Five Things to Know About Demat Account Charges

Demat accounts in India are growing at a rapid pace. Thanks to the growing awareness and issuance of IPOs. The depository provider CDSL has recorded a jump of 13% from the last year while its competitor NSDL has recorded growth rate of 6.6% as compared to the last year.

The total number of accounts listed under NSDL was 15.33 lakhs and 119.2 lakhs at CDSL by the end of January 2017. The rise in demat accounts can be attributed to the fact that the retail investors are consciously investing in the market.

Here are five things that you need to know about demat account charges:

  • Demat account types- There are two kinds of demat accounts: basic service account and full-service account. The charges vary depending upon the kind of account that you own. If you are a beginner, you should go for a basic service account. This will give you a fair idea about investing in stocks. The biggest advantage of this account is that you don’t need to pay annual maintenance charges. On the other hand, a full service account offers the personal advisory charges. Hence, the fee is a bit more.
  • Account opening charges– Thanks to the mandatory document Aadhar, now it’s possible to open a trading and demat account with the broker through the online mode. Since all the processes are completed within a fraction of second, the account activation also takes a few minutes. Though there are no demat account opening charges, still you will have to pay share broker charges or transaction fees. Failure to pay the same can lead to freezing of the account.

  • Maintenance Charges- Generally, the investors need to pay 2-3 percent on the total investment or of Rs 50,000 annually for maintenance charges of their demat account. But there are chances that a small investor may not avail many of such services like derivatives, forex trading, future, options. Hence, in order to curb this menace, the market regulator SEBI has introduced BSDA account. If an individual’s demat account has the value of securities less than Rs 50,000, he/she is not liable to pay annual maintenance charges. So, if an account holder has invested Rs 20,000 in stocks through the demat account, then there will be no annual maintenance charges.
  • Brokerage fees and other charges– Brokerage charges is the amount that you need to pay while trading. The brokerage fees can be in a percentage or some fixed amount. For example, if the broking charge is 0.50 percent, then the investor has to pay 50 paisa for investing in the stocks. There is a separate fee for trading in derivatives and mutual funds.
  • Intraday charges- If you are an aggressive investor who wants to invest in stocks on daily basis, then the firm will charge you for it. There are different plans depending on the needs of the investors; brokers like Sharekhan offers two kinds of account to the holders each attracting different facilities and charges.
  • Parting thoughts –There are no charges if you plan to close the demat account.

Demat account is the best way to hold the stocks that you have purchased, so get one today.