A demat account is important for any investor willing to trade. Apart from having a demat account, the investor also needs a savings bank account and a trading account. All of the nationalized banks offer the facility of 3-in-1 bank account which consists of all 3 accounts required for trading purpose being opened at a time.

Having a 3-in-1 account is important so that the accounts are linked together giving a seamless trading experience to the investor. It makes the process of stock market investment easier for beginners and casual traders. Together it helps you to trade in exchange of financial instruments such as stocks, derivatives, IPOs and so on.

Earlier, before digitalization happened, investors had to visit the stock exchanges in order to trade and were given hard copies of investment certifications. But when online trading started, investors could trade from any place. This gave rise to the need of having separate demat and trading accounts. Demat accounts are different from trading accounts. The trading account allows you to trade in stocks, while the demat account helps you to store the stocks in an electronic form. Demat account is similar to bank accounts, only that instead of storing more, they store shares, mutual funds, bonds, ETFs, and more. Here are some more differences between the two that investors must know:

All of the large national banks offer 3-in-1 accounts, some of the names included in this list are SBI, PNB, ICICI Bank, HDFC Bank, Yes Bank, and Axis Bank. Amidst the long list of banks that offer 3-in-1 account, here are the top 5 banks that you can go to for opening a demat account.

1. ICICI Bank
2. HDFC Bank
3. Kotak Mahindra Bank
4. Axis Bank
5. SBI Bank

They are all similar in their offerings, charges, trading platforms and customer service. It is easier to open the 3-in-1 account if you are already associated with the bank. However, we will look at each one of them in greater detail to understand them better and to see why they are ranked so.

ICICI Bank

Needless to say, ICICI is one of the leading banks in India. It has been into existence for more than two decades. It is known to offer demat and account trading services with exceptional customer service. ICICIDirect, the online trading website and mobile app is ranked No. 1 in the industry. If you already have a savings account in ICICI Bank then it is highly recommended that you convert it into 3-in-1 bank account. Although the brokerage charges of ICICIDirect are higher than the other discount brokers available like Zerodha and 5Paisa, the cost makes it all worthy because of the high-quality service provided by the bank to its customers.

HDFC Bank

HDFC bank ranks as the second most respectable banks in the industry and has been active since the year 2000. It is the second largest full-service broker in India. For any HDFC bank account holder, it is very convenient to open the 3-in-1 account and start trading in stocks, mutual funds, corporate FDs, NCD, banks and many more financial services. Being a full-service broker, brokerage charges are very high; however, they offer useful research tips and recommendations, and proper customer support through their local branches. Here are some of the additional features offered by HDFC Bank:

• Trading is available in both NSE and BSE

• Excellent trading platforms for beginners

• Special care taken about safety and security of accounts, zero mismanagement

Kotak Mahindra Bank

Kotak Securities is a subsidiary of Kotak Mahindra Bank. They offer excellent trading and investment options, personal relationship manager, research and trading tips, portfolio analysis, and many more features to its customers. Here are some of the additional features offered by Kotak Mahindra Bank:

• Offers investment options in equity, IPOs, bonds, FDs, ETFs, mutual funds, currency derivatives, etc.

• In addition to 3-in-1 account, customers get access to more than 1400 branches for any investment or issue related assistance

• They provide daily SMS alerts, market pointers, and stock recommendations to help the customers.

• Online chat facility is available to customers

• Offers easy integration of trading account with CitiBank, HDFC Bank, UTI Bank, and Kotak Mahindra Bank.

Axis Bank

Axis Direct is the trading and mobile app offered by Axis Bank to its customers. They deal with numerous financial products such as mutual funds, FD, insurance, and so on. The web and mobile app makes managing online trading a lot simpler for the customers. Some of the major advantages of having a 3-in-1 account in Axis bank are detailed research reports, trading tips and recommendations, and dedicated relationship manager.

SBI Bank

SBI 3-in-1 account offers seamless online trading and investment services to its customers. SBI is the 10 largest full-service brokers that offer demat account services to rural areas, research tips, online trading platform, and so on. They are popular for their efficient customer support service. Here are some additional features that SBI offers:

• Low bandwidth option for easy access from anywhere

• Instant fund and share transfer facility

• Round-the-clock access to the back-office

• Trades in BSE and NSE

• Offers investment options to both residential and non-residential Indians

Customers, especially those who are new to trading, tend to wonder often whether their demat account is safe with the banks. They generally believe that demat and trading accounts are operated by the banks. However, that is not the truth. Demat accounts are opened and managed by two central depositories in India – NSDL (National Securities Depository Limited), and CDSL (Central Depository Securities Limited).

Broker and banks are the mediators or depository participant (DP) with either of the central depositories. Hence, as an investor, if you choose to open a demat account with a particular bank, then it depends on the bank to which depository it has partnered with, to operate your demat account.

There is not much of a difference between the two central depositories except for the fees charged. The central depositories charge fees from the partner banks or brokers in order to maintain the demat account. This fee is taken from you (the investor) by the banks or brokers. The most you can do is to find out which central depository charges less fee and which are their partnered banks or brokers, and you can then open your account with them to pay lesser fee.

For beginners, however, it is ideal to open the demat account with banks as they will be well-backed up with all the necessary facilities. This will provide hassle-free stock market investment experience and a lot of learning through research tips and recommendations. Once you are well-versed with trading and its pros and cons, you can switch to discount brokers like Zerodha, 5Paisa, Prostocks or others, who will charge less brokerage and offer good trading facilities.