Over the past few decades, the securities market in India has become increasingly accessible, a fact that is substantiated by the rising number of demat accounts opened in India every year. With a completely digital account opening experience, you can open a demat account in a hassle-free manner. Before opening a demat account, however, you must understand the charges associated with such an account. In this article, we shall discuss the various types of demat account charges and how you can reduce them.
How to open a demat account online
Let us begin by briefly discussing how to open a demat account online. To begin with, you must select an authorised depository participant or stock broker. Then you must assess and compare various demat account offerings and choose the one that fits within your budget and carries the required features and benefits. Subsequently, you must visit the selected DP’s official website and open a demat account by filling the online account opening form and submitting the necessary documents. As the last step, you must complete video KYC.
Prominent categories of demat account charges
There are various types of demat account charges that you must be mindful of. From the time you open a demat account to the closure of the account, different demat account charges become due at different intervals. Here are the most prominent types of demat account charges.
- Demat Account Opening Charges: This type of demat account charges is levied at the time of opening your demat account. Some DPs offer free demat accounts and waive account opening charges.
- Demat Account Transaction Charges: When you place buy and sell orders in the securities market, each transaction carries a transaction charge. This fee could be in the form of a percentage of the transaction’s value or a flat fee.
- Demat Account Annual Maintenance Charges: This type of demat account charge usually falls due at the end of the first year of account operation. AMC is charged by DPs for the operation, maintenance, and support services pertaining to your demat account.
- Account Custodian Charges: Another prominent category of demat account charges is custodian fees. This type of fee is levied for the custodianship or safe storage of your demat holdings by the DP.
Possible measures to reduce your demat account charges
Should you wish to reduce your demat account charges, you must open a demat account which has minimal charges or a waiver of charges. Here are some easy ways to reduce your demat account charges.
- Opt for a Basic Services Demat Account: You can opt for a Basic Services Demat Account; this type of demat account carries no account opening charges and no yearly charges if your total demat holdings do not exceed Rs. 50,000.
- Avoid demat account inactivity: Once you open your demat account, you must access and use it regularly. If you do not use your demat account for 12 months or longer, the account can be marked dormant. In such a case, you may be required to pay account reactivation charges. Therefore, you must avoid inactivity in your demat account.
- Carefully choose a demat account offering: While opening your demat account, you must be careful not to be swayed by a plethora of features. It is important to choose a demat account offering that carries the required features but also falls within your budget. You must compare various demat account offerings in terms of features and charges and then make your selection.
- Do not open too many demat accounts: Although you can open multiple demat accounts, each demat account carries certain charges. Therefore, you must refrain from opening unnecessary demat accounts.
The bottom line
You can open a demat account with basic features and minimal cost and start your investing journey in the Indian securities market. By keeping your account active and paying your demat account charges on time, you can avoid any penalties on the account.
Additional Read: For more information about our business and services, feel free to visit our Google My Business page.
