It is necessary to evaluate and compare the various costs that are associated with opening up a Demat account. Get to know more about the real costs associated with the process.
There are some Depository Participants (DPs) that initiate the account opening process for free; but then, they may levy other charges afterwards. Here, you need to know that there are two types of Demat accounts- the basic service account and full service account. For the basic service accounts, clients are not required to pay any types of maintenance costs up to an amount of Rs. 50,000. These accounts are an integral part of a SEBI initiative aimed at encouraging financial inclusion of small scale traders into the system. A full service account also flaunts several features but is not absolutely free of cost.
Let’s see the fees charged by different channels providing full service accounts.
Most banks would allow you to open up a Demat account without any fees. However, you will be charged for AMC (Account Maintenance Contract). There are a few banks that waive off their AMC for the first year, and from the second year onwards, they charge you as per your transactions; so, choose accordingly.
Stock Broking Companies
A Demat account can be directly opened with any registered stock broking company. Here too, there will be variations pertaining to the AMC. The cost of account opening would vary from Rs. 0 to Rs. 250. Such companies also charge an AMC of nearly Rs. 600 per year. However, there are certain brokerage companies that charge about Rs. 750 as account opening fees. The brokerage for trading would range between 0.05% and 0.50% of the securities worth in a single transaction.
Financial advice provided by discount brokers are usually at par with, or higher than the costs attached to traditional brokerage firms. Some of these brokers are allowed to open online accounts across all segments at no cost at all. Nonetheless, the common amount that is charged as online account opening fee ranges from Rs. 150 to Rs. 250. The fee for opening up a Demat account might be around Rs. 210, with AMC of Rs. 400. You might also be required to pay a fee of Rs. 110 for the purpose of generating an e-stamp for the power of attorney.
Online Investment Platform
As an online trader, you have yet another available option for opening a Demat account; via investment portals. The AMCs that are charged on these portals are comparatively lower than that levied by banks. However, the key is to search for an authentic investment online portal that would not cost you more than your expectations.
Once you begin transacting with your trading account, you will come across other additional charges that might include credit fees, demat and remat fees, failed instruction charges, fees for pledge services, or mailing charges. These fees would vary across different channels on the basis of your usage.
So, be very cautious about the associated charges with different types of online transactions with your Demat account. Be wise and step up successfully!