No-frills demat account details

Features of No-frills demat account

With the introduction of no-frills demat account small retail investors with an demat holdings of less than 50000/- need not to pay any annual maintenance charges. Currently, for small investors, demat maintenance charges range anywhere from 300-750. It varies from the financial institution/bank where demat account is opened.  No-frills demat account is also known as basic services demat account(BSDA).

Sebi move on no-frills demat accounts could be good news for retail investors
Name Account
Annual maintenance
charges (Rs)
Additional account
statements (Rs)
ICICI Bank  Nil 500 ( 450 for e-statements) 20
SBI  Nil 400 (350 for e-statements) 30
Angel Broking Nil 300 25
IIFL Nil 555 (one-time) or Rs 250 a year  Nil
Geojit BNP Paribas Nil 400 25
No frills accounts Nil Up to 50,000 = Nil
50, 001 to 2 lakh = 100
up to 25
*Stamp duty of Rs 20 and stamp paper of Rs 50 for power of attorney. Source: Company websites

Source: Business Standard

With the introduction of no-frills demat account, Annual maintenance charges will be Nil upto 50000 rupees holdings in it. Holdings ranging from 50001 to 2 Lakh will cost Rs 100-/ as annual maintenance charges.

Most of the investors either stopped using demat account or closed due to high maintenance charges in past 3-4 years where equity markets performed very poorly. For a small investor with a holding of 20000/- in demat account and annual charges of 500 (including service charges), it works out to be 2.5% which is quite steep. The introduction of no-frills demat account will address this concern of small retail investors.

No-frills demat account will not affect other investors who hold securities worth more than 2 Lakh. They will pay the maintenance charges as usual.

For stand alone depository participants, this may be a blow as they lose most of their revenue. Particularly, if they have most retail investors as clients. Overall, no-frills demat account introduction may have little affect on depository participants as most of them offer other financial services like broking, mutual funds etc.,

No-frills demat account will help not only to stop existing investors to stop closing their demat accounts but will encourage new investors to open demat account. Depository participants must keep in mind the failure of banks to promote similar service introduced to help people with small amounts of savings.

If you are an investor with holdings of more than 2 Lakh, then you can consider opening a demat account with one time demat charges. After one time payment, demat will be free for life time.  It shall be a good alternative without limiting any benefits that regular demat accounts offer.

No-frills demat accounts have limitations in terms of benefits offered by regular demat accounts like frequent account statements. Also if holdings in the account happen to cross the threshold limit, then regular demat charges will apply.

Do you want to open a demat account? You can open a demat account with life time free maintenance charges with all regular benefits with one time fee of Rs 1250/- with angel broking.



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