There is a price for everything in today’s world. Similar is the case with trading in shares and securities. When you trade or invest in the stock market, you have to pay the charges for opening a demat account and brokerage fees for purchase or sell of shares.
The introduction of demat account in 1996 has eased the way in which transaction of shares and securities are carried out. There is no need to purchase share transfer stamps, worry about share certificates or visit the company’s registrar for transfer of shares. Now you can trade and do everything related to shares and securities from anywhere across the world by using a demat account.
In this article, you will learn about the opening and maintaining charges on the demat account.
Let us first learn about the opening charges on the demat account.
Demat Opening Charges
The opening charges on the demat account are very nominal and nil in most cases. Banks offer the facility of 3 in 1 account if you have a demat account, savings account and trading account at a bank. This service makes trading or investing in the stock market simpler and easier.
Let us now learn about the safety charges or custodian fee.
Demat Safety Charges
Demat account holds your shares and securities at a single place. There is no need to worry about share certificates being stolen, lost, etc. as they are kept in an electronic form.
Depository participants (DPs) and banks charge the demat account holders for keeping their shares safely. This demat account charge is popularly known as safety charges and it is generally charged annually.
Let us now learn about the annual maintenance charges of the demat account.
Demat Annual Maintenance Charges
Every demat account holder has to pay the annual maintenance charges. A demat account with a balance of Rs. 50,000 attracts no charges. However, if the holdings of an investor in the demat account are Rs. 50,001 to Rs. 2 lakh, the annual maintenance charges are between Rs. 100 and Rs. 750 depending on the number of transactions carried out in a year.
If the value of transactions is above Rs. 2 lakh, the annual maintenance charges would be Rs. 2000 to Rs. 2500. This type of demat account charges can be on a quarterly basis and the depository participants may charge annual maintenance lifetime fee of Rs. 2000 and above.
Let us now learn about the transaction charges on the demat account.
Demat Transaction Charges
The transaction charges vary from one depository participant to another. Some DPs levy charges on the basis of the number of transactions carried out while some have a flat rate for the entire month. In general, the DPs charge Rs. 1.5 for every share traded.
Now the next set of demat account charges are for dematerialisation and rematerialisation.
Demat and Remat Charges
The depository participants charge a fee for demat or remat of shares. The cost of dematerialisation for every share certificate is Rs.5 and the cost of rematerialisation for every share certificate is Rs. 25.
The above mentioned are the different types of demat account charges that every demat account holder must pay. If you are a beginner in the stock market and looking to open a demat account you can contact a well-known and trustworthy securities firm that is known for providing hassle-free premium services at affordable rates.