Annual Maintenance Charges
Also written AMC · Annual Maintenance Charges (AMC)
The yearly fee a depository participant charges to keep your demat account running, linked to the value of your holdings. In a Basic Services Demat Account it can be nil for small holdings.
In plain language
A demat account costs something to keep open, even in a year when you do not buy or sell anything. That yearly cost is the Annual Maintenance Charge (AMC).
It is charged by your Depository Participant (DP), the firm you opened the demat account with. It is not brokerage, which your broker charges when you trade, and it is not a tax.
For a small investor, a fixed AMC can eat a noticeable slice of a small portfolio every year. That is why SEBI created the Basic Services Demat Account, where the AMC is nil or capped at Rs 100 for small holdings.
How it works
Definition (Chapter 5): AMC "refers to the charges collected by Depository Participants (DPs) towards maintenance of Demat accounts of the beneficiary owners (Account Holders), depending upon the value of holdings in the Demat account."
The BSDA slabs, as the securities-market booklet sets them out:
| Security type | Value of holdings | AMC |
|---|---|---|
| Non-debt (e.g. equities) | Up to Rs 50,000 | No AMC |
| Non-debt | Rs 50,001 to Rs 2,00,000 | Up to Rs 100 |
| Debt | Up to Rs 1,00,000 | No AMC |
| Debt | Rs 1,00,001 to Rs 2,00,000 | Up to Rs 100 |
The Financial Education Booklet prints the same thresholds in one combined table (debt holdings and equity holdings side by side, with a single charge column: NIL, maximum AMC Rs 100, or charges as applicable to regular demat accounts above Rs 2,00,000).
Who qualifies for BSDA: an individual with only one demat account across all depositories, whose holdings do not exceed Rs 2 lakh each in debt and non-debt securities at any point of time.
The securities-market booklet adds: check the SEBI or depository website for the latest rules.
A worked example
Holding values are illustrative; the slabs are the booklet's.
Three friends in Madurai each hold one demat account and nothing anywhere else.
| Investor | Equity holdings | Debt holdings | AMC under BSDA slabs |
|---|---|---|---|
| Anitha | Rs 42,000 | Nil | No AMC (equity up to Rs 50,000) |
| Balu | Rs 1,30,000 | Rs 90,000 | Equity in the Rs 50,001 to Rs 2,00,000 slab: up to Rs 100. Debt up to Rs 1,00,000: no AMC |
| Chitra | Rs 2,40,000 | Nil | Above Rs 2,00,000: regular demat account charges apply |
Why it matters: suppose Anitha were on a regular account with an AMC of, say, Rs 450 a year (an illustrative figure). On a Rs 42,000 portfolio, that is 450 ÷ 42,000 ≈ 1.1% of her money every year, before any return. Under BSDA she pays nothing.
Chitra has crossed the ceiling, so her DP can charge the normal rate. Nothing is taken back for earlier years; the concession just stops.
Why NISM asks about it
Chapter 5 (Investment in Securities Market) defines AMC and prints the BSDA slab table; the securities-market booklet repeats it per security type and lists AMC in its glossary. Expect a holding value and a question on the charge, and a definition question on who collects AMC (the DP).
Common exam traps
- AMC is collected by the DP, not by the broker, the stock exchange or SEBI.
- AMC is not brokerage. One is for keeping the account; the other is for executing trades.
- Nil-AMC thresholds differ: Rs 50,000 for non-debt, Rs 1,00,000 for debt.
- Rs 100 is a maximum, not a fixed price.
- Above Rs 2,00,000, regular demat account charges apply.
- AMC here means Annual Maintenance Charges. In mutual fund papers the same letters stand for Asset Management Company. Read the context.
Check yourself
1.An investor holds equity worth ₹45,000 in a Basic Services Demat Account. What annual maintenance charge applies, and how does BSDA differ from BSBDA?
- a)₹100, and BSDA is another name for BSBDA
- b)Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
- c)Regular demat charges, since BSDA has no concession for equity
- d)Nil, and both BSDA and BSBDA are held with a Depository Participant
Show the answer
Answer: (b) Nil, because equity holdings up to ₹50,000 attract no AMC — and BSDA is a demat account with a DP, while BSBDA is a bank savings account
The booklet's slab table sets AMC at NIL for equity holdings up to ₹50,000 (or debt holdings up to ₹1,00,000), a maximum of ₹100 for equity between ₹50,001 and ₹2,00,000, and charges as applicable to regular demat accounts above ₹2,00,000. Note the asymmetry candidates miss — the first equity threshold is ₹50,000 while the first debt threshold is ₹1,00,000. The BSDA exists because "SEBI with a view to achieve WIDER FINANCIAL INCLUSION... In order to REDUCE THE COST of maintaining securities in demat accounts for RETAIL INDIVIDUAL INVESTORS", and its other benefits are free periodic transaction and holding statements, two free physical statements per billing cycle and at least two Delivery Instruction Slips at account opening. The acronym trap is deliberate: BSDA holds securities with a Depository Participant; BSBDA from Chapter 4 holds money at a bank.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Basic Services Demat AccountA low-cost demat account for a small investor who holds only one demat account and whose holdings stay within Rs 2 lakh of debt and Rs 2 lakh of non-debt securities — its annual charge can be nil.
- Depository participantThe SEBI-registered agent through whom an investor reaches a depository — NSDL and CDSL cannot open investor accounts themselves, so every demat account is opened and operated through a DP.
- Demat accountAn account with a depository participant of NSDL or CDSL that holds your shares and other securities in electronic form. Since April 1, 2019, shares must be in demat form to be transferred.
- Know Your CustomerThe identity and address check every investor must clear before a bank, broker or depository participant will open an account — mandatory under the Prevention of Money Laundering Act, 2002.