All about Demat Account Charges & Ways to Reduce Them

24 Aug 2023

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Trading and investing in the share market are gaining momentum among Indian investors. While there can be huge gains by investing in the share market, it also comes with certain associated costs. For trading or investing in the share market, you first need to open a demat account with a stockbroker.

Once your demat account is active, you can begin investing and trading in different segments and instruments. But, certain demat charges are levied for opening and maintaining the demat account and conducting transactions using the same.

What are those demat account charges?

All About Demat Account Annual Charges

Following are some of the different Demat charges that you should always consider before selecting the stock broker:

Demat Account Opening Charges

The process of opening Demat account has become quite simple and convenient. It requires the presence of a Depository Participant. This can be banks providing stock brokerage services or stock broking platforms. These participants offer the services of opening the demat account against which they charge nominal demat account opening charges. These charges can vary among different participants.

Different participants can have different policies for charging the demat account opening fees. Some might even charge zero fees for a certain period. However, one should always ensure that lower fees do not compromise the quality of services.

Demat Account Annual Maintenance Charges

It is also called demat account AMC charges. After you open the demat account, you can start trading and investing in the stock market. However, most depository participants charge an Annual Maintenance Charge (AMC).

These DP AMC charges are levied annually to maintain your demat account with the stockbroker.

Again, the policies are usually different for different depository participants.

Some participants may even provide a free demat account with no annual charge for a certain period. Further, SEBI also allows Basic Services Demat Account (BSDA), recommended for small investors. The DP AMC charges for BSDA are waived if the balance is less than Rs. 50,000.

Demat Account Transaction Charges

Each transaction conducted through a demat account attracts transaction charges. These charges are levied against the debiting and crediting of securities. Demat transaction charges are not fixed and differ among different brokers.

Further, even the same broker can have multiple schemes, and transaction charges can differ under each scheme. While some brokers can charge demat transaction charges based on the number of transactions, others can charge a flat fee or a percentage of each transaction’s value.

Traders and investors should always compare transaction charges, especially when they are seasoned traders and investors.

Demat Account Safety Charges

It is also known as custodian charges. Earlier, traders and investors had to store physical share certificates. Thus, the share certificates’ storage and safety rested with the traders and investors. However, the securities are now stored online after dematerialisation and the advent of demat accounts and electronic transactions.

It is the responsibility of the depository participant as they act as the custodian of securities. Thus, they can charge minimal custodian fees depending upon the number of securities held in the Demat account.

How to Reduce Demat Account Charges?

It can be assumed that many charges are associated with the demat account. While the charges are nominal, one can save them if one makes smart moves. Here’s how one can save demat charges:

  • One can open a Basic Services Demat Account (BSDA). This is especially beneficial for small and retail investors. These are low-cost demat accounts for those investors who do not invest regularly. Some of the depository participants even waive the maintenance charges for BSDA.
  • Investors should skim through different brokers and select the lowest charges demat account without compromising the quality of services. Always go through the demat account charges list before finalizing the broker.
  • Another method is to browse through different plans offered by the stockbroker. Brokers often have multiple plans for the investors and traders, and the demat account charges are usually different for each plan. One should try to select the minimum brokerage charges demat account.

Wrapping Up

Demat account charges are nominal, and if you are fortunate and accurate enough, you can cover these charges through a single investment or trading decision. However, you must select the right broker and plan to avoid unnecessarily high charges.

Further, one should remember that the above list of charges only covers the Demat account charges. Taxes are separately leviable. Opt for Bank of Baroda brokerage services for cost-effective and convenient services.

Being one of the leading financial institutions, Bank of Baroda understands your needs and offers feature-rich stock broking services at minimal charges to investors and traders.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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