Different Types of Demat Accounts in India

A demat account functions like a digital locker but for your financial securities. Instead of physical cash and precious valuables, it lets you store your stocks, bonds, or other securities electronically, eliminating the risk of loss or damage to physical investment certificates.

But did you know there are different types of demat accounts in India to choose from? From beginners to experienced investors, these accounts cater to different needs and preferences. Let’s explore the various types of demat accounts in detail to help you select the right one.

Types of Demat Accounts

Demat accounts in India are broadly classified into two types based on the account holder’s nationality:

• Indian residents: Resident Indians can open regular and Basic Services Demat Accounts (BSDA).
• NRIs: Non-resident Indians can open repatriable and non-repatriable demat accounts.

Let’s understand these accounts in detail.

1. Regular Demat Account

A regular demat account is a basic account that lets you hold your securities electronically, a.k.a., in a dematerialised format. Depositories like the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) offer it as the default account through banks, depository participants, stockbrokers, etc.

A regular demat account does not have any limit on the holdings and can be linked with a bank account and trading account to trade in the stock market. However, these accounts come with annual maintenance charges that vary from broker to broker.

2. Basic Services Demat Account (BSDA)

The Securities and Exchange Board of India (SEBI) introduced BSDA in 2012 to make share dematerialisation more affordable. However, to open a BSDA, you must meet specific conditions like:

• Only one demat account should be registered with your PAN card across brokers.
• The total value of holdings in your demat account must not exceed Rs. 10 lakhs.

Moreover, the annual maintenance charges are also waived if the amount of your holdings is less than Rs. 4 lakhs. Therefore, it is more suitable for small investors who don’t trade frequently.

3. Repatriable Demat Account

A repatriable demat account is exclusively for NRIs seeking investment opportunities in the Indian stock market and repatriate the invested amount along with any gains to their overseas bank account. However, the account must be linked with an NRE (non-resident external) bank account.

It’s important to note that with a repatriable demat account, NRI investors can only repatriate a maximum of a maximum of $1 million in a year.

4. Non-Repatriable Demat Account

A non-repatriable demat account is also exclusively for NRIs. However, the capital along with the gains from this account cannot be repatriated outside India. This account must be linked with an NRO (Non-Resident Ordinary) account but the funds can be transferred to other bank accounts held within the country.

Choosing the Right Type of Demat Account for You

Want to open free demat account but don’t know which one to select? Here’s a handy guide to help you narrow down your choices:

• Residency Status: If you’re an Indian citizen, you can only open a regular or basic services demat account. On the other hand, NRIs looking to invest in India can either open a repatriable or a non-repatriable demat account.
• Repatriability of Funds: If you’re an NRI, determine if you want to repatriate the funds to your overseas bank account. If you do, consider opening a repatriable demat account. However, if you want to retain the funds in India, opt for a non-repatriable demat account.
• Trading Frequency: If you’re an Indian citizen, it’s important to consider your trading habits when selecting the right type of demat account. If you trade frequently and in large volumes, a regular demat account will be ideal for you. However, if you’re a small trader or trade less frequently, BSDA will be more suitable as it comes with lower fees and charges.

Read more: Demat Account Charges and Fees in India

Wrapping Up

Different types of demat accounts cater to different types of investors and their needs. Therefore, it’s important to consider your investment style, repatriation needs, and the associated costs to make the right choice.
With share.market, you can create a free demat account and start your investment journey instantly. What’s more? Get free access to WealthBaskets and manage all your investments on a single platform. Register on the official website to open your demat account online and start investing.

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