Money buys comfort, whether it is in our day to day lives or in the world of trading and investing. Unlike earlier when you had to go through the hassles to buy and sell stocks, the introduction of demat account in 1996 made life of traders and investors simpler. With the advent of demat account, now you can trade or invest in shares and securities right from the comfort of your home.
Demat account has completely eliminated the tedious paperwork. In addition, you no longer have to visit the company’s registrar for share transfer or purchase share transfer stamps or stress about loss or theft of share certificates.
The demat account makes the entire process seamless and hassle-free. Having a demat account is a mandatory requirement for trading in the stock market. However, just like everything has a cost, same is the case with the demat account. You need to pay a small amount for all the comfort that demat account offers you.
To help you understand the different charges on demat account, we have compiled the list of charges that you need to pay when you open a demat account.
Demat Account Charges
- Opening Charges
As the name signifies, this is the amount that you pay for opening your demat account. Demat account opening charges may vary from nominal to nil. It depends on broker to broker and the services offered. Some brokers offer a demat account for free while others charge a very low amount. Some banks offer zero account opening charges if you opt to open a 3-in-1 account with them i.e. a savings account, a trading account and a demat account all in one.
- Annual Maintenance Charges
Annual maintenance charges are the fee you pay every year for maintaining your demat account. The charges can vary from Rs. 300 per annum to Rs. 800 per annum depending on your broker. Many times, as special offering to customers, brokers waive off the annual maintenance charges for the first year and start charging you from second year onwards.
Usually, you are not required to pay annual maintenance charges for a basic demat account with a balance of up to Rs. 50,000. While for a demat account with a balance of above Rs. 50,000, you would be required to pay anything between Rs. 300 and Rs. 800, depending on the number of transactions that you make in your account.
Some brokers charge this amount on an annual basis while others may choose to charge on quarterly basis or may even charge a lump sum lifetime fee.
- Transaction Charges
This is the amount you pay to carry out a buy or sell transaction from your demat account. While some brokers charge this amount based on the number of transactions that you make from your account, others charge a flat rate on a monthly basis. Transaction charge varies from broker to broker and can be anywhere around Rs. 1.5 for each share you trade.
- Safety Charges
Safety charges are also termed as custodian fee. It is the amount that you pay to the broker for safekeeping your shares in the electronic form. Prior to the introduction of demat account, there were many issues related to the safety of share certificates. However, demat account has eliminated these issues and your shares can no longer be stolen or lost. The brokers charge a fee for holding them safe. Safety charges are typically levied annually unless specified otherwise.
- Demat and Remat Charges
Apart from the above, there are other charges like demat and remat charges where the broker charges you a fee for dematerialising your physical shares or rematerialising your demat shares back to physical form. Demat charges can be anywhere around Rs. 5 per certificate while remat charges can be around Rs. 25 per certificate.
The above-mentioned are some of the basic demat account charges that are charged by different brokers. The charges may vary from broker to broker depending on the services offered. But this article gives you a holistic picture of overall charges which will help you understand your overall cost of opening a demat account. If you are willing to open a demat account, you may consider opening it with Kotak Securities.