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All about Demat account maintenance charges.
Before the introduction of online stock trading platforms, buying and selling shares was a cumbersome process. Investors had to maintain physical share certificates for all the stocks in their portfolio. It was common for investors to lose their share certificates due to physical damage or theft. However, dematerialised or demat accounts changed all that. They allowed investors to convert and store all their physical share certificates into electronic form, thereby eliminating the risk of damage and theft. Nowadays, all stockbroking firms allow investors to open demat accounts for storing their shares. For this service, they charge a nominal annual maintenance charge or AMC.
What are account maintenance charges (AMC) in Demat Accounts?
Demat Account Maintenance Charges (AMC) are fees levied by depository participants (DPs) for maintaining your Demat account. These charges are applicable whether or not there is any activity in your account. AMC covers the costs incurred by the DP for providing various services related to your Demat account, such as safekeeping of securities, transaction processing, account administration, and providing regular statements of account, among other aspects. Demat AMC charges can vary based on several factors, including the type of account and the policies of the DP. They are typically charged on an annual basis, but some DPs may offer monthly or quarterly payment options. The AMC structure can be a flat fee which is a fixed annual charge, regardless of the number or value of securities held, or a variable fee based on the value of holdings or the number of transactions.
AMC is an important consideration when managing your Demat account. Understanding Demat AMC charges helps you make informed decisions and manage your investment costs effectively. Always review all charge related details provided by your broker and compare with other service providers to find the most cost-effective option for your needs.
There are mainly four types of charges levied by stockbroking firms on demat account holders:
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Account opening charges:
To open a demat account, it is necessary to avail the services of depository participants (DPs) such as brokers. Most brokers levy a one-time charge for opening an account with a depository. This is a nominal fee for providing investors the service of operating a demat account. At m.Stock, investors can choose from two account opening plans. They can avail zero brokerage across all segments with a one-time fee of ₹999. Alternatively, they can choose a low-brokerage plan by a one-time fee paying ₹149. -
Annual maintenance charges:
Along with the one-time account opening charge, brokers also charge fees for demat accounts. This charge may be levied on a quarterly or annual basis. Note that this fee is mandatory and cannot be waived off. It has to be paid irrespective of whether there is any transaction in the demat account. m.Stock gives investors the option of paying a one-time fee of ₹999 and making their demat account AMC-free for life. -
Transaction charges:
Depository participants also charge investors for the transactions in their demat account. This may be levied each time shares are debited from or credited to the demat account. Some DPs charge a percentage of the transaction amount, while others charge a flat fee for every transaction. -
Custodian/safety charges:
Depository participants charge traders a minimal fee for the safe custody of investors’ securities. These charges depend on the number of securities held in the demat account.
Read Also: Demat Account Charges
Conclusion
Demat Account Maintenance Charges are a key aspect to consider before opening and while managing your Demat account. Best practices in this regard include reviewing the DP’s schedule of charges to understand the AMC and other fees before opening a Demat account. Thereafter, regularly check your account statements to ensure AMC is being charged correctly. Furthermore, consider the AMC when choosing a DP, as lower charges can save you money over time.
Choosing a DP like m.Stock by Mirae Asset can help manage and potentially reduce the costs associated with maintaining your Demat account. At an additional cost of only ₹ 999, you can get a Zero AMC charge Demat account. Yes, this option will make your Demat account AMC free for life. Otherwise, m.stock AMC charges will be levied at ₹ 120 per quarter. Apart from zero AMC, m.Stock also gives you the choice of free trade delivery and zero brokerage across segments for life. Elevate your trading game and save more with each trade, with m.Stock. After all, saving is earning too.
