What is account maintenance charge for Demat account

Demat account make trading and investing in the stock exchange as easy as opening a savings or current account at a bank. Investors can track and hold their investments wherever they may be by dematerializing share certificates. Demat is the conversion of physical shares into electronic forms via a depository participant (DP). The DP is a link between the CDSL (Central Depositories Services Limited), or NSDL(National Securities Depository Limited) bodies that are authorized to manage your shares. A DP may be a bank, broker or other financial institution that meets the requirements of SEBI.

Online opening a demat account is easy, quick, and painless. This service is now offered by hundreds upon hundreds of DPs. Due to the many players in this market, the costs and charges for opening and maintaining a Demat Account are very competitive. As long as the account is not linked to the same DP, an individual can open as many as demat accounts they wish. A demat cum trading account allows you to trade shares and keep track of them through one account. You can buy, sell, and hold a variety of securities, including stocks, ETF's, and it is easy to track their performance over time.

It is a good idea to familiarize yourself with the charges associated with opening and operating a Demat Account with this particular DP.

Account opening Charges

Account opening fees are a small fee that DPs charge at the time you open the account. Depending on which type of DP (bank, firm etc.), charges may vary. There will be different charges depending on the type of DP you are dealing with (bank, firm, etc.). At the time of opening a Demat Account, banks charge between INR 700 and 900. Some DPs have waived all charges in recent years. This has been a boon for customers as DPs are competing to win new customers through low opening fees.

Custodian Fees

Some DPs may charge you custodian or safety fees. These can be a one-time or monthly fee to ensure the safekeeping and security of your shares. As little as INR 1.50 may be charged for each International Security Identification Number (ISIN), that is mapped to your account. The charges will depend on how many securities you have. Some DPs may charge a safety fee while others don't. Ask your DP upfront if there is a safety fee or custodian charge and if so, how often.

Transaction Charges

Transaction fees are charged for the movement of securities into and out of your account. These transaction charges should be known as they may vary for different DPs. Some DPs only charge for debiting shares, while others charge for crediting shares. Some DPs charge both for credit and debit. You can either charge per transaction or a monthly consolidated amount. In general, transactions are charged at INR 1.5.

You will find the details of how much you will be charged for transactions in your terms and conditions.

Account Maintenance Fees

Folio maintenance fees, also known by INR 300-900, are demat account maintenance costs. Folio charges can be applied annually or quarterly depending on the DP. Some DPs waive annual maintenance fees for the first year. You can save quite a bit by opening a savings-demat-trading account at a bank to lower your account maintenance fees.

You could pay more if your demat account is mapped to a savings or savings account from another bank than if you have both a savings and demat account.

Keep In Mind

You can open multiple demat accounts. However, it is best if we not. Multiple accounts can lead to seemingly small fees for opening, maintaining, and transacting.

You can open up two accounts to help you manage your portfolio better. One account can be linked to your trading account, while the other can hold your long term investments.

You are required to pay an annual maintenance fee even if your demat account is inactive.

- Your demat account is managed by CDSL/NSDL. Therefore, the safety and security for your share certificates are their responsibility. If you pay lower maintenance or custodian fees, there is no need to compromise the quality of safety and protection provided to your shares.

DPs should provide seamless customer service and streamline paperwork to make it easy for you to open, close, or transfer shares.

- Your demat account will be frozen if you are inactive.

Conclusion

There are many options for investors opening demat accounts. Trading and investing have become easy with demat cum trading accounts.

In just a few steps, you can open a Demat Account. After you have chosen the DP that you wish to use, the DP will send you a KYC form. Your personal bank account will be linked with your demat account. All transactions, including transaction charges, custodian fees, demat maintenance charges and custodian fees, will be carried forward. All transactions, including demat maintenance charges, transaction charges, custodian fee etc. will be charged to your linked bank account.