Demat Account features | Demat Account Fee Structure

Demat conversion

Converting physical records of investments into electronic records is called dematerialising securities. In order to dematerialise physical securities investors must fill in a DRF (Demat Request Form) which is available with the DP and submit the same along with physical certificates. Separate DRFs must be filled for each ISIN Number. The complete process of dematerialisation is outlined below:

• Surrender certificates for dematerialisation to your depository participant.
• Depository participant intimates Depository of the request through the system.
• Depository participant submits the certificates to the registrar of the Issuer Company.
• Registrar confirms the dematerialisation request from depository.
• After dematerialising the certificates, Registrar updates accounts and informs depository of the completion of dematerialisation.
• Depository updates its accounts and informs the depository participant.
• Depository participant updates the demat account of the investor.

Demat Options

Banks score over others Around 200 “depository participants” (DPs) offer the demat account facility. A comparison of the fees charged by different DPs is detailed below. But there are three distinct advantages of having a demat account with a bank — quick processing, accessibility and online transaction. Generally, banks credit your demat account with shares in case of purchase, or credit your savings accounts with the proceeds of a sale on the third day. Banks are also advantageous because of the number of branches they have. Some banks give the option of opening a demat account in any branch, while others restrict themselves to a select set of branches. Some private banks also provide online access to the demat account. So, you can check on your holdings, transactions and status of requests through the net banking facility. A broker who acts as a DP may not be able to provide these services.

Transfer of Shares between DPs

To transfer shares, we need to fill the Depository Instruction Slip Book (DIS). Firstly we need to check, whether both Demat account's Depository Participant is same or not(CDSL or NSDL) If both of them are different, then we need an INTER Depository Slip (Inter DIS). If they are same, then we need INTRA Depository Slip (Intra DIS).

For example: If we have one Demat account with CDSL and other Demat account with NSDL, then we need an Inter DIS.

Generally, brokers issue Intra DIS, so do check with broker.

Once we identify the correct DIS, fill the relevant information like

   scrip name
   INE number
   quantity in words and figures 

and submit that DIS for the transfer to the broker with signatures. The transferor broker shall accept that DIS in duplicate and acknowledge receipt of DIS on duplicate copy.

Do try to submit that DIS when market is on. Accordingly, date of submission of DIS and date of execution of DIS can be same or a difference of one day is also acceptable.

For transfer, you shall also pay the broker some charges.

Remember: DIS is almost like a cheque book. Accordingly, it can be misused if issued blank. So deposit only a completely filled in Slip to broker. Do cut out unfilled rows so that none can fill them later on.

Fee Structure

There are four major charges usually levied on a demat account: Account opening fee, annual maintenance fee, custodian fee and transaction fee. All the charges vary from DP to DP.

Account-opening fee

Depending on the DP, there may or may not be an opening account fee. Private banks, such as HDFC Bank and UTI Bank, do not have one. However, players such as ICICI Bank, Globe Capital, Karvy Consultants and the State Bank of India to do so. But most players levy this when you re-open a demat account, though the Stock Holding Corporation offers a lifetime account opening fee, which allows you to hold on to your demat account over a long period. This fee is refundable.

Annual maintenance fee

This is also known as folio maintenance charges, and is generally levied in advance.

Custodian fee

This fee is charged monthly and depends on the number of securities (international securities identification numbers — ISIN) held in the account. It generally ranges between Rs 0.5 to Rs 1 per ISIN per month. DPs will not charge custody fee for ISIN on which the companies have paid one-time custody charges to the depository.

Transaction fee

The transaction fee is charged for crediting/debiting securities to and from the account on a monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank and ICICI Bank peg the fee to the transaction value, subject to a minimum amount. The fee also differs based on the kind of transaction (buying or selling). Some DPs charge only for debiting the securities while others charge for both. The DPs also charge if your instruction to buy/sell fails or is rejected. In addition, service tax is also charged by the DPs.

In addition to the other fees, the DP also charges a fee for converting the shares from the physical to the electronic form or vice-versa. This fee varies for both demat and remat requests. For demat, some DPs charge a flat fee per request in addition to the variable fee per certificate, while others charge only the variable fee.

For instance, Stock Holding Corporation charges Rs 25 as the request fee and Rs 3 per certificate as the variable fee. However, SBI charges only the variable fee, which is Rs 3 per certificate. Remat requests also have charges akin to that of demat. However, variable charges for remat are generally higher than demat. Some of the additional features (usually offered by banks) are as follows.Some DPs offer a frequent trader account, where they charge frequent traders at lower rates than the standard charges.Demat account holders are generally required to pay the DP an advance fee for each account which will be adjusted against the various service charges. The account holder needs to raise the balance when it falls below a certain amount prescribed by the DP. However, if you also hold a savings account with the DP you can provide a debit authorisation to the DP for paying this charge.Finally, once you choose your DP, it will be prudent to keep all your accounts with that DP, so that tracking your capital gains liability is easier. This is because, for calculating capital gains tax, the period of holding will be determined by the DP and different DPs follow different methods. For instance, ICICI Bank uses the first in first out (FIFO) method to compute the period of holding. The proof of the cost of acquisition will be the contract note. The computation of capital gains is done account-wise[source:wikipedia].

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