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How Much Minimum Amount Is Required To Open A Demat Account?

Just like a bank account is a safe house for all your monetary savings, similarly, a Demat Account is a safe house for all your shares, securities, exchange-traded funds, and bonds that you trade or invest in. Demat Account, a short form of dematerialized account, tracks the ownership of tradable assets through electronic records. Anyone who is new to the stock market needs to open Demat Account. 

A Demat Account makes trading safe, quick, and easy. A Demat Account holder need not visit the company’s registrar to request the transfer of shares. He does not have to buy a share transfer stamp or worry about the share certificates getting stolen, lost, or damaged. 

Demat Accounts have made trading possible at a click of a button for traders. Before you start the Demat Account opening process with the depository participant of your choice, it is advisable to make yourself aware of the Demat Account opening charges and other charges associated with the opening and maintenance of a Demat Account, and the minimum balance required to open a Demat Account. This way, you can compare the charges of different brokers and choose the broker with the lowest charges and customer-friendly services. 

Minimum Amount A Per Requires To Open A Demat Account

Earlier, depository participants would charge a fee as high as Rs. 1000 to open a Demat Account. It was not a very cost-effective practice, especially for a new trader. Over the years, this practice changed, and now, opening a Demat Account has become cost-effective and easy. Depending on the depository participant you choose, you may have to pay a fee between Rs. 0 to Rs. 500 to open a Demat Account. Some reputed brokers open a free Demat Account for their customers and offer a trading account along with a Demat Account to smoothen their trading activities. It has tremendously encouraged retail participation in the stock market. 

What is the Required Minimum Balance in a Demat Account

Unlike most bank accounts, there is no minimum balance requirement for a Demat Account. The shares and securities a trader buys get electronically recorded in his Demat Account, and there is no requirement of keeping money in a Demat Account. Even if there are no shares and securities in a Demat Account, it will remain active till the account holder pays the account-related charges on time. 

Charges You Need to Pay for a Demat Account

Before opening a Demat Account, a trader should know the charges he will have to pay to open and maintain a Demat Account. It will help him understand the total cost of opening and maintaining a Demat Account, and help him avoid late fees or penalty charges. The list of charges levied on a Demat Account is as follows:

  • Annual Maintenance Charges (AMC):

Annual Maintenance Charges are the charges a Demat Account holder needs to pay every year to the depository participant for maintaining his Demat Account. The annual maintenance Charges may vary for different brokers. Some leading brokers waive the annual maintenance charges for the first year for their customers and charge an AMC only from the second year onwards. You can also apply for a lifetime annual maintenance charges free Demat Account with your broker. 

  • Account Opening Charges:

As stated earlier, some leading brokers offer zero account opening charges for Demat Accounts to customers. However, this is not true for all brokers, and you should always discuss the account opening charges with the broker of your choice. 

  • Transaction charges and custodial fee:

The depository participant charges a nominal transaction fee as a brokerage for every debit or credit transaction you make in your Demat Account. The brokerage fee depends on the broker and the scheme the customer opts. Some depository participants may charge monthly fees as transaction fees instead of taking charges for every transaction. The depository participant also charges a custodian fee for safely storing the customer’s shares and securities in a Demat Account. The custodial fees depend on the number of assets in a Demat Account. The custodian fee is usually an annual charge and ranges between Rs. 0.5 to Rs. 1 per ISIN (number of shares and securities) for a month.   

  • Share dematerialization and rematerialisation charges:

If a customer asks for dematerialization of the physical copy of his shares and securities into an electronic form or the dematerialization of his electronic shares and certificates into an electronic form, the depository participant levies charges on the conversions. These are nominal charges and may range from Rs. 5 to Rs. 25 per share certificate. 

The Final Word

In addition to the above charges, the account holder has to pay 18% GST charges on the brokerage and transaction charges on his Demat Account. You can open an instant online Demat Account with a reputed broker for zero account opening charges and no AMC charges for the first year.

Read also: What Is A Low Brokerage Trading Account?

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