Demat Account Opening Charges and Fees
Opening a demat account is a simple enough process. In addition to being aware of the documents required, you’ll also need to get to know the fees and charges associated with opening a demat account. In today’s financial climate, a demat account is indispensable to buy or sell electronic shares. Before delving into the charges levied for account opening and for other services, it’s essential to understand the advantages of a demat account.
The Fees and Charges Associated with Demat Account Opening
Among the many different depository participants, India Infoline is one of the most premier and attractive service providers. The demat account opening charges of IIFL is not only competitive, but also transparent with absolutely no hidden charges. The schedule of demat account charges of India Infoline are tabulated below to help you understand the fees and charges involved with a demat account.
|Particulars of service
||Charges (in Rs.)
|Account opening fee
|Annual Maintenance Charges (AMC)
|Dematerialization of share certificates
||Rs. 15 (per certificate)
|Rematerialization of share certificates
||Rs. 15 (per certificate or per 100 units/shares, whichever is higher)
|Conversion of Mutual Fund units
||Rs. 15(per Statement of Account)
|Reconversion of Mutual Fund units into Statement of Account
||Rs. 15(per Statement of Account)
||Rs. 40 (per request)
Most investors find it hard to comprehend the nature of services and fees charged by a depository participant. In order to make it easy for you to understand the various demat account charges levied by India Infoline, here’s a brief explanation on the particulars of each service.
Account opening fee:
This is a one-time fee charged by almost all depository participants as part of the process involved in opening a demat account. Certain full-service stockbrokers like India Infoline regularly offer waivers and discounts for opening a demat account. While the normal account opening fee levied by IIFL is Rs. 555, at present, you can open one for free with zero demat account opening charges.
Annual Maintenance Charges (AMC):
AMC is a fee that is charged annually by depository participants for maintaining your demat account. These charges are levied irrespective of the number of transactions that you make in a year. When you open a demat account with India Infoline, you don’t have to part with any Annual Maintenance Charges for the entirety of the first year. You will only be required to pay an AMC of Rs. 400 from the 2nd year onwards.
Dematerialization of share certificates:
The process of converting physical share certificates to electronic records that can be held in a demat account is fondly known as dematerialization. A fee is normally charged by depository participants for dematerializing your share certificates. While most DPs like IIFL charge a flat dematerialization fee per share certificate, others charge a fee based on the total value of the securities.
Rematerialization of share certificates:
Rematerialization is the process of converting electronic records of shares back into physical share certificates. Similar to dematerialization, a fee is charged for rematerialization of shares as well.
Conversion of mutual fund units:
A fee is typically charged by depository participants to convert mutual fund units that are held physically into a dematerialized form. As a general rule of thumb, most depository participants only charge a flat fee for conversion of mutual fund units.
The process of converting mutual fund units from its physical form into a dematerialized electronic form is known as destatementization.
Reconversion of mutual fund units into Statement of Account (Restatementization):
Restatementization is the process by which a depository participant converts mutual fund units held in a demat account back into its physical form. The physical form of mutual fund units is represented by a Statement of Account (SOA).
The process by which you sell your mutual fund units back to the fund house is known as Redemption. The value of the mutual fund units as on the redemption date is credited back to your bank account by the fund house. Usually, a flat-rate fee is charged by a depository participant for each redemption request.
Postal charges are levied by depository participants to physically courier documents and statements of account to you.
Different Modes of Opening a Demat Account with India Infoline
The process of opening a demat account with India Infoline is extraordinarily smooth. You can get your demat account up and running in just a few days’ time. IIFL offers the following two modes using which you can open a demat account in record time.
Step 1: Firstly, you need to visit www.indiainfoline.com.
Step 2: Once you’ve opened the website, click on open a trading account.
Step 3: You will be asked to enter your basic details such as your email ID and your mobile phone number.
Step 4: After you’ve submitted all the required details, you will receive a One-Time Password (OTP) on your email ID and your mobile phone.
Step 5: Verify both the OTPs that you receive. Upon successful verification, you will be required to fill and submit an online account opening form.
Step 6: After submitting the form, you will be contacted by a Relationship Manager (RM) from IIFL regarding the documentation that you will need to submit.
Step 7: Once all your forms and documents are received by IIFL’s Head Office (HO), your account will be activated within 24 hours.
If you’re more comfortable with the traditional offline mode of opening a demat account, all that you need to do is give a missed call on this number - 080 6671 9101. One of the Relationship Managers from IIFL will contact you and walk you through the entire account opening process.
Things to Keep in Mind Before Opening a Demat Account
Before opening a demat account, it is always a good idea to keep the following things in mind. This would not only ensure that you take the right decision but will also make the process much smoother.
Select the right depository participant:
Since there are plenty of registered depository participants in India, take the time to research and analyse their performance and track record. Generally, full-service stockbrokers like India Infoline provide a more satisfactory service when compared with discount brokers. Additionally, full-service stockbrokers are renowned for their range of products, services, and customer support.
Read the schedule of charges:
Demat account charges levied by depository participants are almost never the same. That’s exactly why you should always ensure that you take a close look at the schedule of charges before opening a demat account. This way, you can fully understand the extent of applicable fees and make sure that there aren’t any hidden charges.
Keep all documents handy:
Keeping all the necessary documents in hand before going ahead with the account opening process can help you out tremendously. With all the documents by your side, the demat application process can be completed quickly without any hassles or mistakes that can lead to rejection.
Advantages & Benefits of Opening a Demat Account
A demat account is an electronic account that is used to hold the equity shares and securities you purchase. Demat accounts were first conceptualized in the year 1996 as an alternative to physical share certificates. Thanks to the widespread adoption of dematerialization of shares, demat accounts are now mandatory for buying or selling shares in the stock market. These accounts not only make it easy to trade in shares, but also come with a host of other benefits. Briefly explained below are some advantages of opening a demat account.
Back in the initial days of the stock market, as an investor or trader wanting to buy or sell shares, you had to be physically present in the stock exchange. However, that’s not the case with demat accounts. Since all of the records are electronic and online, you can buy and sell shares from anywhere in the world and at any point in time.
Before demat accounts came into the scene, the stock market was rife with fake, fraudulent, and forged share certificates. All of those risks were completely nullified with the introduction of demat accounts. There’s absolutely no risk or chance of receiving forged share certificates at all.
Demat accounts have eliminated several additional costs associated with physical share certificates such as handling charges and stamp duties. This ultimately results in more savings and helps maximize your profits.
Apart from these advantages, demat accounts have also significantly decreased the time taken to transfer shares. Furthermore, the settlement of trades and the delivery of equity shares are done on the same day, thanks to demat accounts.
How Do Online Demat Accounts Work?
The way online demat accounts work is very similar to how bank accounts function. In order for a demat account to function to its fullest potential, it has to be linked with a trading account. Whenever you buy a share of a company via your trading platform, your depository participant forwards your ‘buy’ order to the stock exchange. The exchange then matches your ‘buy’ request with a corresponding ‘sell’ request from another trader or investor.
Once your order is matched, an order from the stock exchange is sent to a clearance house, which then settles the trade. Once the trade has been settled, the number of shares that you bought get credited to your demat account at the end of the trading day. Simultaneously, the demat account of the seller gets debited for the number of shares that were sold.
Demat Account FAQs
Here are the answers to some of the most commonly asked questions about demat accounts.
Is it possible to open a demat account directly with a depository?
No, it is not possible to open a demat account with a depository directly. You only do so through a depository participant, who basically acts as an intermediary between you and the depository.
Can an individual possess multiple demat accounts?
Yes, there are no restrictions with respect to the number of demat accounts you can possess.
Can I pledge the securities held in my demat account?
Yes, you can pledge the securities in your demat account with a bank or a financial institution to secure a mortgage. However, a nominal fee for creation of pledge might be levied by your depository participant.
Is it possible to freeze a demat account?
Yes, you can temporarily freeze your demat account for a specified period of time, during which no debits or credits to your account can be made.
Is nomination mandatory for a demat account?
No, it is not mandatory to have a nominee for your demat account.
Now that you have a more comprehensive awareness of the charges associated with opening a demat account, you can make an informed decision about opening one. Keep in mind that in addition to your demat account fees and charges, you’ll also need to bear the costs associated with your trading account. With financial markets now becoming extensively digital, most depository brokers only charge nominal fees. IIFL, in particular, has an exciting offer going on, where you can open a demat account for free. Your AMC charges for the first year are also waived off, so you get to save up to Rs. 1,150 when you choose India Infoline.