Demat accounts have made investing and trading in the stock market like operating a current or savings account in a bank. By dematerializing share certificates, investors can hold and track their investments conveniently, no matter where in the world they are. Demat comes from the dematerialization of physical shares to an electronic form through a depository participant (DP). The DP acts as a bridge between the body authorized to manage your shares which is either the CDSL (Central Depositories Services Limited) or NSDL (National Securities Depository Limited). The DP can be a bank, broker, or any other financial institution that qualifies as a DP as per the criteria laid down by SEBI.

Opening a demat account online is a simple, painless, and quick process now being offered by hundreds of DPs. The costs and charges associated with opening and maintaining a demat account are quite competitive due to the entry of so many players in this space. An individual can open as many demat accounts as they like as long as they don’t have more than one account with the same DP. You can also own a demat cum trading account that allows you to trade and hold shares through a single account. Buying, selling and holding a multitude of different securities including mutual funds, stocks and ETFs is possible under one account making it less complicated to track the performance and value of these securities over a while.

Before you open a demat account, it is prudent to be acquainted with the charges levied on opening and operating a demat account with that particular DP.

Account Opening Charges

Account opening charges are a nominal fee charged by DPs at the time of opening the account. Depending on the type of DP you are dealing with (bank, firm, etc.) charges will vary. Banks charge anywhere between INR 700 – 900 at the time of opening a demat account. Today, some DPs waive charges entirely. The influx of participants in this space has proved beneficial to the customer as DPs compete to gain customers by providing low opening charges.

Custodian Charges

Custodian charges or safety charges are levied by some DPs in the form of a one-time fee or a monthly/annual fee for the safekeeping of your shares. For every International Security Identification Number (ISIN) mapped to your account as little as INR 1.00 may be charged. The number of securities you hold will determine the charges. While some DPs charge a safety fee, some don’t. It is best to ask your DP upfront if they do charge a safety or custodian fee and if they do, how much or how frequently they charge it.

Transaction Charges

Transaction charges are applied to the movement of securities in and out of your account. Transaction charges are the ones you need aware of as they apply differently for different DPs. Some DPs charge a fee only for shares debited, while some charge for shares credited. Others charge for both the credit and debit of shares. It can be drawn up as a monthly consolidated amount or charged per transaction. Typically, about INR 1.5 is charged per transaction.

The terms and conditions of your demat account service provider will detail how you will be charged for transactions.

Account Maintenance Charges

Demat account maintenance charges, also known as folio maintenance charges range from INR 300-900. Depending on the DP, folio charges are applied quarterly or annually. Some DPs waive the annual maintenance charges for the first year. If you want to save money here, opening a savings – demat – trading account with a bank will bring down the account maintenance charges by quite a bit.

If you have a demat account with one bank mapped to a savings account you have with another bank, the demat account annual charges could be higher than if you have a demat account and savings account with the same bank.

Keep in Mind

– While you can open multiple demat accounts, it makes sense to not do that. Seemingly small charges for opening, maintaining and transacting can rack up if you operate multiple accounts.

– For the sake of managing your portfolio more efficiently, you can open two accounts – one that is linked to your trading account and the other that can hold your long-term investments.

– Even if your demat account remains inactive, you are expected to pay annual maintenance charges.

– Demat accounts are managed by CDSL or NSDL, hence the safety and security of your share certificates are their responsibility. You don’t have to worry about compromising the quality of protection and safety being given to your shares if you are paying lower custodian fees or maintenance fees.

– A good experience with a DP would include seamless customer service and streamlined paperwork so that opening, closing, or transferring shares.

– In case of inactivity, your demat account will be frozen by the DP.


Investors are spoiled for choice where opening a demat account is concerned. Demat cum trading accounts have made investing and trading accessible and easy to manage.

You can open a demat account in a few simple steps. Once you decide which DP you want to opt for, the DP will provide you with a KYC form to fill up. Your demat account will be linked to your bank account. Going forward all your transactions including demat maintenance charges, transaction charges, custodian fees etc. will be charged to the linked bank account.