What is Account Maintenance Charge (AMC) with regards to my Demat account?
If you are someone who has invested in stocks, mutual funds, or other securities, it is likely that you have a Demat account. A Demat account, short for Dematerialised account, holds your securities in electronic form.
What is Account Maintenance Charge (AMC)?
Account Maintenance Charge (AMC) refer to the charges levied by a Depository Participant (DP) for maintaining your Demat account. These charges are necessary to cover the costs of operating the electronic account.
Every depository participant charges AMC for their services, and it is imperative for you to understand the fee structure before opening an account. AMC is a recurring fee payable annually, at the beginning of the financial year.
Types of Demat account charges:
Apart from AMC, there are other types of charges that come with a Demat account. Following are the types of Demat account charges:
1. Account opening charges: This refers to the fee levied by the Depository Participant (DP) or the brokerage firm for opening a Demat account. It covers the administrative and operational costs associated with setting up the account.
2. Transaction charges: These charges are incurred each time you buy or sell securities (stocks, bonds, etc.) through your Demat account. They are usually a small percentage of the transaction value and help cover the costs of processing and facilitating the trade.
3. DP charges (Depository participant charges): DP charges are fees imposed by the Depository Participant, who acts as an intermediary between you and the depository. These charges cover the costs of maintaining your Demat account, providing account statements, and other related services.
4. Pledging charges: Pledging involves using your securities as collateral to avail margin trading facilities. Pledging charges are incurred when you pledge your securities to get limit for trading. These charges cover the administrative and documentation costs for pledging your assets.
5. Charges for Dematerialisation and Rematerialisation: Dematerialisation is the process of converting physical share certificates into electronic form, while rematerialisation is the reverse process. Both involve administrative tasks and paperwork. The charges associated with these processes include handling and processing fees.
6. Demat account maintenance charges: This is an annual fee charged by the DP for the upkeep of your Demat account. It covers costs like record keeping, providing account statements, and maintaining the electronic records of your holdings.
It is important to note that the specific charges and fee structures can vary among different brokers, DP providers, and depositories. Some brokers might offer zero account opening charges or discounted maintenance charges, while others might have different fee structures based on the services they provide. Always review the terms and conditions carefully before opening a Demat account to understand the charges you'll be subjected to.
What are the Account Maintenance Charges for a Demat account with Bajaj Financial Securities Limited (BFSL)?
Bajaj Financial Securities Limited is a Depository Participant and one of the leading brokerage firms in India. Following are the charges levied by them for a Demat account:
- Account opening charges: NIL
- Transaction charges: These charges vary depending on the offer/scheme chosen by the investor
- Brokerage charges: Starts from Rs. 5 per order*
- Pledging charges: Rs. 35 + applicable taxes
- Charges for Dematerialisation request: Rs. 50 per request + Rs. 50 per certificate
- Charges for Rematerialisation request: Rs. 35 per certificate or 100 shares and part, whichever is higher, and Rs. 25 per re-state of the statement of account redemption
- Demat account maintenance charges: NIL
BFSL Demat account subscription plans:
Upgrade to enjoy lower brokerage and MTF rates with premium subscriptions
| Charges | Freedom Pack |
Professional Pack |
Bajaj Privilege Club |
Subscription charges |
Free for 1st year; Rs. 431 p.a. 2nd year onwards |
Rs. 2,500 p.a. |
Rs. 9,999 p.a. |
Brokerage charges (Intraday, Future & Options) |
Rs. 20 per order |
Rs. 10 per order |
Rs. 5 per order |
Margin Trading Fund Interest Rate |
18% p.a. |
12.5% p.a. |
10.75% p.a. |
Conclusion
While choosing a DP, it is essential to consider not only the AMC but also other charges levied by the DP. A low AMC may not always be beneficial, as the DP could be charging high fees under other heads.
Moreover, it would be beneficial to keep a track of AMC payment dates and maintain sufficient funds to avoid any late payment fees. Failure to pay AMC can lead to a freeze on your account, which could result in more significant losses.
In conclusion, educating yourself on the different charges that come with a Demat account is crucial to make informed investment decisions. It could also help you avoid unnecessary fees and charges and safeguard your investments.
