A Demat Account is an account an investor or trader in the stock market opens to hold his shares and securities. Since all bonds, shares, government securities, exchange-traded funds, etc., are stored in an electronic form in a trading account, maintaining a Demat a/c is a primary requirement for trading in the market. A trader or investor needs to open a demat a/c with a depository participant.

The depository participant with which an investor or trader opens the account levies certain charges on the account and its holdings. The charges that the account holder pays for the maintenance of a trading account are known as Annual Maintenance Charges (AMC). shoppingstops

The Demat Account maintenance charges may vary from broker to broker. It is advisable to check the account opening and annual maintenance charges of different brokers before you open a Demat Account. If the Demat Account holder does not pay the annual maintenance charges, it may lead to some negative effects on the Demat Account. 

Consequences of Not Paying the Annual Maintenance Charges for a Demat Account

There are several negative consequences of not paying the annual maintenance charges for a Demat Account. Here are the things an account holder should be aware of:

• The broker floods the account holder with multiple reminders via email, phone calls, SMS, etc., if the account holder fails to pay his annual maintenance charges on time. It can be both disturbing and unpleasant for the account holder.
• If the account holder does not pay the annual maintenance charges for a long time, the broker changes the status of such an account to a dormant account. A dormant account is an inactive account. Note that an account holder cannot do any transactions from a dormant account until he reactivates it.  a1dealsonline
• To be able to use a dormant account to make transactions, the account holder will have to reactivate the account. To reactivate a dormant demat account, the account holder will have to pay a reactivation fee charged by the broker. Usually, brokers charge Rs. 500 as a reactivation fee on a dormant DEMAT account. He will also have to pay pending dues on the account. These dues typically include the unpaid annual maintenance charges and interest on the account. 
• If the account holder does not want to use the account further and wants to close it, he will still have to reactivate the account to close it permanently. He will have to pay the account dues and the reactivation fee in this case too. 
• In the event that the account holder has an inactive account and does not have any holdings, he will not be allowed to open another account.
• In the event that the a/c holder does not close his account permanently and the account remains inactive, the depository participant will not close the account from his end, and the demat account will remain permanently inactive. The a/c holder will keep receiving the Demat Account Statement and reminders through email, phone calls, and SMS forever. 

The Final Word on Demat Account Charges:

If an account holder fails to pay the annual maintenance and then opens a trading account, he will have to face several unpleasant consequences. The account holder will have to pay a heavy penalty and interest charges if the charges remain unpaid for a long time. He will also have to face constant reminders from the broker to pay the annual charges. To close the account permanently, he will have to undergo account reactivation, then the account closing procedure, and pay additional charges for account reactivation. 

You may consider opening a lifetime annual maintenance charge-free account to avoid all these issues. Discuss the account opening charges, reactivation charges, AMC, and interest charges with the broker before opening an account. New age discount brokers offer various attractive packages to open free demat accounts.

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