Lets make sense of the basic ideas in demat account operation and the criteria to select the most suitable one for you.

What is demat account?

It is an electronic dematerilised account that allows investors purchase and sell stocks online. Thus it eliminates troubles associates with paper certificates of equity. Previously traders and investors had to deal with issues like postal delays, signature mismatch, physical damage to certificates, loss of certificates, forgery, etc. Here are the factors that affect your choice.

Account opening

This is the most important demat account service. The processing varies from one organization to another. Primarily, the variable factors of account opening are:

The process can start online or offline.
It could be free or paid.
You can open zero balance account. Alternatively, you would need to add and maintain certain account balance in the account.
You need to open account in the savings bank. If you are opening account in third party Company, you dont need to open separate personal banking account.

Obviously, a free account is much better than paid one. However, the service and transaction charges are most important. Since you need to open account once, it is important to choose partner with quality long term offerings.
Account fees and charges
Demat account services are paid services. You need to pay certain charges for these services.
Annual account maintenance fees These fees are variable within the organization as well. But, it is not primary criterion.
Transaction fees for each purchase and sale of shares
Additional charges These are based on additional services availed such as dematerialization, re-materialization, account statement fees, etc.
Transaction fee is the most important as this is the largest expense and varies from company to company. Since you pay this fee each time you buy or sell, you must choose the organization that offers lowest percent for this service.

Convenience

There are banks that offer three-in-one accounts, which includes savings-demat-trading account that can facilitate all investments. Yet, most important factor is the platform for operations. You can operate account online or offline. Offline services mandate that you involve the branch professional into each and every stock transaction. No wonder online services are most preferred.

Features and benefits

ICICI provides mobile updates about transactions, bills, holdings and ISDN details. Axis bank has very efficient online operations that facilitate the convenience of stock purchases and sales. Sharekhan offers several trading tools and highly sophisticated research-based trading tips. IndiaInfoline offers zero balance accounts whereas HDFC bank is a leading Depositary Participant (DP) and waives the 1st year annual charges. These benefits and features would vary with every organization.

As each product has different benefits of its own, choose most suitable demat account for your investment strategy.