Checklist of Demat Account Charges and Fees
A Demat account lets you trade, hold, and monitor shares and securities in a quick, cost-efficient manner without you needing to worry about fraud, forgery, or damage.
While the process of opening a Demat account is relatively straightforward, you’ll be required to pay fees for starting, maintaining, and transacting with the account. Below, we discuss the types of charges involved and how you can reduce them to optimize your trading process.
Demat Account Fees and Charges — Everything You Need to Know
1. Demat Account Opening Fees:
Earlier, opening a Demat account could be an expensive procedure for some, as banks or DPs charged Rs. 700 to 900 for the service. These days, however, the charges are either marginal and highly affordable or nil, making it easier for more investors to work with the market. These Demat accounts can be two-in-one or three-in-one, serving as a trading account and giving you a seamless platform to invest.
2. Demat Account Maintenance Charges:
Accountholders are required to pay annual account maintenance charges (AMC) to the depository participant, also known as folio maintenance charges. They can range between Rs. 300 and 900 per annum, and have to be paid in advance for you to continue using the DP’s well-integrated banking network and quick processing. Some may even have higher prices as they levy the fees every quarter.
3. Demat Account Transaction Charges:
These charges are levied every time securities are debited or credited to your account. Transaction charges can differ depending on which DP you choose as well as on your brokerage plan. Some of them may levy a per-transaction cost, while others charge you a flat fee every month. The amount can also change based on whether you are buying or selling.
4. Demat Safety Charges/Custodian Fees:
The chief purpose of a Demat account is to keep your shares and securities safe. This onus falls on the DP, who takes charge of maintenance as well as protection. Therefore, you will need to pay custodian fees that depend on how many securities and shares you hold in the account. However, many DPs are required to pay these fees to the depository as a one-time charge, so they may choose not to charge investors for it. Fees can range from Rs. 0.5 to 1 for every International Securities Identification Number.
5. Miscellaneous Charges:
These can include stamp duty, GST, and other nominal fees that form a small part of the amount you pay for the services offered in a Demat account.
How to Reduce Unnecessary Demat Charges
- Find a brokerage firm that offers competitive prices on their brokerage plans. Since there are a lot of players in the market, you can reach out to several and compare the plans to select the best one.
- Open a Basic Services Demat Account. These are specifically designed for small or new investors who do not trade every day. They come with a holding limit of Rs. 2,00,000, which is ideal for an investor who wants to start slow.
With so many services offered in your Demat account, paying a certain amount of charges for transactions and maintenance makes sense. However, be sure to compare multiple brokerage firms before choosing the right one that fits your budget.
1. Are there any charges for Demat account maintenance?
Yes, depository participants (DPs) can charge anywhere between Rs. 300 and 900 per annum for maintaining your Demat account.
2. What are the annual charges of a Demat account?
The annual charges of a Demat account include maintenance costs, transaction fees, custodian or safety charges, and miscellaneous expenses like stamp duty and GST.
3. What’s the minimum balance required for a Demat account?
Since the Demat account stores shares and securities instead of money, you do not have to sustain a minimum balance.
4. How can I avoid Demat charges?
While all the charges cannot be avoided, you can reduce them by finding a brokerage firm with a competitive price strategy or opening a Basic Services Demat account that comes with a holding limit and is suited to new investors.
5. Which financial institution is charging the lowest on a Demat account?
With ICICI Bank, you can open a Demat account for free. The annual maintenance charges of Rs. 700 can be waived for ICICI Direct customers for the first year of opening the account, and you’ll never have to pay every time you buy securities, only when you sell.
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.