InvestorQ : Should I select a bank or broker as my DP?
Tisha Malhotra made post

Should I select a bank or broker as my DP?

user profile image
Aashna Tripathi answered.
2 years ago

There is not hard and fast rule and you can decide based on your requirements. Today, most brokers and banks offer demat services along with a trading account. These are called 2-in-1 accounts or 3-in-1 accounts. The problem will arise when the bank may not provide broking or trading service along with the demat account facility. Then it becomes essential for you to use the DIS and submit to your broker and the process becomes cumbersome each time you sell shares. A bank with broking and demat normally allows you to integrate your savings account of the bank with the demat account as well as the trading account. That is the 3-in-1 account benefit that banks like ICICI Bank, HDFC Bank and Kotak Bank offer since they have exposure to banking, trading and DP businesses. However, with the advent of online banking, real-time NEFT and RTGS, IMPS transfers and with UPI transfers also being permitted, that may not be a really big advantage. In case of most brokers, it is 2-in-1 that combines demat and trading that is a real advantage. The banking interface can be externally integrated and that is not a great value addition. Otherwise, if you take a broker’s demat account, you may have to open an account with a bank with which the broker has an arrangement. Either ways, funding your account online is a breeze nowadays!
One factor you need to bear in mind while choosing a bank for DP services is the cost. Brokers usually charge lower annual maintenance charges (AMC) for providing demat services, as they provide it as an additional service to investors trading through them. It is not the same with banks since demat becomes a separate revenue center for banks. Hence you may end up paying more for demat services if you are with a bank.