Are there any AMC charges for the demat account?

Berry Mathew

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Are there any AMC charges for the demat account?

When you trade online, shares are bought and kept in a Demat account, which makes trading easy for everyone. Your account consolidates your investments in government securities, stocks, bonds, exchange-traded funds, mutual funds, etc. With a Demat account, buying and selling stocks on the stock market is as easy as using a checking or savings account at a bank. With a trading account, you can electronically hold securities and shares. 

Even though Demat Account opening is not too hard, you will have to pay fees to open, maintain, and use the account. To keep your account active, you must pay an Account Maintenance Charge (AMC); otherwise, it would be considered a dormant account. 

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Annual Maintenance Charges

Several brokers, financial institutions, banks, and broking firms give their customers a free Demat Account. However, customers may need to pay specific fees later, depending on their chosen options. There are two types of Demat Account charges: operational charges (like AMC, tax, etc.) and transactional charges, which are fees that the broker collects for making trades for clients.

The account Maintenance Charge is the fee to keep the trading account running. Some companies charge a basic fee, and some Depository Participants even waive the AMC in the first year and begin the billing cycle in the second year. The annual or quarterly AMC or Folio Charges could be between Rs 300 and 900. Each bank has its own rules about how much to charge.

For example, ICICIdirect charges Rs. 700 for the first year of Annual Maintenance Charges. A monthly maintenance fee of Rs. 300 is set from the second year. SEBI has changed the Basic Services Demat Account (BSDA) so that there are no annual maintenance fees for debt securities worth up to Rs. 50,000 starting on June 1, 2019. Meanwhile, if you own securities worth between Rs. 50,000 to Rs. 2 lakh, you need to pay a maximum of Rs. 100 plus taxes.

If you do not pay your AMC fees on time, it could negatively impact your account in several ways, such as the account being deactivated, not being able to open another account, etc.

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Demat accounts have made it simple and easy to store shares and other securities and buy and sell them. But brokerages need money to cover the costs of keeping your online trading account up to date, keeping your deposits safe, and any transactions you may authorize. DPs provide various payment options; some brokers may even offer or let you off the hook for some of these Demat fees.