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Before you decide to open a Demat account with your preferred DP, it is important to know the charges involved. Demat accounts offer many benefits, but these aren't free of cost. One among the many charges is the Demat account maintenance charge. 

Also known as the AMC for a Demat account, this isn't to be confused with the other abbreviation for AMC in the investing sphere. This is specific to the charges applicable for owning, operating, and maintaining this account, and DPs charge varying rates. 

So, it is important to assess Demat AMC charges and other fees when choosing a Depository Participant (DP) to open a Demat account. Read more to know what is AMC for a Demat account and how it impacts your returns.

What is AMC in the Demat Account?

Demat AMC charges stands for Demat account maintenance charges. As its name suggests, you have to pay it annually for the maintenance of your account by the DPs.  Also called the Folio Maintenance Charge, the Demat AMC charges between ₹300 and ₹900 depending on the DP you choose. 

 

Some DPs also decide to waive off the AMC charges for the first year. The AMC for Demat account also depends on the type of Demat account that you choose. For instance, Basic Service Demat Accounts (BSDA) do not charge any AMC if the value of securities is below ₹50,000. 

 

For securities in a BSDA account with a value of between ₹50,000 and ₹2 Lakhs, DPs levy a Demat AMC charge of ₹100. If the value exceeds ₹2 Lakhs, the Demat AMC charges may go up to ₹2,000-₹2,500.

 

Some banks offer three-in-one accounts with Demat, trading, and banking services. As these accounts are linked, the Demat account AMC charges are lower. 

 

On the other hand, Demat AMC charges are comparatively higher if the Demat accounts are linked with a savings account of another bank. 

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Other Types of Charges on Demat Accounts

In addition to Demat AMC charges, there are some other fees and charges that DPs levy on Demat accounts. Here are details about these charges:

 

  • Account Opening Charges: DPs levy this fee when you open a Demat account. The account opening is quite negligible or may even be zero.

  • Custody Fees: As DPs store your securities in electronic form, there is no threat of theft or misplacement. To store your securities safely, DPs charge custody or a custodian fee.

  • Brokerage Fees: Also called transaction fees, some DPs charge a fee on every transaction you make. On the other hand, some DPs levy a fixed charge as brokerage fees to be paid every month.

  • Demat Charges: When you convert your shares in dematerialised form, your DP levies Demat charges. In the same way, you will need to pay Remat charges for rematerialisation of shares.

What Happens If You Fail to Pay Demat AMC Charges?

If you fail to pay Demat AMC charges, your Demat account will be considered inactive after some time. You will not be able to carry out any transaction through your Demat account. Moreover, your holdings in the account will also be frozen which means you will not be able to buy or sell securities. 

 

To reactivate your account, you will have to pay a reactivation fee as well as AMC along with the interest for delayed payment. If you wish to close your Demat account, you will have to reactivate it by paying off your previous dues. After clearing your dues, you can close your account. 

 

However, if you do not pay AMC for a Demat account that has no holding, you cannot open another account. You will be able to do so only after paying AMC on the first account. 

 

In conclusion, Demat accounts offer many benefits, but those come at a cost. DPs levy a variety of charges when you trade or hold shares on your Demat account. A Demat account maintenance charge (AMC) is one of them. However, you can get it waived by opting for a Basic Services Demat Account

FAQs on AMC in Demat Account

What is AMC for Demat Account?

The AMC for Demat Account is a fee levied by Depository Participants (DPs) for maintaining your Demat Account. The Demat AMC charges vary between ₹300 and ₹900, depending on the DP you choose.

How are Demat AMC charges different from Demat charges?

While DPs levy Demat AMC charges annually for maintaining your Demat account, Demat charges are levied when you dematerialise your physical shares.

Can I reduce the Demat AMC Charges?

You can opt for a Basic Services Demat Account (BSDA) as it waives off Demat AMC charges if the value of securities is under ₹50,000.

What will happen if I fail to pay AMC charges?

If you fail to pay Demat AMC charges, your Demat account will be made inactive and you will be unable to buy or sell securities. 

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