In this article, we will coverDemat account is a secure online brokerage for buying, selling, and holding assets. But not every Demat account is the same. Let's take the plunge into the types of Demat accounts in India!
- Safe and secure: A demat account eliminates the need for physical share certificates, which can be lost, stolen, or damaged. Because the assets in a Demat account are stored digitally, they cannot be lost or stolen.
- Easy access: A Demat account gives investors easy access to their securities. They can access their assets 24/7 and make trades from anywhere.
- Faster transactions: Trading in securities through a Demat account is faster and more efficient compared to physical trading. Security transfers are finalized in a matter of days thanks to the settling processes automation.
- Saving money: With a Demat account, you won't have to pay stamp tax on your shares of stock like you would if you held real documents. Demat accounts are cheaper to keep than actual share documents, which is a major benefit.
- Increased liquidity: With a Demat account, securities can be traded easily, making them more liquid than physical shares. This is crucial information for you if you're a trader and need to unload your shares fast.
Types of Demat Accounts
1. Basic Services Demat Account (BSDA)SEBI (Securities and Exchange Board of India) introduced a new type of Demat account called a Basic Service Demat Account (BSDA) in 2012. A simplified and streamlined alternative to a standard Demat account is a BSDA account. Due to the lower minimum investment, this is a great option for small investors who don't frequently engage in stocks, ETFs, mutual funds, etc. Also, it's perfect for first-time buyers who are still learning the rules and don't want to take big risks. It also makes it easier for investors with Demat accounts but less than Rs. 2,00,000 Lakhs in their stock to manage their investments across all depositories. So, BDSAs help makes it easier for people to invest in the stock market.
Eligibility CriteriaBDSA (Basic Services Demat Account) is a type of Demat account for minor buyers who want to keep a few assets. Indian BDSA account eligibility:
- Only Indian residents can open these types of Demat accounts. Foreigners and NRIs are prohibited.
- The individual's annual income should not exceed Rs. 2 lakhs. So small investors can use the BDSA account.
- The BDSA account is for users with few equities. The account's assets shouldn't reach Rs. 2 lakhs.
- BDSA accounts are limited to one per person. A person with a regular Demat account cannot open a BDSA account.
- Joint BDSA accounts are prohibited.
- The person must provide proof of name, address, and NIC to finish KYC (Permanent Account Number).
Features of BSDA AccountThe features of a Basic Services Demat Account (BSDA) include:
- Lower transaction fees for online trades
- No charges for annual maintenance (< Rs.50,000)
- The ability to transfer securities from one account to another
- A secure and convenient way to transact in the stock market
- Access to real-time stock quotes and market updates
- Facility to monitor stocks and track portfolio
- Support from customer service representatives
2. Regular Demat AccountA regular Demat account is a type of account that lets people trade stocks and other financial securities. It is a type of Demat account that is linked to a person's bank account. Regular Demat account holds electronic copies of physical stocks. A regular Demat account lets you do things like make transactions faster, maintain records of your stocks and portfolio, buy, sell, and hold stocks and move securities from one account to another. It also has several ways to pay, like net banking, debit or credit cards, and the Unified Payment Interface (UPI). You can also withdraw money from a regular Demat account without any restrictions.
Eligibility CriteriaThe eligibility criteria for opening a regular Demat account include:
- Applicant must be 18 years or older
- An Indian resident
- Have a valid PAN Card
- Have an active bank account
- Have an active mobile number
- Have proof of identity and PAN details
Features of Regular Demat AccountA regular Demat account includes the following features:
- Individuals can now trade equities and other financial assets.
- The ability to monitor stocks and analyze portfolios.
- The ability to purchase, trade, and invest in securities.
- Transferring assets from one account to another.
- Payment choices include net banking, debit or credit cards, and UPI.
- The ability to transfer funds from your account without restriction.
- A safe and easy method to conduct stock market transactions.
- Real-time financial prices and market reports
3. Repatriable Demat AccountRepatriable Demat accounts are one of the two types of Demat accounts that are accessible to NRIs. If a non-resident of India (NRI) wants to open a Repatriable Demat account, they must follow the rules set by FEMA. Repatriable Demat lets NRIs send money home. Normal Demat account holders don't have to connect their NRE (Non-Resident External) account to their Demat account, but people with Repatriable Demat accounts do. Repatriable types of Demat accounts allow repatriation from all banks and discount brokers. Money can be repatriated if the receiver meets both countries' legal criteria and governments don't interfere.
Eligibility CriteriaTo open a repatriable Demat account, NRIs must meet the following eligibility criteria:
- Applicants must be an NRI, PIO, or OCI.
- A PAN card is mandatory.
- NRIs must have a valid passport copy or any other identity proof.
- Applicants must have an active NRE or NRO bank account.
- Need a valid visa and work permit if the applicant is an OCI or PIO.
- Proof of Overseas Address.
- Need an active email address and phone number
Features of Repatriable Demat AccountHere are some features of a repatriable Demat account:
- Ability to freely move funds between Indian and overseas accounts
- Access to both domestic and international markets
- Low transaction cost
- Ability to trade in multiple currencies
- Real-time stock quotes
- Support from customer service
- Access to online trading and investing platforms
- Easy transfer of securities between different Demat accounts
- Comprehensive portfolio management
4. Non-Repatriable Demat AccountA non-repatriable Demat account is a common type of Demat account with sub-status as 'NRI Non-Repatriable.' This demat account allows NRIs to invest the money earned in India in the Indian Stock Markets. All the proceeds from selling securities, bonuses, and dividends are automatically credited to this linked NRI bank account.
Eligibility CriteriaTo open an NRI non-repatriable Demat account, the following eligibility criteria must be met:
- Must be an NRI per FEMA guidelines.
- Must be 18 years or older.
- Must have a valid Indian passport or proof of overseas address.
- Must have a valid Indian bank account.
- Must provide documents such as PAN card, passport, and other KYC documents.
Features of Non-Repatriable Demat AccountA non-repatriable Demat account includes:
- Access to the Indian market for trading in equities, derivatives, currencies, commodities, and mutual funds.
- Easy transfer of shares and securities to and from the NRE/NRO accounts.
- Facility to invest in IPOs, mutual funds, and other financial products.
- A nomination facility is available for the account for added security.
- Easily transfer funds from NRE/NRO accounts to Demat accounts.
- Safe and secure storage of securities in the depository account.
- Hassle-free settlements and withdrawal of funds from the account.
- Ability to monitor portfolio online or through the mobile app
- An annual maintenance fee is typically around Rs. 300-500.
- A transaction fee is usually about 0.03-0.05% of the total transaction value.
- Account opening charges can range from Rs. 100-400.
- A depository participant (DP) fee is usually around Rs. 25-50 per transaction.
- Stamp duty varies based on the state of residence and the transaction amount.
- Any other charges levied by the depository, such as Dematerialization charges, account closure charges, etc.