Since their inception in 1996, Demat accounts have revolutionised the way inventors and traders trade in the stock markets. The whole process of investing, trading, holding, and monitoring has become hassle-free. You no longer need to be concerned about the risks of holding physical shares. Dematerialisation also mitigated the need for you to run helter-skelter to obtain the certificates of your stocks.
For everything, there is your depository participant(DP).
However, for every comfort, there is a price associated; in the case of your Demat accounts, you would have to pay a small charge to enable you to trade online with a single click.
Demat account charges could come in varied forms, such as Demat Account opening charges, DP Charges, Dp account charges, and Annual maintenance charges (AMC) for the Demat account. With competition on the rise, many DPs have waived off the Demat account opening charges and AMC for Demat Accounts for the first year.
Also Read: How to Download Demat Holding Statement?
Demat Account Opening Charges
Earlier, when an investor used to Open a Demat account, the banks would charge between Rs 700 to 900 as a Demat account opening charge. Despite the heavy charge, investors were opening the account with them because of the well-integrated network and the additional investment services, allowing more manageable stock market investment through the account that had both trading and banking services. But, when you do open a Demat account with a depository participant, the DP charges you nominal or nothing. Brokerage firms and banks make it an incentive for opening a two-in-one or three-in-one account. These accounts are beginner friendly and make investing or trading extremely easy for beginners or casual investors.
Demat Account Annual Maintenance Charges
Though some of the charges are waived off, a Demat account holder will have to pay an AMC for the Demat account they operate to the Depository participant for the services provided. This charge is also known as the folio maintenance charge. These charges are paid in advance, ranging from Rs 300 to Rs 900 a year. Some Depository participants charge quarterly, while other DPs charge a lifetime fee of Rs 2,000 and above. Due to the rising competition, many depository participants have waived off the AMC for Demat accounts for the first year and start billing from the second year onwards. The DPs operating under banks have different annual maintenance charges. The banks offering three-in-one ( Demat, Trading & Savings) charge lower as the trading account is mapped with the same bank’s savings account, but if the mapping is with another bank’s savings account, they charge higher.
Demat Account Safety Charges
Most depository participants (DPs) pay a custodian fee as a one-time charge to their respective depository. Many do not charge any custodian fee from the investor to maintain a Demat account. DPs who charge a custodian fee do it on a monthly basis. The charge is subjective to the number of securities in the Demat account. The charges vary between Rs 0.5 to Re 1 for each ISIN (International Securities Identification Number). The DPs do not charge any safety or custodian fee to the companies that have already paid the One time charge to the depositories. Earlier, DPs did charge the client for both the credits and debits to the Demat, but now DPs only charge for the debits to your Demat accounts.
Demat Account Transaction Charges
Some DPs levy a charge based on the number of transactions you make or a flat rate monthly. However, such charges vary as well. Some DPs (Discount brokerages) charge approximately Rs 1.5 for each trade made. The Dp for the services in helping you earn charges this nominal fee as a transaction charge.
Conclusion
Online Demat account is a safe, efficient, low-cost method of investing in the Indian Stock Market. If you’re a beginner or a small trader, you must compare Demat charges with all DPs before opening a Demat account.
