Different Types Of Demat Account
A Demat account is an online repository to hold securities in electronic form. Stockbrokers in India offer different types of Demat accounts, depending on the needs of investors. Basically, there are three types of Demat accounts. Resident Indians can use a regular Demat account, while non-resident Indians (NRIs) may use repatriable or non-repatriable accounts. Investors can choose a suitable Demat account based on their residence status. In this blog, let’s learn about the different types of Demat accounts available in India.
Key Highlights
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Regular, repatriable, and non-repatriable are the three primary types of Demat accounts available in India.
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Indian residents can open regular Demat accounts. Moreover, investors with low trading volume can open a Basic Services Demat Account (BSDA).
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Repatriable and Non-repatriable Demat accounts are available to NRIs who want to invest in the Indian stock market.
Types of Demat Account
The following are the different types of Demat accounts.
- Regular Demat Account:
A regular Demat account is required for investors who live in India. It is ideal for those who trade equity shares only. The shares one buys are stored in digital format in the account. Both full-service and discount brokers offer this type of Demat account. They levy certain charges for the services they provide.
BSDA: Recently, SEBI introduced a new type of Demat account called the Basic Services Demat Account (BSDA). It is similar to a regular Demat account. However, there are no maintenance charges to hold assets up to Rs 50,000. For holdings between Rs 50,000 and Rs 2 lakh, the charges are Rs 100 per annum. The aim of introducing the BSDA is to allow small investors to invest in the stock market at low costs.
- Repatriable Demat Account:
A Repatriable Demat account is available to non-resident Indians (NRIs). It allows NRIs to transfer funds abroad. Investors must link it to a Non-Resident External (NRE) bank account for carrying out the transactions. However, they must follow the rules and regulations of the Foreign Exchange Management Act (FEMA).
- Non-repatriable Demat Account:
A Non-repatriable Demat Account is also available to NRIs only. However, it does not allow the transfer of funds abroad. NRIs must link a Non-Resident Ordinary (NRO) bank account to this type of Demat account. The investments made through a non-repatriable Demat account cannot be converted to any foreign currency.
Conclusion:
A Demat account is mandatory to invest in the Indian stock market. Different types of Demat accounts are available in India. Resident Indians can open a regular Demat account. On the other hand, NRIs can open a repatriable or non-repatriable Demat account. However, they must follow certain rules as per the Foreign Exchange Management Act. Investors must understand how each type of Demat account works and the rules associated with it. This will help them to choose the right one that suits their needs.
FAQs on Types of Demat Account
Which type of Demat account is meant for you?
The type of Demat account you select depends on your investment needs. While a regular account is suitable for investors who want to trade regularly, small investors can go for a BSDA. Moreover, NRIs can open a repatriable or non-repatriable Demat account.
What is the key benefit of having a regular Demat account?
A regular Demat account offers Indian residents a digital repository to hold securities. This makes it easy to trade securities online. It also eliminates the risk of forgery, damage, and loss of security certificates.
Are repatriable and non-repatriable Demat accounts the same?
No, repatriable and non-repatriable Demat accounts are not the same. Repatriable Demat accounts allow the transfer of funds abroad. However, non-repatriable Demat accounts do not allow investors to transfer funds outside of India.
