Annual Maintenance Charge or AMC for a Demat Account is a mandatory fee need to be paid by each investors. In case of a non payment of AMC, your Demat Account will be announced inactive by your DP.
Annual Maintenance Charge or AMC for a Demat Account is a compulsory charge. Every Demat Account holder needs to pay to the Depository Participant (DP) for the services they are offering. These vary from one Depository Participant to another. Many investors may be curious to find out the consequences in case of non-payment of AMC charge for a Demat Account. Here in this article, we are going to discuss the same.
Consequences in case of Non-payment of AMC
If you are a Demat Account holder and you do not pay the Annual Maintenance Charge or AMC for your Demat account, then the following things will happen.
- You will receive hundreds of Emails, Phone Calls, and SMS from the Broker to pay your AMC.
- If you still don’t pay the AMC then after some time, they will make your Demat Account inactive. In that case, you cannot perform any kind of transaction until you pay the AMC and reactivate your Demat Account.
- To reactivate your Demat Account you will be required to pay the reactivation fee along with all your dues with interest.
- If you want to close your Account permanently, you still need to reactivate it and then close it permanently.
- In case of an inactive account, you cannot open another Demat Account and you cannot avail of any other services from the same Broker.
- The Depository Participant will hold your inactive account forever and they will keep sending you reminder Emails, SMS, and call you to clear your dues. You will also receive the Demat account statement.
So now you got all your queries answered and you know what happens when you do not pay AMC for a Demat Account. It is recommended to open a lifetime AMC free Demat Account if you don’t consider yourself as an active investor.
For passive investors, who like to buy and forget their shares in their Demat account, it is common to forget the payment for AMC charges. To prevent any penalty or interest on the outstanding amount, it is best to maintain some surplus funds in your account at all times. The extra funds will ensure the timely deduction of the AMC charges from your account and will keep your account active even if you do not transact it regularly.
The AMC or annual maintenance charge is a fee charged by the broker to the trader in exchange for the services they provide like Demat accounts. The investors are required to pay the AMC fee to the broking firm if the trader is unable to pay or does not pay then the firm may announce the Demat account as unavailable or cease all the services.