In the age of the internet trading, you must have come across the term demat account. This account provides the facility to hold share certificates in an electronic format. During online trading, investors buy stocks and receive certificates immediately in their dematerialized or demat accounts. They can store any kind of investment certificates including shares, government securities, exchange traded funds, bonds, mutual funds and much more. In fact, having a demat account is now compulsory for performing the share trading in India.

Having said that, it is important to have a detailed knowledge about the demat account like the best demat account provider, charges for opening a demat account, benefits of having a demat account and so on and so forth. Come, let’s talk about the demat account opening charges and the benefits of having a demat account in this article.

Demat Account Charges

There are 5 kinds of charges they levy upon opening a demat account and those are –

1. Demat account opening charges: Usually no charges are required for opening a demat account. Most of the brokerage companies whether discount brokers or full-service firms offer Free or No Charges demat accounts to the investors. But they may collect annual fees upfront at the time of opening an account.

Disclaimer: While not all brokerage companies offer Free demat account, it is advisable to check the charges of the broking firms before opening an account.

2. Annual maintenance fee: This fee is charged well in advance while opening a demat account for maintaining the portfolios of the investors. The amount of this fee varies largely based on the services provided by the brokerage firms to the investors.

3. Custodian fee: The custodian fee is charged for keeping your shares safely in the demat account and varies from the numbers of share certificates stored in the account. It is generally charged annually and ranges from Rs. 0.5 to Re. 1 per ISIN (number of securities) month.

4. Transaction fee: As the name suggests, this fee is charged during stock transaction which means when an investor buys and sells stocks. The amount of the fee depends on the scheme that an investor opts for and hence, it is variable from scheme to scheme.

5. Dematerialization fee: This fee is applicable only to those who possess physical shares and apply for converting them into the demat form.

Now you may want to know what benefits you are going to get in return of such varied kinds of demat account opening charges. So, here we present some of the most crucial benefits of having a demat account.

Fuss free share transfer: The demat account allows the investors to transfer their shares easily, either through a delivery instruction slip or receipt instruction slip for buying or selling shares.

Lower the risk: The demat account reduces or waves off the risk of the share certificates being theft, loss and damaged.

Easy holding: Unlike physical shares, demat account makes it more convenient for the investors to hold and track the share certificates.

Reduce cost: The demat account also reduces the overall cost by abolishing stamp duty, handling charges and other expenses.