Wish to open a demat account? Wait! Before you actually go ahead and start the process, is it not a good idea to first make yourself aware of the various charges and fees associated with a demat account? That’s exactly what this article is here for. Here, we’re going to be taking a look at whether there’s a demat account minimum balance that you need to maintain or if you need to put up a minimum amount for demat accounts. And so, let’s begin.
What is the minimum amount required to open a demat account?
Earlier, depository participants were charging as much as Rs. 1,000 for opening a demat account. However, the practice changed over the years. Now, depending on the depository participant (DP) that you opt for, you will have to put up anywhere between Rs. 0 and Rs. 500 as a minimum amount for demat account opening.
That said, a majority of depository participants have now started to waive off demat account opening charges in a bid to encourage retail participation in the stock market. That’s not all. They’re even throwing in a trading account along with the demat account as well.
Is it mandatory to maintain demat account minimum balance?
A demat account is nothing but an electronic account that allows you to store shares and other securities electronically. And since a demat account can only store shares and not money, there are absolutely no minimum balance requirements that you need to follow. Your demat account will continue to remain active irrespective of whether you have shares to store in it or not.
What are the other charges that you would have to bear?
Apart from the opening charges, you might have to bear a few other charges while opening a demat account as well. Here’s a quick glimpse at a few of them.
Annual Maintenance Charges (AMC)
These are standard charges and have to be paid by the account holder on a yearly basis. Of late, many depository participants have started to waive off AMCs for the first year, requiring the account holder to only start paying the fee from the second year onwards.
For every debit or credit transaction in your demat account, depository participants charge a nominal fee. This fee is what is known as the transaction charge. Some DPs, instead of asking you to pay the fee for every transaction, will charge them on a monthly basis instead.
Charges for dematerialization and rematerialization of shares
Whenever you place a request for dematerialization of physical share certificates or for conversion of electronic shares into physical share certificates, depository participants will generally charge you a nominal fee for that. The charges can range anywhere from Rs. 5 to Rs. 25 per share certificate.
There you have it. In the current scenario, you probably wouldn’t have to pay any minimum amount for demat account opening whatsoever. Now that you’re clear on this front, what are you waiting for? Go ahead and open a demat account right now.
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