While engaging in any banking and financial transactions, there are always charges and fees attached to transactions you conduct. For instance, when you opt for cash withdrawals at ATMs through your credit card, you have to pay a processing fee. Similarly, when you hold your assets in a Demat account, your DP or depository participant may charge you certain finance charges on specific transactions you execute. To know more about DP charges and how to avoid them, you should have a rough idea about the nature of a depository participant.
A depository participant is similar to a bank that keeps your money safe for you. A depository participant or DP, holds the securities you purchase and any other assets. A popular DP is Motilal Oswal. Since you cannot buy assets directly from depositories such as the National Securities Depository Limited, the DP serves as a channel to buy assets, hold them and transact with them when you wish to. However, particular DP charges must be incurred by you and you may want to learn how to avoid DP charges as these may be costly for you if you trade a lot.
What are DP charges and how do they get levied? Apart from charges you have to pay to open a Demat account, plus maintaining it, DPs levy other charges on you too. If you have a bank account, most banks will offer you a free demat account (no opening charges levied). Firms like Motilal Oswal offer this too. However, for any transaction executed by investors in their trading account, some DPs, for instance, charge a flat fee for the month. Others levy charges that are based on a percentage of the transaction undertaken, as when you sell stocks.
The answer to this question is yes, you can avoid them. Here are ways to avoid DP charges:
A guaranteed way to reduce Demat account charges is by starting an account with a financial firm that gives you a nominal brokerage fee. Motilal Oswal is one such firm that gives you competitive rates on brokerage, only charging nominal fees on stock trading.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account
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