SEBI has recently made it compulsory for all the retail investors in opening Demat accounts for making any investment in the stock market. From now on, all types of financial security, even debenture, mutual funds, bonds, shares, insurance, etc have to be managed electronically. Demat has been derived from the term dematerialization and the purpose is to allow tracking, monitoring, and holding of the market securities most convenient for the investors. Demat accounts are also opened through depository participants like banks, online trading platforms, stockbrokers, etc. Depending on whatever Depository Participant also known as DP you choose, whenever you open a Demat account will also vary massively. To know more about Demat account charges and what is Demat account, keep reading this article.
The charges of opening a Demat account will vary from one provider to another. Some of the banks also offer zero charges that you could use within stock markets. Do make sure that you compare all the charges and take a decision depending on the merits before you open any of Demat accounts.
Although Demat accounts don’t come with any minimum balance charge or requirement, they do come with an annual cost that is somewhere between 200 to 1000. However, some of it depends on the Demat account that you want to open. The account charges will also depend based on the type of account you want to open. If your value ranges from 50,000 to 2,00,000 the AMC will have to be Rs 100 or if it crosses 2 lakhs, then the value will be treated like a full-service account.
Transaction and brokerage fees also depend on the kind of DP you choose. This also means that whenever security leaves or enters your account, a small amount is taken by the DP. the value of the transaction and the kind of security that is transacted will be dependent on the fee of brokerage. The fee will then be declared by the DP before the conditions and terms are presented in front of the investor whenever it comes to opening the account.
The Demat charges come with a nominal fee for converting the equity or the share certificate in any electronic form. Various DPs also charge various rates for conversions.
To keep your account safe, your DP will 1st charge you a small amount every month between 0.5 to 1 paise as per security as the custodian or even the safety fee.
Opening an online Demat account is a very easy, safe, and low-cost method of investing in stock markets. So, if you happen to be a beginner or a small investor, you should compare all the charges across various DPs before you open any Demat account.