Different Types of Demat Accounts Online in India

Demat accounts are essential for investing, as they allow investors to hold shares and securities in an electronic format. In India, there are several types of Demat accounts available. Active traders may open regular Demat accounts, while small investors may opt for Basic Service Demat accounts (BSDA). In addition, NRIs may choose from repatriable or non-repatriable accounts. In this article, let’s understand what types of Demat accounts in India are and how to choose the right one for your financial needs and goals. 

Different Types of Demat Account

There are 4 types of Demat accounts: regular Demat account, basic service Demat Accounts (BSDA), repatriable Demat accounts, and non-repatriable Demat accounts. Let's understand each Demat account type in detail: 

1. Regular Demat Account 

A regular Demat account is the default type of Demat account that allows you to hold an unlimited number of securities. It is managed by depositories like National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), and available to Indian residents only. 

You are liable to pay an Annual Maintenance Charge (AMC) to your stockbroker. The AMC varies with brokers, but,  generally, ranges between Rs. 500 and Rs. 999 per year. 

2. Basic Service Demat Account (BSDA) 

BSDA is a special type of Demat account with a limit on the value of securities it can hold. It is designed for small investors who don’t invest regularly. This account is suitable if you don’t trade much and your holdings do not exceed Rs. 4 lakhs.   

 The Depository Participant does not charge any AMC on BSDA accounts if the total value of holdings does not exceed Rs. 4 lakhs. However, if the value of your holdings is between Rs. Rs. 4 lakhs to Rs. 10 lakhs , you will have to pay a nominal AMC, maximum Rs.100 per year. Moreover, there can be only one BSDA linked to a PAN. 

3. Repatriable Demat Account 

Repatriable Demat account is a type of account that allows Non-Resident Indians (NRI) to invest in India. It allows NRIs to transfer funds  to the countries they live in (i.e. repatriate). However, to hold a repatriable Demat account, NRIs need to have an NRE (Non-Resident External) bank account. 

 In a financial year, an NRI can repatriate up to USD 1 million only. Moreover, individuals who want to open a repatriable Demat account must comply with the Foreign Exchange Management Act (FEMA).  

4. Non-Repatriable Demat Account 

A non-repatriable Demat account is a type of account for NRIs that does not allow fund transfers outside India. Linked to an NRO account, it allows NRIs to invest in the Indian stock market while keeping their funds within the country. Instead, the funds can be transferred to other domestic bank accounts held with Indian banks.  

 To open and operate this type of demat account, the NRI must have an NRO (Non-Resident Ordinary) bank account and comply with the FEMA Act. 

Documents Required to Open a Demat Account

Ordinarily, You will need to provide the following documents to open a Demat account:  

• PAN Card 

• Address proof 

• ID proof 

• Passport-size photo 

• Signature on white paper 

• Income proof (for futures and options segment) 

• Cancelled cheque or last 3 months’ bank statement 

How to Select the Right Type of Demat Account?

The right type of Demat account depends on various factors. You can consider the following points while selecting a Demat account: 

1. Easy and Fast Account Opening Process  

The process of opening a Demat account should be simple, especially for beginners. The broker must offer an online account opening facility to open a Demat account quickly and securely from anywhere. Also, the platform should have minimal documentation requirements with clear instructions. 

2. User-friendly Interface 

The Demat account should have a user interface that is easy to understand. Simple, intuitive design makes it easy to navigate even for beginners. Moreover, an account should have a proper dashboard which helps find all the essential information at one place. 

3. Brokerage Charges 

A high broking fee can negatively impact your potential investment gains, especially if you trade frequently. If you are a beginner, look for a provider with relatively low brokerage rates. As a result, you may keep your costs under control while improving your potential gains. 

4. Annual Maintenance Charges 

Another important cost component is your annual maintenance charge (AMC). Beginners should choose platforms with minimal or zero AMCs during the first year and clearly defined charges after that. Keeping things transparent is essential for avoiding unexpected costs. 

5. In-Depth Data Analytics 

As an investor, you must have access to data analytics tools that enable you to make suitable investments. It is important for investors to have access to a Demat account that offers features like detailed reports, trend analysis, and real-time market data in order to make informed decisions. 

6. Security and Compliance 

When it comes to investments, safety should never be compromised. To protect your funds and data, make sure that the provider of your Demat account is compliant with regulatory standards. 

Conclusion

Demat accounts make investing in the Indian stock market simple and secure. There are four main Demat account types: regular, BSDA, repatriable, and non-repatriable. Each type is designed to suit different kinds of investors. You can choose a Demat account depending on your needs. Make sure to consider the charges, platform features, and safety while selecting. Choosing the right account can improve your experience and make your investment journey smoother.