What Are the Online Demat Account Opening Charges in 2023?
Are you interested in building a diversified portfolio by trading financial securities? If yes, you must apply for a trading cum Demat account first. Beginners can also choose to apply for a separate Demat account in India.
When applying for a new Demat account, traders must not overlook the associated charges. You will come across different charges, from online Demat account opening to custodian charges. Some brokers or depository participants might also apply hidden charges on Demat accounts, thus increasing the investment cost.
It is essential to consider the Demat account charges of different service providers before starting your trading journey. Read on to understand the Demat account opening charges in 2023.
Why Do Traders Need Demat Accounts?
Before delving into the account charges, it is essential to understand the significance of a Demat account. A Demat or dematerialisation account is a safe storage for electronic securities in India. Investors in India purchase different securities like equities, derivatives, and mutual funds. These securities can be stored in the form of physical trade certificates.
However, trade certificates issued by stock exchanges might get damaged with time. For the same rationale, investors prefer storing financial securities with a Demat account in electronic form. Investors in India can purchase or sell securities through brokerage accounts, whereas they can rely on Demat accounts to store them.
The Demat account will be linked with the trading account. Financial securities purchased via the brokerage account are dematerialised before being transferred to the Demat account. The process of dematerialisation or converting securities into their electronic form is automatic.
Similarly, financial securities are debited from a Demat account when they are sold through the linked brokerage account. Besides storing securities electronically, there are many other benefits of Demat accounts. For instance, a Demat account also serves as a portfolio monitoring tool. Investors can track their holdings anytime with a dematerialisation account. They only have to sign in/log in to their Demat account through a media device.
Applying for a New Dematerialisation Account in India
Anyone above eighteen years of age can apply for a Dematerialisation account in India. Individuals below eighteen years of age can only apply for minor Demat accounts with the help of parents or legal guardians. You must find a trusted stockbroker or DP (Depository Participant) to apply for a new Demat account online.
Most stockbrokers and DPs allow traders to apply for new Demat accounts on their websites. While stockbrokers and DPs both offer Demat account services, there are still some differences. A DP might not offer trading account or investment platform services. On the other hand, a stockbroker offers diverse trading services.
Demat Account Opening Charges in India
The online Demat account opening charges might differ from one provider to another. It is the charge required by the broker or DP for opening a new account. The average Demat account opening charge in India is around INR 499. However, the account opening charges will change according to the Demat account plan offered by the broker or DP.
Some brokers even allow traders to open new Demat accounts for free. However, they might adjust the amount by charging the trader a high annual maintenance fee. Besides the account opening charge, you will also have to bear these Demat account costs:
- Annual Maintenance Charge/Fee: The service provider will charge an annual fee for keeping your Demat account active. AMC for Demat account users in India might range between INR 300 and 800.
- Custodian Fees: It is charged by a broker or DP for keeping your electronic securities safe.
- Transaction Fees: Brokers apply transaction charges for each trade. It can be a fixed charge or a part/percentage of the total trade value.
In a Nutshell
Investors must compare the online Demat account opening charges before making a decision. Before choosing a service provider, they must also compare the transaction, custodian, maintenance, and other charges. Lower Demat account charges can lead to high investment returns. Compare Demat account charges and apply for a new account now!