Everything About Demat Account Charges and Fees

A Demat Account, short for "dematerialised account," is a type of account used to hold financial securities in electronic form rather than physical certificates. It allows investors to electronically store and manage shares, bonds, government securities, mutual funds, and other financial assets. This system simplifies the process of buying, selling, and transferring securities, eliminates the risks associated with physical certificates (like loss or theft), and enhances the efficiency of transactions.

Demat Account Opening Charges

To open a Demat Account online, an association with a registered Depository Participant (DP) is necessary. A DP is a brokerage firm or a bank that holds securities. They also offer the option of opening a Demat Account with them. The Depository Participant will require nominal opening charges to open a Demat Account online. Some Depository Participants can open a Demat Account free for a year and then charge you for the following year. You can choose the Demat Account that best suits your financial needs.

Demat Account Maintaining Charges

Along with the opening Demat charge, you must also pay an annual maintenance fee for your Demat Account. These charges are nominal and can range from ₹300-800. The amount will depend on the Directory Participant and the value of your transactions in a year.

You can waive the annual maintenance charge if you are a small investor. The Securities and Exchange Board of India (SEBI) has defined a particular Demat Account for small investors with a balance of ₹50,000 or less. It is called the Basic Services Demat Account (BSDA). If you have a BSDA, you can waive the annual maintenance charge.

Demat Transaction Charges

Your Depository Participant will also charge a nominal fee for transactions. The charge is for the different services the DP provides you. This charge is associated with every transaction you make with your Demat Account.

A transaction occurs each time securities go in or out from your Demat Account. Some DPs will take the transaction charges monthly. Buying or selling can incur different transaction charges. Some DPs will only charge the transaction fee when you sell securities.

Demat Account Safety Charges

Before the conception of  Demat Accounts, traders had to hold their paper-based Security certificates. The burden of responsibility for the safety of these physical papers was on the traders. These days, with the advent of Demat Accounts, the depository participant holds the securities for the trader.

DPs require a small Demat Account safety charge for the safety of these securities. The charge is dependent on the number of securities held by the trader. Typically, DPs charge safety fees every month. The fee amount can range from 0.5-1 rupee for each International Securities Identification Number (ISIN).

While there is no substantial way to reduce the charges, you can do these few small things:

• Open a Basic Services Demat Account (BSDA). You can waive off the maintenance fee with this account.

• Sign up with a brokerage firm that offers discount plans.
   

Click here to learn more about Demat Account charges or to apply for a Demat Account at HDFC Bank.

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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice before you take any/refrain from any action.