Demat Account Opening Charges in India

Demat Account is basic requirement for investing in indian stock market. Dematerialised account is just like a bank account where actual money is replaced by shares. A dematerialised account facilitates buying and selling shares, precluding cumbersome paperwork and meaningless delays. You have to approach the DPs (Depositary Participants), to open your dmat account.

Documents Required To Open Demat account

Opening a dematerialised account for trading in the Indian share market is as simple as opening a savings bank account. You can open a dmat account with a bank or a depository participant (DP). Along with the application form, following documents are required to open a dematerialised account:

Duly filled application form.

Photocopies of passport, pan card (mandatory), driving license for identity proof.

Photocopies of passport, telephone bill, driving license, voter ID card for residence proof.

Photographs of the respective person of passport size.

Details of the bank account which is to be linked with the Demat account.

Dematerialised Account Opening Fee

Dematerialised account opening fees can be divided into four main categories.

Dematerialised Opening and Documentation Cost

This is one-time fee to be paid when opening a dematerialised account. It depends on depository participant whether he takes dematerialised account opening fee or not. Most of the banks and Stock Trading Brokers do not take any fees to open dematerialised account, but some may charge a nominal fee for the stamp paper on which you must execute the contract with the broker.

Annual Maintenance Costs

Annual maintenance cost is required to pay at the beginning of the year. However, some banks and brokers may charge a fee for each month or quarter.

Custodian Fee

The custodian fee is charged on a monthly basis and it depends on the number of securities held in the account.

Transaction fees

Transaction fee is the fee for the debit of shares from your DP account. As per SEBI not a broker or bank may charge fees for Credit of Shares. So, do not be fooled by the agents who claim to offer "free credit of shares". The transactions costs are in the range from 0.02% to 0.04% of transaction value subject to a minimum charge of Rs.12 to Rs.25 per transaction.

Some important points:

In addition to the basic fees, as explained above, you must pay the service tax and education cess.

Many banks waive the fees annually to keep the first year.

You may have to pay additional for physical account statements, but if you opt for e-statements, you need not to pay any costs.

If you already have a Trading and DP account with the same broker, you can save significant amounts on AMC and transaction charges.

Many online brokers offer lower fees at first, but they can charge again it later. Therefore, when choosing a broker or bank to open a new dematerialised account, you must consider all factors, such as service, convenience, and the frequency and volume of transactions, rather than make decisions based solely on cost.

Select the Right Share Market Broker for the Right Decision