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Types of charges applicable in demat account and how to save on those

05 Apr 2023

A demat account is a mandatory prerequisite for investing in the stock market. It is essentially an electronic account that’s used to store a wide range of securities like shares, bonds, and debentures, among others in a safe and secure manner. Now, just like how a bank levies certain charges on its accounts, you’re also liable to pay certain fees towards a demat account. Getting to know what they are can help you make a more informed decision. Here’s an overview of a few of the charges in the demat account that you might have to bear.    

Charges Applicable on Demat Accounts 

There are quite a few key charges that are applicable to demat accounts. This includes the demat account opening charges, Account Maintenance Charges (AMC), transaction charges, and custodian fees. Let’s take a slightly more in-depth overview of each of these fees. 

1. Demat account opening charges 

As the name itself signifies, the demat account opening charge is a one-time fee that’s levied by depository participants (DPs) for opening an account. Most DPs charge anywhere from ₹500 to ₹900 as account opening charges.

2. Demat Account Maintenance Charges (AMC)

Account maintenance charges are levied by depository participants for the various services rendered by them. Unlike account opening charges, AMC is recurring in nature and is levied each year. 

3. Demat transaction charges 

Whenever you buy or sell shares, they’re credited or debited from your demat account respectively. Some depository participants levy transaction charges as a flat rate fee per transaction or on a monthly basis depending on the volume of transactions that you made. 

4. Demat custodian fees 

Also known as safety charges, the custodian fee is a one-time charge that depository participants pay towards the depository. Many DPs generally recover this fee that they pay from the investor. The custodian fee is usually charged each month and is dependent on the International Securities Identification Number (ISIN) that you hold in your account. 

How to save the charges in a demat account

While the above charges are part and parcel of the demat account ownership process, there are a few ways through which you can reduce your overall cost. Let’s take a quick look at what they are. 

  • Consider opening an account with a stock broker cum depository participant that doesn’t charge a demat account opening fee. 
  • Look out for DPs that don’t levy any Annual Maintenance Charges (AMC) on the demat account. 
  • Consider signing up with DPs that offer attractive discounted plans. 
  • Compare multiple depository participants with one another to ensure that you get the best deal. 

Conclusion

Now that you’re aware of the different charges in the demat account and how you can reduce the costs, go ahead and open a demat account today. Motilal Oswal is one of the premier full-service stock broking entities and depository participants in India that allows you to open a demat account in your name for free.

That’s not all. The entire account opening process can be done online through a paperless process. So go ahead and open an account right away and get ready to invest in some stellar upcoming IPOs.

 

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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