, insurance, retirement funds etc. it should be noticed that unlike every bank account where we have to keep a minimum balance, demat account does not require you to have a minimum number of securities. You can open a demat account with zero amount and also you need not have any minimum balance to maintain the account. You may have zero balance in your online demat account.

Apart from the procedure to open a online demat account, one should also know the Demat

Account charges

Demat Account Charges

There are mainly 5 types of Charges that are levied on Demat Accounts

1. Demat Account Opening Charges

Usually the Demat Account is opened Free of Cost and No Charges are levied on the same. However, they may collect annual charges upfront at the time of opening an Free Demat Account. Not all Banks/DP’s provide free Demat Accounts and it is always advisable to check the account opening charges before opening a Demat Account

2. Annual Maintenance Fee

This charge is mainly folio maintenance charge which is levied well in advance. If they are offering you good services, the Maintenance Fee would be high, else it would be low

3. Custodian Fee

The Custodian Fee is charged for safely keeping your Shares in the Demat Account and is charged based on the number of securities in your account. This is generally charged yearly and majorly depends on the number of securities in the Demat account. It may vary from Rs. 0.5 to Rs. 1 per ISIN (number of securities) for a month.

4. Transaction Fee/ Brokerage

The Transaction Fees is the fee which is charged for trading of shares. Whenever, you buy or sell a security, a brokerage would be payable by you which would depend on the scheme you have opted for as the charges vary from Scheme to Scheme.

5. Dematerialization Fee

In case you have share certificates in physical form, the bank would also be charging you a very nominal fee to convert these physical shares into online form. These Charges are not applicable for all Account Holders and are applicable only for those who have Physical Shares and opt for converting these Physical Shares (if any) into Demat Form

You may note that these charges may not remain same every month as DP can also revise them. It is always highly advisable for the Investor to cross check the Account Charges levied by different Service Providers before opening a Demat Account.

The 3-in-1 Account consists of 3 separate accounts open together including a Bank Account (a normal bank account where your money resides), a Trading Account (a share broker account which allows you to trade in equity, F&O etc. segments) and a Demat account ( It holds the equity shares purchased by you).

3-in-1 Trading Account = Savings Bank Account + Equity Trading Account + Demat Account

The beauty of 3-in-1 account is seamless transaction between these three accounts. It also offers wide range of investment products under this account.

When the account holder buy shares through trading account; the money get automatically debited from the saving bank account and share are automatically credited to the demat account. Similar way when shares are sold through trading account; the money gets credited to the bank account and shares are withdrawn from demat account. The money remain in your bank account can be used like any normal bank account (i.e. you can withdraw that using your debit card).

While the cost of trading is generally high with the companies offering 3-in-1 account, the hassle free investing and integrated financial solution provide unique benefits. These accounts are especially good for people who invest in stock market for long term basis or people who do not mind paying a little more brokerage for the hassle free service.

If you are a beginner in stock market or an investor in the market (not a regular trader) then this type of 

account are highly recommended.

Other benefits of 3-in-1 account include:

1. Investment and trading in Equity
2. Investment in IPO's
3. Online Mutual Funds investment
4. Derivative Trading (Trading in Futures & Options or F&O)
5. Saving Account can be used as normal bank account
6. Insurance, NPS, Tax Services & many more financial services

Many shares brokers in India who also provide banking facilities through there parent company, offers 3-in-1 account. Some of the popular brokers include ICICI Bank, HDFC Bank, Standard Chartered Bank, IDBI Bank Ltd, HSBC InvestDirect, Kotak Securities, Axis Bank and SBI.

ICICI 3-in-1 trading account is the oldest and most popular service provided by ICICI Bank. There strong network of branches makes this account very attractive. HDFC 3-in-1 trading account is another very popular and equally good service provider. SBI 3 in 1 account and standard chartered 3 in 1 account are also provides good investment options.

To know more about the services offered by these companies, there reviews, complaints and rating; please visit the broker page through the link below:

1. ICICI 3 in 1 Account
2. HDFC 3 in 1 Account
3. Standard Chartered 3 in 1 Account
4. IDBI 3 in 1 Account
5. HSBC 3 in 1 Account
6. Kotak 3 in 1 Account
7. SBI 3 in 1 Account

Note: If you already have a saving bank account or demat account, it can be linked to trading account to make it 3-in-1 trading account.

A three-in-one account —savings bank account, demat account andinvestment account linked to each other.

"A three-in-one account provides an end-to-end solution that offers ease of transaction to the customer under one roof," says Jignesh Shah, investment advisor at Capital Advisors.

The ease of transactions is a huge comforting factor, but one should consider services offered, costs involved and already available options in the market before signing up for the new offerings, say investment experts.

"Given the operational ease for execution, these three-in-one accounts are a good choice for first-time investors. If you already have a savings bank account, instead of a three-in-one account, just open a demat account linked with an investment account," says Vishal Dhawan, founder, Plan Ahead Wealth Advisors.

Advantages of going for a 3-in-1 Demat Account

Stock trading requires three different accounts:

A Bank account to allocate and receive money.

A Trading Account to buy and sell shares and

A Demat Account where these shares are held.

The process seems pretty straight forward but in practice, factors like keeping track of the accounts separately as well as remembering multiple login details can make it bothersome.

To bypass this complexity and make stock trading simple and easy for investors, Banks have introduced 3-in-1 accounts. A 3-in-1 account gives you the functionality of a savings, trading and Demat account, all integrated into one. The catch however, is that these accounts are only available with financial institutions or Depository Participants that have a banking arm. So typically, you can open a 3-in-1 account only with a Bank.

So why go for a 3-in-1 Account?

Since the inception of 3-in-1 accounts in the beginning of 2006, Banks have been constantly working to improve on and add to the features associated with such an account. A good example for these improvements is the Axis 3-in-1 Demat Account through which you get access to a savings account, a demat account and a trading account with a variety of tools and market watch-lists from Axis Direct that can help facilitate well-informed trading decisions. Let us take a look at the features that gives the 3-in-1 Demat account an edge over a traditional Trading account: -

·         Considerable reduction in the paperwork as compared to the documents required when opening separate Demat, savings and trading accounts.

·         Transfer of funds is quick and secure. In case you are transferring funds from a Savings account in one Bank to a Trading account with some other Bank or Depository Participant, then you would need to login into two different accounts to authenticate a fund transfer. This not only increases the transacting times, but also reduces the efficiency.

·         Funds can be transferred only to the trading account linked with the savings account which makes fund transfers secure and within your knowledge.

·         As per SEBI regulations, any funds that are left in a trading account will be returned back. For purchasing new shares at a later date, fresh funds need to be allocated. This can be a cause of discomfort when your trading accounts and bank accounts are different.

 However, any idle funds present in the trading account of a 3-in-1 account can be kept stored there itself or moved back to a savings account if needed. The above SEBI regulation is not enforced on a 3-in-1 account.

·         You can easily keep yourself updated about your current account portfolio and operate the account using the internet or also trade on the phone.

·         Banks that offer 3-in-1 accounts also provide a very diversified range for investing in different assets like stocks, mutual funds, bonds, debentures and company fixed deposits.

·         Banks also offer consensus estimates from global research firms and a wide variety of tools like stock comparisons and real time watch-lists to determine stock before trading.

I will personally recommend Motilal Oswal

Motilal Oswal Securities

Incorporated in 1987, Motilal Oswal Securities Ltd is a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies.

Company have a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. They are headquartered in Mumbai.

Motilal Oswal’s Trading Platforms

1.      Web Platform:

Web Platform is suited for first time investors who want a clean and simple interface. Investor can trade from any internet connected PC and place the order with instant confirmation.

2.      Desktop Platform:

Desktop Platform is suitable for those investors and traders who want live market watch and faster execution.

3.      Mobile Platform:

Mobile platform works on most GPRS enabled mobile phones. Investor can directly buy/sell from market watch. It also provides the facility to modify or cancel the pending orders.

4.      Call N Trade:

Call N Trade Platform is suitable when investor don’t have online access to their trading site. All Motilal Oswal customers enjoy Call N Trade services at no additional cost.

 Account Types

1.      Value Pac:

Value Pac is the upfront subscription scheme, which gives significant discounts in brokerage rates with defined time period to use it. With the wide range of Value Pacs, based on the Volume of Trade and the Validity period one can enjoy the benefits of placing trades at reduced charges.

2.      Margin account:

Margin account is suitable for those who don’t want to commit to a Value Pac (upfront subscription). In Margin Account investor have to give defined upfront margin amount at the time of opening the account.

Motilal Oswal Brokerage Charges 2014

Account Opening Fees & Annual maintenance charges (AMC)

§  Trading Account Opening Charges (One Time): Rs. 0

§  Trading Annual maintenance charges (AMC): -

§  Demat Account Opening Charges (One Time): -

§  Demat Account Annual Maintenance Charges (AMC): Rs. 441

Trading Brokerages: 

For Value Pac (Value 2,500)

§  Intra-day Trades: 0.080%

§  Delivery Based Trades: 0.40%

§  F&O Trades: 0.090%

§  Options Trades: Rs. 100/- per contract

For Margin Scheme (Margin 10,000)

§  Intra-day Trades: 0.10%

§  Delivery Based Trades: 0.50%

§  F&O Trades: 0.10%

§  Options Trades: Rs. 100/- per contract

How to open account with Motilal Oswal Securities Ltd?

For online trading with Motilal Oswal, investor has to open an account. Following are the ways to open an account with Motilal Oswal Securities Ltd:

§  Call them at 022 – 30896680 and ask that you want to open an account with them.

§  Type MOSL INFO and SMS at 575753

§  Click here and fill a form, Representative from Motilal Oswal will contact you.

§  Contact Motilal Oswal by sending email at info@motilaloswal.com

Process to open an online trading account with Motilal Oswal?

§  To open an online trading account with Motilal Oswal, Investor has to fill up the application form, make an online payment as per the scheme details and submit the form electronically.

§  Once the investor have submitted the online application form, one of the representative from Motilal Oswal will contact the investor and get the signatures on the application form submitted by investor and collect all the documents/proofs.

§  Once they have verified the application form and supportive documentation, they will activate the account. This will normally happen within 3-5 working days.

§  After the activation of the account, PIN mailers containing the password will be sent on correspondence address.

List of documents required to open an acount

1.      Proof of Identity – Copy of PAN Card

2.      Proof of Address – Copy of any one of the following (Self Attested)

§  Passport

§  Ration card

§  Voter’s ID

§  Driving license

§  Electricity bill (not more than 2 months old)

§  Landline Telephone Bill (not more than 2 months old)

§  Bank Pass Book

3.      Bank Proof – Copy of Bank Pass Book or Personalized Cheque leaf (For Existing Bank Account Holders Only)

4.      3 Photographs

Motilal Oswal Advantages

1.      Wide Range of Investment Choices- Equity, Derivatives, IPOs Or Mutual Funds.

2.      Discounted Brokerage Schemes that offers true value for money.

3.      Complete Ease of Operation with more than 39 banks for Fund Transfer.

Useful links about Motilal Oswal

1.      Website: http://www.motilaloswal.com

1.      Faq’s: http://onlinetrade.motilaloswal.com/links/faq.htm

2.      Corporate Office: 3rd Floor, Hoechst House,
Nariman Point, Mumbai – 400021

3.      Email: query@motilaloswal.com

4.      Phone: 022 – 30896680

5.      Fax: 022 – 22885038