Types of Demat Account
For anyone who wants to invest in the stock market, a Demat account is an absolute necessity. This is because it keeps your shares electronically. However, understanding the different types of Demat accounts available in India can help you in making an informed decision. This blog will help you understand the three different types of Demant accounts available. We will also discuss the features of each one of them that will help you determine which one is suitable for you.
Key Highlights
- A Demat account allows you to keep your stocks in the form of electronic documents. This reduces the hassle of bothering about the hard copy of share certificates.
- A Regular Demat Account is used by individual investors to hold and manage their securities.
- A Repatriable Demat Account is meant for Non-Resident Indians (NRIs) who intend to manage their assets and send money out of the country.
- A Demat Account that is Non-Repatriable serves non-resident Indians (NRIs) looking at maintaining and controlling their investments in India without moving the money overseas.
Table of Contents
Types of Demat Accounts in India
The market regulator, securities, and Exchange Board of India (SEBI) allows three types of Demat accounts. The investors can open any of these accounts if they fulfill the requirements as per the SEBI guidelines. Here are the following three different types of Demat accounts available in India.
- Regular Demat account
- Repatriable Demat account
- Non-repatriable Demat account
All three accounts have different features that help meet different kinds of demands. Every investor may not have the same type of requirements. Let us discuss each type of Demat account available in India.
Regular Demat Account
A Regular Demat Account is one that individual investors use to hold and manage their securities. A simple breakdown of its key features is provided here below:
1. Secure Storage
It allows you to hold your shares via electronic means instead of gathering a pile of physical certificates. Storing your shares electronically is easy, convenient, and safe.
2. Easy Access
You can access your shares online with the help of your account. This makes it easy for you to manage your shares anytime and anywhere.
3. Seamless Transactions
In your Demat account, shares transacted are updated automatically on buying or selling them. The process is thus easy and without hassle.
4. Regular Updates
You get consistent notifications and reports regarding your assets, dealings, and other corporate activities such as dividend payments or rights offerings.
5. Nominee Facility
If anything happens to you, it is possible to suggest an individual who shall receive your stocks. Thereby ensuring an easy process of moving belongings.
6. Low Maintenance
Since shares are maintained electronically, it eliminates the requirement for any physical storage or documentation. Thus, lowering the chances of misplacement of documents or theft.
Repatriable Demat Account
A Repatriable Demat Account is meant for Non-Resident Indians (NRIs) who intend to manage their assets and send money out of the country. It has the following characteristics:
1. International Transfers
You can transfer your investments and funds to your native country or other international locations. This is beneficial if you reside outside India.
2. Linked NRE Account
By linking this account to an NRE (Non-Resident External) bank account, it becomes simple to repatriate money.
3. Electronic Storage
Just like other Demat recounts, it exclusively keeps your shares in digital form eliminating the hassle of storing physical certification. Thereby making your investment management simple.
4. Easy Transactions
It allows you to buy and sell shares online. Moreover, it updates these transactions automatically in your Demat account.
5. Regular Statements
Your investments and transactions are updated regularly, so they don’t slip through the cracks and are kept in your mind.
6. Compliance with Regulations
According to all regulations applicable to NRIs in India, this account will ensure that your investments comply with the law and are handled appropriately.
Non-repatriable Demat Account
A Demat Account that is Non-Repatriable serves non-resident Indians (NRIs) looking at maintaining and controlling their investments in India without moving the money overseas. Below are its key attributes:
1. Domestic Holding
With this account, an NRI can retain equity and equities in India, but fund transfers are not allowed to foreign countries.
2. Linked NRO Account
In India, it is connected to a Non-Resident Ordinary (NRO) bank account that is utilised for maintaining local transactions.
3. Electronic Storage
Shares are kept in electronic formats instead of possessing actual physical certificates which require taking care of them. Thus, simplifying investment management and tracking.
4. Easy Transactions
You can buy and sell online stocks, and these movements automatically feed into your Demat account.
5. Regular Statements
Regular statements regarding your holdings, transactions, and any corporate actions keep you informed about your investments.
6. Regulatory Compliance
The Indian rules for NRIs are followed by the account, which makes sure that your investments stay within the bounds of the law.
Conclusion
It is important to select the right Demat account to manage your investments successfully. There are three types of Demat accounts in India Regular, Repatriable, and Non-Repatriable which serve different users. Regular Demat accounts are beneficial for individual investors while repatriable accounts allow NRIs (Non-Resident Indians) to remit capital abroad. Whereas, non-repatriable accounts provide a way for NRIs to hold all their investments in India without transferring them out there. Understanding these options enables you to choose and open a demat account that matches your investment strategies and legal obligations.
FAQs on Demat Account Types
Basic Services Demat Accounts (BSDA) are new types of Demat accounts. Securities and Exchange Board of India (SEBI) introduced these Demat account types, “BSDAs,” in 2012 for investors with fewer investments whose portfolios are below a threshold of Rs. 2 lakhs. Such investors don’t participate in the Stock market frequently.
The Portfolio Investment Scheme (PIS) is a special kind of scheme enabling all the Non-Resident Indians (NRIs) to invest in the Indian share market, both on a repatriable or non-repatriable basis. Both a PIS account and an NRE account work in the same manner. While using your Demat account to invest in India, you will have to take the help of PIS.
A 3-in-1 Demat account is a combination of three: a Demat account, a trading account, and a bank account. This account simplifies investment in many ways such as buying and selling shares simultaneously by a single account which makes the transaction process much faster and easier.
You need to know your expectations and requirements properly before trading and investing in the stock market. Then, when you know your future investment plan, you can decide which type of Demat account is the right choice for you.
Yes, you can have up to 4 Demat accounts. However, they should all be opened through different brokerage services. You’re not allowed to open more than one single demat account per brokerage service provider. So keep this in mind while talking about demat accounts. Careful management helps avoid confusion and additional charges. Besides this it keeps all dealings lawfully seamless and free of obstacles.