Demat Account Charges Explained

Need for Demat Account

Demat Account is required primarily to store your shares and securities electronically. It is a simple and easy way to process the trading of shares further. Demat is the short form of “Dematerialized”, which means to convert your physical shares in the electronic format. This account can hold a variety of investments such as bonds, equity shares, government securities, mutual funds, etc. It is a hassle-free method that aids in paperless trading.

Check: How to use a Demat Account

Demat Account Charges

Let us find out the various types of demat account charges:

1.    Demat Account Opening Charges

2.    Dematerialisation of Share Certificate

3.    Rematerialization of Share Certificate

4.    Conversion of Mutual Fund Units

           a)    Destatementization Charges

           b)    Restatementization Charges

           c)    Redemption Charges

5.    Demat Account Safety or Custodian Charges

6.    Demat Transaction Charges

7.    Postal Charges

8.    Demat Account Annual Maintenance Charges (AMC)

Many investors find the different types of Demat Account charges difficult to understand. Demat Account charges rely on the nature of services and fees charged by a depository participant. The following section explains each of the demat account charges in brief and the need for them.

Account Opening Charges: It is a one-time fee charged by most of the depository participants as part of the procedure of opening a Demat account. Online Demat account opening costs are negligible. Some banks even have special offers related to Demat accounts opening charges to attract more investors. It makes the process of investing easy.

Charge for Dematerialisation of Share Certificate: Dematerialisation means converting your physical assets like share certificates to electronic records. After dematerialisation, the shares can be held in your Demat Account. For the efficient conversion of your shares, the depository participant charges some amount of money. 

Charge for Rematerialisation of Share Certificate: Rematerialization is just the opposite of Dematerialisation. It is the process by which the electronic record of shares is converted to its original form, i.e., physical share certificates. It is chargeable.

Check: Dematerialisation & Rematerialisation: Meaning and Process

Charges for Conversion of Mutual Fund Units: Converting of physically held mutual fund units to dematerialised electronic format is chargeable. Most of the depository participants charge a flat fee for the dematerialisation of mutual funds units.

There are three types of charges for the conversion of mutual fund units:

Destatementization Charges: It is the process where mutual fund units are converted into electronic form through dematerialisation. This is a chargeable process.

Restatementization Charges: Restatementization involves the process of converting mutual fund units in a Demat account back to their physical form. The mutual fund units are represented in the physical form through a Statement of Account. Here, the depository participants charge a nominal fee for carrying out the process effectively.

Redemption Charges: It is the process by which you can sell your mutual fund units back to the company you purchased them from. Your account is credited based on the valuation of your funds on that particular date. The depository participants charge a flat-rate fee for each redemption request.

Safety or Custodian Charges: Depository participants usually pay safety charges as a one-time fee to maintain the account. Those who charge for the Demat account maintenance charges from the investors, do it on a monthly basis. The amount charged is dependent upon the number of securities associated with the particular Demat account. 

Charges for Transaction: Demat Account transactions are made for the profit of the investors. The depository participants can charge for their service to handle shares and issues related to their transaction, which eventually help you earn profit. 

Postal Charges: In the case of offline demat account creation, postal charges are applicable. The depository participants charge a nominal amount for physically couriering documents, and statements of accounts to your residential address or whichever address has been provided by you while opening the account. 

Demat Account Annual Maintenance Charges (AMC): The demat account annual charges, also known as Annual Maintenance Charges or AMC, cannot be waived. These are mandatory for anyone holding a demat account. This charge is mandatory for the maintenance of your account, and it does not depend on the number of transactions in your account. Even if there are no transactions throughout the year, you have to pay for AMC if you have a demat account. These are also called Folio Maintenance Charges. 

Why choose 5paisa?

5paisa offers you a zero-fee demat account. The following are some of the chargeable services offered by us:

1)    We charge ₹15 per certificate for the dematerialisation of physical shares.

2)    We do not charge any amount for the transfer of funds through UPI and IMPS. For fund transfer through Net Banking, ₹10 per transaction is levied.

3)    A charge of ₹40 is levied for postal services. 

4)    We charge nothing for Depository Participant AMC if the value of your shares is less than ₹50,000. If it exceeds ₹50,000, then you have to pay just ₹75 per quarter. 

5)    If you pledge shares, you will have to pay ₹50 only per script. 5paisa offers the best services across various financial domains at the minimum cost. 

Check: How to Open a Demat account

5paisa Add-Ons

You can subscribe to our Super Saver Packs that prioritise your needs and provide customised services accordingly.

Power Investor Pack - This is useful for investors who plan for short-term transactions. You get a flat fee of ₹10 per executed order. This pack also lets you compare your portfolio performance with benchmark indices, sectoral indices, etc., with the help of Advanced Portfolio Analytics. You can also check the stocks that are in demand so that you can plan accordingly. This Add-On pack enables you to get daily recommendations from experts. This pack helps in evaluating the market, daily market outlook and also helps you track your portfolio. You can get all these services and more at just ₹599 per month (plus GST).

Ultra Trader Pack - This pack is a bonus for traders. This pack eases you of the charge of call and trade, maintenance, transfer charges, Depository Participant charges, Net Banking Pay In charges, and lets you save more on Advanced Portfolio Analytics also. You get a free model portfolio and a list of hot stocks to plan your next buy. 

5paisa is the best platform for all your queries related to the share market, IPO, demat accounts and trading.