Understanding Demat Account Opening Charges and Fees

The popularity of stock market investing is on the rise, and it requires you to have a Demat account in order to trade. A Demat account allows quick access to your securities, along with many additional features to help you streamline trading. 

To access these facilities, you must pay a few charges to the Depository Participant (DP) to open a Demat account. Being mindful of these Demat charges alongside any other fees applicable is the mark of a responsible investor.

Read on to know about various Demat account charges and fees.

Demat Account Opening Charges

The Demat account opening charges are generally minimal or zero. These charges vary among different financial institutions and can have an impact on the overall cost of managing your Demat account.

 

To open a Demat account, you must apply with the intermediate, known as a Depository Participant after comparing the fees and charges. This can be either a brokerage firm or a bank. Generally, the DP requires a minimal fee to open the account.

 

On the other hand, some DPs provide the option of a free Demat account for the first year, followed by charges in subsequent years. Therefore, it is important to inquire about the specific costs associated with the particular Demat account. 

 

Ideally, you would want one with lowest Demat account charges simply because such fees add to the costs of investing. As such, they cut into your profile, no matter how nominal the fee may be.

Apart from the fee you pay when opening a Demat account, there is an additional annual maintenance charge (AMC) that you need to pay to keep the account active. This fee is charged to cover the costs of managing and operating the Demat account throughout the year.

 

Typically, there are no maintenance charges for a basic Demat account as long as the balance is up to ₹50,000. However, if your Demat balance ranges between ₹50,001 and ₹2 Lakhs, you may be charged around ₹100 to ₹750 based on the number of transactions you make. 

 

For accounts with balance exceeding ₹2 Lakhs, the AMC can be around ₹2,000 to ₹2,500. With a Demat account, annual charges like these are a recurring expense, and aren’t just a one-time payment. These, combined with other charges, can amount to a significant sum, which can cut into your total yield. 

In regards to transactions, your Depository Participant (DP) will levy a brokerage fee. These Demat transaction charges cover the services rendered by the DP and are required for every transaction through your Demat Account. 

 

Demat transaction charges may be flat charges per transaction or a percentage of the traction value, as per your DP’s policy. Certain brokerages, ask for a fee of around ₹1.5 for every share you trade in the stock market. For precise Demat transaction charges on your Demat Account, contacting your broker is the best way to go.

 

It also helps to know this before you sign up for a Demat account with a given DP. In some cases, these transaction charges may be quite high. As such, it may be unviable for your investing strategy, especially if you have to continually trade and transact. 

Demat safety charges are fees charged by DPs to keep your securities safe in a Demat account. They are also known as custody charges. As the name suggests, these charges help cover the costs of securely storing and managing your electronic securities, protecting them from being lost, stolen, or damaged.

 

The DP usually applies these Demat account charges regularly, generally every quarter or every year. The Demat account safety charges amount can differ depending on which DP you choose.

Dematerialization is the process of converting your physical share certificates or securities into an electronic format. On the other hand, rematerialization is the conversion of your electronic securities from a Demat account back into physical certificates. 

 

There are some charges applicable for this process and these are known as Demat and Remat conversion charges. Dematerializing your certificates can cost approximately ₹5 per certificate plus 18% GST, whereas dematerialization may cost you around ₹25 for each certificate plus 18% GST.

 

To make the best choice for your Demat account, it's crucial to understand Demat charges and their impact. Moreover, it helps when doing a Demat accounts charges comparison, as you know what to look for and assess.

To further streamline the process, here are some tips you can follow to get the lowest Demat account charges.

• Research and compare Demat Account types

• Avoid unnecessary add-ons

• Open a Basic Services Demat Account (BSDA)

• Be sure about the frequency of transactions and choose accordingly

• Look for brokers with discount plans

• Monitor your account records

• Stay updated about Demat charges

   

Through Bajaj Markets,  you can now open a Demat and Trading account at Zero* account opening charges. Opening an account through Bajaj Markets is as simple as ordering your favourite food online. All you need to do is - 

• Step 1: Visit the Demant account opening form

• Step 2: Enter the necessary details

• Step 3: Upload soft copies of your KYC documents

• Step 4: Complete In Person Verification (IPV)

• Step 5: E-sign the form using your Aadhar-linked mobile number

• Step 6: Review & submit your application

   

Naturally, choosing a DP with the lowest Demat Account charges is the best option, but you should also ensure that it has the features you need to invest as per your strategy. 

While the fees and charges on a Demat account are low, you can further reduce the cost of opening an account. One smart way to reduce your Demat account charges is to apply with a broker offering an affordable brokerage plan. 

 

By comparing the rates and charges, you can open a Demat account with a broker offering a low-cost plan. Further, many brokers have discount offers on Demat account opening charges. Some may offer a waiver on additional charges for the first year with a discount brokerage package. 

 

Another way to reduce your cost of opening a Demat account is to get a Basic Services Demat Account (BSDA). Suitable plan for a passive trader, this account will help you store your securities at a lower cost when you are not trading. 

 

In addition, you can request a waiver of annual maintenance charges from your broker. With a no-cost Demat account or zero-Demat account, as offered by some DPs, you can eliminate account maintenance charges for the first year.