A Demat account, much like a bank account, is where you store your shares and securities in electronic form. You might often see advertisements for “Free Demat Accounts,” especially from banks and brokers. But are these accounts truly free? Let’s break down the actual costs involved.
1. Demat Account Opening Charges
Many banks and brokers now offer zero account opening charges. However, this typically applies only to the initial opening of the account.
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Banks often waive the fee because customers usually already maintain a savings account with them, generating float income.
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Full-service brokers often offer free or low-cost demat account opening as part of bundled services.
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Discount brokers may still charge a fixed fee, especially for standalone demat accounts.
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If you’re executing a Power of Attorney (POA), you may be charged separately for stamp paper costs, usually billed at actuals.
2. Annual Maintenance Charges (AMC)
Though opening the account might be free, Annual Maintenance Charges (AMC) are typically applicable.
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AMC generally ranges between ₹300 to ₹800 per year.
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Some brokers waive AMC for the first year as a promotional offer.
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Banks may offer lower AMC if your trading and bank accounts are linked.
Basic Service Demat Account (BSDA):
SEBI has introduced a Basic Demat Account (also called BSDA) for small investors:
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AMC is waived for holdings under ₹50,000.
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A nominal fee is charged for holdings between ₹50,000 and ₹2,00,000.
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Above ₹2,00,000, standard AMC applies.
This is ideal for occasional or small-scale investors.
3. Transaction and Custodial Charges
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Custody Fee: Levied by NSDL/CDSL but usually paid by the company, so not charged to the investor.
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Transaction Fees:
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When you buy shares, your demat account is credited.
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When you sell shares, it is debited.
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Most DPs only charge for debits (i.e., sales), not credits.
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Other Charges to Be Aware Of
While AMCs and transaction fees are standard, there may be additional charges, such as:
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Administrative fee for physical Debit Instruction Slips (DIS) (if not using online transfer).
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Penal charges if a debit instruction fails or is rejected.
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Dematerialization/rematerialization fees:
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Charged when converting physical shares to demat or vice versa.
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These charges vary across DPs and are usually detailed in the DP Agreement signed during account opening.
In Summary
| Charge Type | Typical Range / Notes |
|---|---|
| Account Opening Fee | ₹0 (in many cases), or nominal for discount brokers |
| Annual Maintenance Charge (AMC) | ₹300 – ₹800/year; waived for BSDA accounts |
| Transaction Charges (Sell-side) | Per debit; varies by DP |
| Demat/Remat Charges | On actuals; charged per request |
| DIS Administrative Fee | Applicable if using physical DIS instead of online mode |
| Penal Charges | For failed instructions, technical issues, etc. |
Understanding these charges gives you a complete view of the cost structure of maintaining a Demat account. While many costs are minimal, it’s always wise to check the fine print and compare options before choosing a DP.
