Everything You Need to Know About Demat Account Fees and Charges
Short for dematerialised, a demat account is one which holds your stock market securities in the electronic or digital form. In 1996, the Securities and Exchange Board of India (SEBI) issued a mandate, stating that all stock market investors needed to open a demat account if they wished to continue investing in the stock market. Dematerialisation reduces paperwork and mitigates the risks associated with losing share certificates. As such, a demat account can be incredibly beneficial. That said, brokerage firms typically levy a wide range of charges for providing demat services. They are as under:
Demat account fees and charges and the details you need to know
Demat accounts are provided by brokerage firms registered as Depository Participants (DPs), serving as intermediaries between clients and the two central depositories in India, the CDSL and NSDL. These brokerage firms offer a wide range of services with demat accounts and levy certain charges for the services rendered. Here’s a look at some of the standard charges you need to pay with your demat account.
Account opening fees:
Many brokerage firms provide free demat accounts, thereby waiving off the account opening fees. However, if you are looking for quality services, you should consider opening your demat account with a prestigious brokerage firm that provides a bouquet of investment advisory services. Such firms may levy account opening fees, which could be anywhere in the range of ₹0 to ₹1000.
Account maintenance charges:
All brokerage firms levy an annual account maintenance charge (AMC). While the AMC is typically waived off for the first year, fees are levied from the second year onwards. You could be charged a sum in the range of ₹200 - ₹700 (plus taxes) and upwards from the second year, depending upon the type of demat account you opt for – individual or joint accounts, NRI demat accounts, demat and trading accounts or 3-in-1 accounts.
Investors also need to pay transaction charges. DPs levy charges each time you conduct any sell transaction. DP may levy a flat fee for the transaction or a certain percentage with upper cap on every debit transaction.
Apart from the fees mentioned above, DPs may levy miscellaneous charges against specific services. For instance, if you have physical shares, your DP may levy a charge of ₹5 per certificate, to dematerialise it. Similarly, you can rematerialize your shares, i.e. convert your digital certificates into paper form, by paying approximately ₹25 per share certificate. You may also have to pay a separate fee for requesting services like non-periodic statements, courier and mailing charges and so on.
Apart from the demat account, investors also need a trading account. While the former merely holds your securities in the electronic format, the latter is necessary for executing trades, i.e. buying and selling your securities. If you’re looking for a single account for all your investment needs, you should consider opening a 3-in-1 account which combines, demat, trading and banking facilities.
Disclaimer: The contents herein mentioned are solely for informational purpose and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.