To invest in the stock market and to become an active trader, one has to start with opening the Demat Account and the trading account, essential for performing trading activities. These two accounts help facilitate online trading, and the investors enjoy the independence of making their own decisions. But the only problem with these actions remains the uncertainty, and lack of credibility that new investors hold in their hearts regarding the functioning of these accounts. Traders come with a plethora of questions regarding the functioning and reliability of the Demat Accounts. While these questions are answerable as a whole with a homogeneous approach, the ones related to the Demat Account charges require a much precise explanation.
The two major depositories channelise their services through the centres of over 500 Depository Participants in the country. The quality of services and the Demat Account charges of all these Participants may differ from one another. Considering the diverse rate chart, investors face the conflict of choice! Consequently, budding traders and investors come up with several FAQs (Frequently Asked Questions) regarding the same. Here are some of the common ones to get the basic idea about the diverse charges of Demat Accounts.
The answers to general FAQs can shed some light on the general queries that investors face!
Common FAQs Regarding The Charges of Demat Accounts
The FAQs are common queries that arise in the minds of new investors when they start searching for the right Demat Account. The Demat Account charges play an important role as no investor wishes to pay any sum that does not benefit him to the fullest! And traders must always feel free to address these questions either with their Depository Participant or with the trading experts available online. These FAQs will drive some light on the facts that go unnoticed in general.
● What is The Account Opening Charge of Demat Accounts?
Earlier, the Depository Participants, whether it be banks or brokerage firms, used to charge a nominal account opening fee. The charge was around INR 250-300. However, nowadays, most of the leading Depository Participants offer the account opening service free of cost. Therefore, traders can avoid paying this cost out of the other Demat Account charges if they choose the right Depository Participant. All one has to do is collect all the required documents at the time of account opening.
● Why Do The Demat Account Charges Differ?
Demat Account charges differ from one Depository Participant to another because of the company strategy and the types of services they provide. Most of the Depository Participants offer the same services, such as online transfer facility, mobile applications, websites, etc. The DP can decide the charges as per his policies. So, while the investors cannot do anything about the prevailing differences in the prices, it is better to decide after analysing the market carefully! The more precise one is with his decision, the higher are the chances of cracking the right deal!
● How To Get The Lowest AMC?
The AMC (Annual Maintenance Charge) is the cost that the Depository Participants charge for maintaining the authentication and storage facility of the account. This charge is inevitable as every DP will charge this amount no matter how much balance one maintains in their accounts. But there are some leading names in the industry that provide zero AMC service in the initial year. Yes, one can avoid this cost in their first year of service. Also, the AMC ranges between INR 400 and INR 700 in the market. One can consider the services of the DP that charges the lowest price.
● Are There Any Charges Related To Account Activities?
Yes, for most of the account activities, the DP charges a nominal amount as “transaction cost”. Dematerialisation and rematerialisation fall under the major and usual activity. Their cost differs between INR 15 and 40. Other account actions like redemption, Destatementisation, Restatementisation, etc. may or may not be chargeable. Some DPs do not charge anything for these actions, so the investors have a choice to escape these.
● Is There Any Cost On Freezing The Demat Account?
One of the best features of Demat Accounts is that investors can freeze theirs if they are likely to hold their existing shareholdings without making any future transactions for a while. Freezing the account for this period increases the safety standards of the accounts. This action is not a part of the general Demat Account charges that the investors are supposed to pay. However, the DP can set a bar of minimum balance for providing this service.
The investors who are willing to avail Demat Account services at pocket-friendly costs should be very careful with their choice of the Depository Participant. Although there is no limitation on the number of Demat Accounts that one can have, it is always better to make the right choice in the first place! And to avoid the chances of paying unnecessary charges, it is vital to analyse the market options thoroughly!
