What Are the Different Fees and Charges Involved While Opening a DEMAT Account?

In the past years, the interest of Indians in the share market has significantly peaked. Reports by depository firms like Nationals Security Depository Limited (NSDL) and Central Depository Services (CDSL) reveal that post the Covid-19 outbreak, India has 100.5 million Demat accounts (as of August 2022), more than double the accounts in March 2020 (40.9 million).

Share markets are an easy way to increase your finances – earn from the money you earn. And so, if you are interested in opening a Demat Account, this blog is for you. Let’s examine the fees involved in opening a Demat account and get acquainted with the process.

Who Charges the Fees?

The two depository organizations in India, Nationals Security Depository Limited (NSDL) and Central Depository Services (CDSL) have depository participants (DP). They act as intermediaries between the account holders (investors) and the depository. For instance, banks and financial institutions. It is these DPs that charge the fees. Furthermore, they have different Demat account charges for opening a Demat account.

Fees Involved in Opening a Demat Account

The fees and charges involved in opening a Demat account can be categorized into 4 types – account opening fee, annual maintenance fee, custodian fee, and transaction fee. Let’s look at each one of these in detail.

1. Account Opening Fee

While some Depository participants require a little cost to create an account, some do not. When a consumer reopens their account, the DP that charges account opening fees likewise imposes such fees. Customers who create accounts with The Stock Holding Corporation pay a one-time lifetime charge, enabling them to maintain their accounts for a long time. Also, the cost is refundable.

2. Annual Maintenance Fee

Also known as the Folio Maintenance fee, it must be paid in advance. This charge varies from one DP to another and might be between Rs. 300 and Rs. 1000 yearly. Due to intense competition, numerous brokerage businesses also provide their clients with $0 maintenance fees for the first year. They start being charged after the second year.

3. Custodian Fee

The amount of securities maintained in a Demat account determines how often the custodian fees are assessed. These fees for each ISIN might be anywhere from Rs. 0.5 and Rs. 1.

Companies who have previously paid the one-time costs to the depository are not subject to custodian fees for the ISIN.

4. Transaction Fee

Transaction fees must be paid monthly to credit and debit securities from and to the Demat account. While some DPs have the option to charge a fixed amount for each transfer, others charge a percentage based on the total transaction worth. The transaction fees might also vary depending on the type of transaction, such as buying and selling.

Wrapping Up

If you want to open a Demat account, you must be aware of all the charges you will have to pay. Also, the fees mentioned above are only for opening a Demat account. Other charges include Pledge Creation Fees, Dematerialisation Charges, and more. Trading can be risky, so it’s better to have an idea before you start!