Having a Demat account is mandatory for holding financial securities in India. Securities bought via the trading account are transferred directly to your Demat account. Financial securities will remain in the Demat account until you decide to sell them and make a profit. A Demat trading account facilitates the dematerialisation of securities, which is the conversion of physical securities into electronic securities. A registered DP (Depository Participant) in India can help you open a Demat account and start holding securities. However, the DP will apply numerous charges to your Demat account, from account opening charges to custodian fees. Let us discuss the Demat account charges in India and how to minimise them.
Understanding the Demat account charges in India
Before starting digital trading, you must understand the charges associated with your Demat account. Here are the Demat account charges for traders in the country:
- Demat account initiation fees
You will pay a charge to open a Demat account with a trusted DP in India. The Demat account opening charge might change from one provider to another in India. To set up your Demat account, the DP has to complete the KYC verification process and allot a unique account number. Many other procedures are involved in opening a Demat account in your name. The DP charges a fee to cover the costs involved in allotting a unique Demat account in your name.
- AMC
AMC (Annual Maintenance Charge) is applied by every DP in India. Depository participants apply maintenance charges to keep the Demat account active and provide basic trading services. Usually, the maintenance charge for a Demat account is submitted once a year. Therefore, AMC will differ from one depository participant to another in India.
- Custodian fees
Demat account benefits include the safety of your financial securities. To ensure the safety of your securities, the depository participant might apply a custodian fee. However, it is a minimal amount charged monthly by the respective stockbroker or DP.
- Transaction fees
Transaction fees, also known as brokerage charges, are applied by DPs in India. For every transaction via your Demat account, you will pay a brokerage. The brokerage can be a flat fee or some part of the transaction value.
Besides the above charges, several other Demat account charges are applicable. For example, dematerialisation charges, stamp duty, courier charges, and other charges might be applied to your Demat account.
How to minimise Demat trading account charges?
Here’s how you can minimise Demat trading account charges in India:
- You do not have to pay a single penny to initiate a Demat account in your name. Religare Broking currently allows traders to open Demat and trading accounts for free.
- Search for a discount broker like Religare for minimal transaction charges. When brokerage charges are low, you do not have to pay a hefty amount to the stockbroker for each transaction.
- You can open a Basic Services Demat Account (BSDA) for zero/fewer maintenance and brokerage charges. These are not regular Demat accounts and are designed especially for small investors.
- Compare different stockbrokers and choose one with the lowest Demat account charges.
In a nutshell
You do not have to pay a hefty amount to enjoy Demat account benefits in India. Religare Broking offers a Demat account for free via its new offer. Also, you will enjoy minimal transaction charges on your Demat account. So minimise your Demat account charges right away!
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