What Do Demat Account Charges Look Like?
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What Do Demat Account Charges Look Like?

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In today’s world of technology when everything can be done at the stroke of a finger, most of the things have become easier. In times where advances like these are a common occurrence, how can the trading and stock market be any behind? Most of the trading and transactions these days are done online. But to be able to invest and trade in the stock market online, it is absolutely mandatory for a person to have a Demat Account. A Demat account is an account where the investors can hold their shares in securities in digital format. A Demat account is just like a bank account but as a substitute to storing money, Demat account stores the shares of an organization, mutual funds, bonds, etc. in digital format. Opening a Demat account is very easy. You can open a Demat account with an approved DP, who could be your advisor or a bank. And then, all the shares will be held in care of one of the depositories namely NSDL or CDSL.

What Do Demat Account Charges Look Like?

If you look at the newspapers and websites or any of the pop-up advertisements today, you will notice ads promoting zero Demat account charges for opening a new account. And yes, most banks will lure you into the offer of opening a free Demat account. But that is not because they are feeling generous. There is a reason behind it. If you have a Demat account there, there is a very good chance that you will be willing to open a bank account with the same financial insitution. This means that most of your trading will be safe with the bank which more than reimburses for the account opening charges. Brokers these days also offer zero account opening charges or charges very lowly.

But remember, relinquishing the opening charge of your account in no way means that your Demat account has become free as well. Various other Demat account charges will be charges to you. There are two basic types of Demat accounts viz. 1. Basic Service Accounts, in this account the Annual Maintenance Charges (AMC) do not apply till a certain value. These are recommended for small time investors. 2. Full-Service Accounts, here an AMC is charged annually. The AMC charges vary depending on the Depository of your choosing. In India, GST of 18% is applicable on these AMC charges. Normally, AMC charges are lower when the number of transactions is higher and the charges are higher when the number of transactions is lower. Hence, if you are opening a Demat Account with a bank, you better beware of the veiled fees and read the fine print carefully.

The Annual Maintenance Charges (AMC) aren't the only charges included with regards to a Demat account. There is a custodian fee that is charged by certain DPs every month. In any case, since most organizations pay this expense legitimately to the depository, most DPs don't charge this add up to the clients. The most significant charge is the transaction fee. The DP charges it everytime a share is charged or credited to your Demat account. Generally these charges are billed on a month to month basis. After this, there are the various charges. A charge is applicable when a client rejects or neglects to adhere to any guidance by the DP. In the event that you need the physical statement for all the exchanges, the charges are independent for this component.

There are various charges involved when it comes to the opening and proper functioning of a Demat account. Below is a list of a few of the basic charges that are applicable.

  • Account opening charges
  • Annual Maintenance Charges (AMC)
  • Debit Transaction Charges.
  • Demat charges
  • Remat charges
  • Charges for modification in address, email, phone, and bank updation fees.
  • Consolidate Account statement charges. And many more.

The conclusion to this topic is, account opening charges aren’t the only charges involved when it comes to a Demat account. There are many other charges involved as well. You need to educate yourself and read the terms and conditions properly before opening a new demat account in your name.