Demat Account Charges & Fees | Demat Account Brokerage Charges 2024 | Demat Account Kya Hota Hai?
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In this video of Josh Money, we will be discussing Brokers in the Demat account and its hidden charges.
While Demat accounts make investments, in general, and trading, in particular, more convenient than ever, they come with their fair share of charges. These charges are a small price to pay for the convenience of trading electronically. However, it is still financially prudent to be aware of a few aspects of these Demat account charges.
Demat Account Opening Charges:
The process of opening a Demat account requires the presence of a Depository Participant, also known as a DP. These are typically brokerage firms or banks that offer the option of opening a Demat account with them. In most cases, your DP will likely require Demat account opening charges that are a nominal amount. In other cases, the DP might offer the option of using a Demat account free for a year and charging you the next year.
Either way, it is best to inform yourself of the opening charges for a Demat account of your choice. Before choosing a DP, ensure that the concession on opening charges does not mean a compromise on the quality of services offered. IIFL offers Demat accounts with no opening charges and also waives maintenance charges for a year.
Demat Account Maintenance Charges:
Apart from charges for opening a Demat account, you might also be required to pay an annual maintenance charge for your Demat account. These charges are billed annually and are also nominal, ranging anywhere from Rs. 300 to 800, depending on the DP and the value of your transactions.
There are cases in which the Demat account charges for annual maintenance can be waived off. The SEBI defines a type of Demat account known as Basic Services Demat Account (BSDA) which is recommended for small investors. In the case of BSDA, annual maintenance Demat charges are waived off if the balance is less than Rs. 50,000.
Demat Account Safety Charges/ Custodian Fees:
Before trading became electronic, traders had to store physical, paper-based certificates for their shares and other securities. The responsibility for the safety of these certificates was placed on the trader. However, with the advent of Demat accounts, the safety of a trader’s securities rests with the DP. Therefore, traders are charged a minimal custodian fee, depending upon the number of securities held in the Demat account.
Demat Account Transaction Fees:
Finally, among the Demat charges are the charges levied for the debiting and crediting of securities in a Demat account. These are known as the transaction fees and they differ from DP to DP, as well as on the choice of the trader’s brokerage plan. Some DPs levy transaction fees based on the number of transactions while others charge a flat transaction fee for the entire month.
Transaction Fees for Demat Accounts:
There are charges associated with transactions made in a Demat account. These charges are levied whenever securities are credited or debited from the account. These transaction fees can vary depending upon the Depository Participant and also the selected brokerage plan by the investor. In some cases, it may be levied on every individual transaction while some DP charges a flat transaction fee for the month.
Miscellaneous Charges:
You will also need to pay some miscellaneous charges for the Demat account. These can include charges to dematerialize as well as rematerialize shares. You may also need to pay for courier charges, stamp duty and non-periodic statements.
Conclusion:
Due to the advent of technology, trading today has become far easier and more accessible than ever before. In particular, Demat accounts have drastically changed the way traders buy, sell and hold their securities and made trading a more open playing ground. In return for these services, providers of Demat accounts charge various fees related to various aspects of keeping a Demat account secure and convenient. As a potential trader, it is important to stay apprised of these Demat charges as well as make note of how they could be minimised.
Source: IIFL
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