Different Types of Demat Account

Investors in India have access to a number of financial and physical investment products. While real estate and gold are primary investment options for Indian households, financial products are catching up fast. The Central Depository Services Limited opened 1.7 million new Demat accounts in 2021 and the total tally came up to be 51.5 million A surge in the number of new Demat accounts signals an increase in equity investors.

What is demat account?

A Demat account is used to store financial securities in the Dematerialised form. It is used to securely hold and trade shares in the Demat form. There are two main depositories in India that provide Demat account services—CDSL and NSDL.

The types of Demat Accounts are as follows:

Types of Demat Account

 

Regular demat account

A regular Demat account is used by investors who reside in India. It is the best demat account for people who trade in shares. A regular Demat account is not required to trade in the derivatives segment. It is managed by the depositories but the opening and maintenance are handled by depository participants, popularly known as stockbrokers.

The Securities and Exchange Board introduced a new type of Demat account to promote financial inclusion in the country, called the basic Services Demat Account (BSDA). The basic services Demat account is similar to a regular Demat account with a slight difference in maintenance charges.

Repatriable demat account

Non-resident Indians can also invest in the equity markets. However, they cannot use a regular Demat account to invest as repatriation of funds is not allowed from a regular Demat account. A repatriable Demat account allows the transfer of funds abroad but you need to have a Non-Resident External NRE bank account for it.

Non-repatriable demat account

Just like a repatriable Demat account, the non-repatriable account is meant for non-resident Indians with a slight difference. One can transfer wealth abroad through a repatriable Demat account, but the transfer of funds is not allowed in the case of non-repatriable Demat accounts.

The regular, repatriable and non-repatriable Demat accounts are different based on their functionalities. Demat accounts can be categorized into 2-in-1 accounts and 3-in-1 accounts.

  • A 2-in-1 account offers trading and Demat accounts together.
  • A 3-in-1 account offers a trading account, Demat account and a bank account together.

Conclusion

A Demat account is compulsory to apply for initial public offerings and to trade in equity shares. To choose the best Demat accounts, opting for credible stockbrokers is necessary. Open an IIFL Demat and Trading account to get access to quality research and tools. You do not have to pay demat account opening charges nor Demat maintenance charges for a year with IIFL Demat and Trading charges.