What Is the Minimum Amount Required for Opening a Demat Account?
Every trader and investor needs a Demat account to participate in the trading of securities. It not only allows you to easily trade stocks and bonds digitally but also ensures that your holdings are safe. However, you must pay certain charges to your Depository Participant (DP) to maintain and hold your account.
Many DP’s tend to levy a fee from investors for opening a Demat account. This is popular as account opening charges. As an investor, you only need to pay this fee once after opening a Demat account. However, the terms, conditions, and minimum amount varies between Depository Participants.
Is There a Minimum Amount to Open a Demat Account?
Several years ago, investors and traders were required to pay a sum as high as ₹1,000 to open a Demat account. However, this practice changed over the years. To popularise Demat accounts among traders, Depository Participants reduced their opening charges to ₹0-₹500.
Today, many Depository Participants are waiving off Demat account opening charges. This is a significant step to encourage traders to open a Demat account and participate in safe trading.
Thus, the minimum amount to open a Demat account varies between institutions. You should research opening and other charges to open a Demat account to save money while trading in stocks.
What Are the Charges You Need to Pay to Hold a Demat Account?
Besides opening charges, you must pay the following charges to use a Demat account.
- Account Maintenance Charge
You must pay an Account Maintenance Charge (AMC) every year to your Depository Participant (DP) to hold your Demat account. Depository Participants may charge an AMC amount as high as ₹500. However, many Depository Participants do not charge AMC for the first year. In such scenarios, you must pay AMC from the second year onwards.
- Agency/ Transaction Fees
As traders, you must pay agency fees or transaction charges each time you buy or sell a share. The amount you need to pay depends on the system chosen by you. Many DPs refer to them as brokerage fees.
- Custody Charges
You must pay these fees to your DP for safely holding your securities in the Demat account. Custody charges are also mandatory annual fees. Furthermore, custody charges depend on the kind and volume of securities held by your Demat account. These might range from ₹0.5 to ₹1 per security per month.
- Dematerialisation Charges
Investors who hold physical securities need to convert them to electronic format to store them in a Demat account. For this dematerialisation process, investors need to pay Demat charges. DPs charge this fee nominally on each certificate. Demat costs can range from ₹5 to ₹25 per certificate.
- Dematerialisation Charges
The process of converting securities in a Demat account to their physical format is called rematerialisation. Like dematerialisation charges, you need to pay Remat charges to your DP to convert deposits to their physical form.
Who Can Open a Demat Account?
The following categories of individuals and entities are eligible to open a Demat account in India.
- Individuals below 18 years of age
- Residents of India
- Non-Resident Indians
- Mutual Funds
- Any Business
- Partner Companies
- Registered/Unregistered Companies
- Registered/Unregistered Trusts
What Are the Eligibility Criteria for Opening a Demat Account?
Interested traders and investors must fulfil the following eligibility criteria to open a Demat account in India.
- There is no minimum age to open a Demat account in India.
- You must possess an Aadhaar card and a PAN card to complete the KYC process for opening a Demat account in India.
- Any Indian citizen residing within the country’s territories or an NRI (non-resident Indian) can open a Demat account in India.
To conclude, all investors must know that DPs charge account opening fees and additional charges from traders. However, the value or amount differs from one DP to another. Although there is no minimum amount required to open a Demat account, consider researching these charges before choosing a DP.
Frequently Asked Questions
What details do I receive after opening a Demat account?
After your Demat account is active, you receive specific details from your Depository Participant. These include your DP ID, Power of Attorney number and Demat account number or Beneficiary ID.
Is having an Aadhaar Card mandatory for a Demat account?
An Aadhaar card is not a mandatory document to open a Demat account. You can produce an Aadhaar card as address proof while opening a Demat account. In its absence, documents such as Voter ID card, driving licence, or utility bills can serve this purpose.
Who can open a Demat account for a minor?
Parents or guardians of a minor can open and manage a Demat account under his/her name.
Can I have multiple Demat accounts under the same broker?
No, you cannot have multiple Demat accounts under the same broker. For additional Demat accounts, you need to open with different brokers and Depository Participants.