Demat Account Types

Before understanding various Demat Account types, a basic understanding of the Demat Account is necessary. Demat Account is also known as the Dematerialization account.

It was made mandatory after the implementation of the Depository Act of 1996 by SEBI. The process of digitizing stocks, securities, debentures, etc. in the Indian Stock Market got initiated back then.

The effort to minimize illegal activities like fraud, theft, etc. got a firm push with this action. In the long run, these measures made the process of trading smoother and faster.

Before moving ahead, let’s first understand what a Demat account is?

Also, know about Demat Account Rules to reap more benefits in opening and closing the account hassle-free.

Demat Account is the electronic form of holding your financial securities. It is required to mention in every transaction related to the Stock Market.

Demat Account has increased the safety of the shareholdings and reduced the paperwork. It is a luxury that you can trade at one click while sitting in the comfort of your home.

Trading has simplified with the help of these three things – Demat Account, Access to the Internet, and ever-increasing competitiveness among the brokers.

Now, let us talk about the Demat Account types, shall we?

Types of Demat Account in India

In general, an outsider thinks that only one type of Demat Account exists. But as you enter the field of trading and experience these distinct events firsthand, you understand the minutiae of the industry.

There are three types of Demat accounts offered to the customers in India that cater to traders’ distinctive bases. These accounts are as follows:

• Regular Demat Account
• Repatriable Demat Account
• Non-Repatriable Account

Read further to understand them in detail.

1. Regular Demat Account

What do you think is a Demat Account?

You got a few things in your head, right?

Don’t worry! We got you all covered.

A Regular Demat account facilitates the process of trading across India and is mainly for the citizens and residents of India.

The two Central Indian Depositories – CDSL (Central Depository Services Limited) & NSDL (National Securities Depository Limited) maintain the Regular Demat Account. The intermediaries, stockbrokers, or the depository participants (DPs) extend the facility to open a Regular Demat Account.

The list of DPs is very long. But some of them are IIFL, HDFC, SAMCO Securities, Sharekhan, Motilal Oswal, Angel Broking, etc.

There are appropriate charges charged by the intermediaries in exchange for the respective services they provide.

The Demat Account got announced to reduce the illegal practices in the stock market and enhance the trading experience. It holds all your financial securities safely in one place and facilitates secure trading. That is one of the many benefits of demat account in India you can have. 

Lastly, every aspect of trading got simplified in the course of this digitalization drive.

2. Repatriable Demat Account

What if one day you move out of India and become an NRI, but your heart still wants to trade in the Indian Stock Market. You’d say it’s impossible to invest now.

Well, well, well! We have a solution to your problem. 

Open a Repatriable Demat Account, and you’ll be able to invest in Indian Markets again.

Repatriable Demat Account is the facility that permits trading to Nonresident Indians. It transfers funds to foreign countries and abides by the guidelines set by FEMA (Foreign Exchange Money Act).

Similar to the regular Demat Account, you can have a nominee in a repatriable Demat Account too.

The documents required to open a repatriable Demat account are – Copy of Passport, Copy of VISA, Copy of PAN Card, Overseas Address Proof, FEMA Declaration, Canceled cheque of NRE Bank Account and passport size photographs.

The account holder has to get all of these documents attested by the country’s local Indian Embassy.

3. Non-Repatriable Demat Account

This type of Demat Account is also for the NRIs, but this Account has a small variation.

Unlike the repatriable Demat Account, transferring funds abroad is not permitted in a non-repatriable Demat account.

When an amount gets transferred to the NRO bank account, that amount loses its ability to be repatriated. Thus, whatever you earn from this Account, stays in India only. You won’t be able to transfer to any account abroad.

Other than that, everything remains the same as Repatriable Demat Account.

Also, you have an option to transfer your physical shares with the Demat Account Transfer process that could be done online these days.

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Conclusion

Having learned these three Demat account types, you are more aware of what suits your plans. Opening the correct Demat account type is very important to reap the best results possible.

We sincerely hope that your doubts and confusion regarding the types of Demat accounts got sorted.

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