What are Account Maintenance Charges in Demat Account?

What are Account Maintenance Charges in Demat Account?

What are the Account Maintenance Charges (AMC) in Demat?

Opening a Demat account is the first step to trading stocks. You can open a demat account with any DP (Depository Participant), such as a bank or a broker. However, SEBI needs to approve them. As soon as you open a Demat account with a DP, you can use all the services.

However, DPs need some funds to maintain Demant accounts. Thus, the broker charges you a fee for maintenance and for services they provide. Basically, this fee is called Account Maintenance Charge for Demat Account (AMC), also called Folio Maintenance Charge.

You can make these payments in a couple of different ways with DPs. There are even brokers who will waive some of these Demat AMC charges. However, if you're new to demat accounts and their charges, this article can help. Here you'll learn about Account Maintenance Charges and what is AMC for a demat account using a demat account app. Additionally, you'll know what you need to consider before choosing DPs for your demat account.

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Table of Content

  1. What are the Account Maintenance Charges (AMC) in Demat?
  2. The Account Maintenance Charges
  3. What is AMC for the demat account?
  4. Conclusion

The Account Maintenance Charges

According to SEBI regulations, to trade in the stock market you need a Demat account. You can open a Demat Account with depository participants such as banks, NBFCs, and stockbrokers.

Every year, stockbrokers charge a fee for maintaining a Demat account. This fee is called the Account Maintenance Charge (AMC). It is charged to you each year by your Depository Participant. Once you pay the Account Maintenance Charges, you can trade easily in the stock market and enjoy other benefits of having a Demat account.

Almost all financial institutions and depository partners charge AMCs, however, the amounts vary. Depositors who offer 2-in-1 accounts for Demat account, & trading account. Alternatively, if you choose to link your Demat account to your savings account, your AMCs will rise.

What is AMC for the demat account?

As mentioned previously, DP charges account maintenance fees for demat accounts. Also called folio maintenance fees, this fee is paid for the service provided by the company. However, before we get started with Account Maintenance Charges, you should know that only certain banks and brokerage firms are authorized to serve as DPs. The Securities and Exchange Board of India should have let depositories store your securities electronically on their behalf. This isn't free for these DPs. Additionally, using a brokerage calculator can help you estimate the impact of these account maintenance charges on your overall investment costs and returns.

Usually, AMC for Charges for a Demat Account Costs around Rs 300 to Rs 900. You can pay Demat Account Maintenance Charges as a one-time charge or quarterly. Additionally, most DPs waive first-year AMC Demat charges to attract new customers. Moreover, when you open a Demat account with a bank, you get a trading account as well. In such a situation, the AMC is lower.

On the other hand, if you have a Demat account at one bank and a trading account at another, the Account Maintenance Charges would be higher. You can get some of the lowest AMC charges for a Demat account at some banks and brokerages.

So, before you choose a bank or other finance company for a Demat account, check out what Demat services they offer. You can also check whether other financial institutions charge higher Account Maintenance Charges for specific benefits of holding a Demat account.   

Conclusion

The maintenance fees for Demat accounts are called Account Maintenance Charges, or AMCs. AMCs are annual fees charged by brokers for managing demat accounts. There are different amounts charged by different depositories, typically ranging from Rs. 300 to Rs. 900 yearly. However, you should compare the charges of different depositories before opening a Demat account.

Also, to attract new customers, many DPs waive the first-year AMC, and opening a Demat account with a bank may lower costs. Consider the services offered by each DP or financial institution, along with any specific benefits associated with higher AMCs, when choosing a DP for your Demat account.

Account Maintenance Charges FAQs

Depository Participants (DPs) or Brokerage houses charge minimal annual fees for their services. This fee is called AMC for Demat Account Charges.

Yes. For demat accounts, there are maintenance charges called Account Maintenance Charges. Typically, these fees range from Rs 300 to 900 per year.

If you don't pay AMC for a demat account, your account will become dormant (inactive). Until you reactivate your account, you won't be able to perform any transactions.

Yes. There are some DPs that do not charge the first year's AMC Demat fee for new customers.

The AMC for the demat account is charged on yearly basis.