There are four major charges usually levied on a Demat accounts namely:
- Account opening fee
- Annual maintenance fee
- Custodian fee
- Transaction fee.
As there are all kept in same Depository, you would expect that the charges between all the DP would be same but it is not the case. Each DP can charge fees which they deem appropriate.
Account opening fee: Depending on the DP, there may or may not be an opening account fee. Private banks, such as ICICI Bank, HDFC bank and UTI bank, do not have it. However, players such as Karvy Consultants and the State Bank of India charge it. But most players levy this when you re-open a Demat account, though the Stock Holding Corporation offers a lifetime account opening fee, which allows you to hold on to your Demat account over a long period. This fee is refundable.
Annual maintenance fee: This is also known as folio maintenance charges, and is generally levied in advance. This is anywhere from Rs 300 – Rs 500 yearly and vary by DP’s.
Custodian fee: This fee is charged monthly and depends on the number of securities (international securities identification numbers – ISIN) held in the account. It generally ranges between Rs. 0.5 to Rs. 1 per ISIN per month.
DPs will not charge custody fee for ISIN on which the companies have paid one-time custody charges to the depository. Most of the major companies have paid it and so there is no custodian charge to be paid by retail investor.
Transaction fee: The transaction fee is charged for crediting/debiting securities to and from the account on a monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank and ICICI Bank peg the fee to he transaction value, subject to a minimum amount.
The fee also differs based on the kind of transaction (buying or selling). Some DPs charge only for debiting the securities while others charge for both. The DPs also charge if your instruction to buy/sell fails or is rejected.
In addition, service tax is also charged by the DPs at the rate of 12.36%
But compared to brokerage charges, maintaining a Demat account is very cheap and most of the investor would pay very nominal amount for the Demat account. But brokerage charge is a different story. Brokerage charges could decide whether you end up as a winner or loser in the market. Read detailed review about top 10 brokers in India market.