Different types of Demat account
As per the guidelines by SEBI, it is very necessary for an individual to have a Demat Account if he/she wishes to make any type of investment in the stock market. That makes learning about types Demat Account as much important as having it to trade. Unless you have a Demat account, you cannot participate in any type of stock market trading. But to have the right type of stock trading account is necessary to make meaningful stock market trading choices.
Also, there are some indirect participation you make into the market, let’s say if you invest in mutual funds, you are indirectly participating in stock market trade, but you don’t need a Demat account for investment. So, a Demat account is necessary to have in only direct investments made in the stock market. There are three types of Demat accounts. Here is a complete detail of each one.
There are 3 types of Demat Accounts:
Regular Demat Account:
Regular Demat accounts are for investors who reside in India and people who invest in equity shares only. A regular Demat account thus helps in storing all the information digitally at one place for any type of equity trade made by an individual. It is highly safe and tracks each buys and sells equity.
Earlier, an individual had to pay a maintenance charge, but SEBI recently introduces a new type of account. This new account is called Basic Services Demat Account or BSDA. It functions more or less live a regular Demat Account, but the feature that differentiates the two is no charges on maintenance if the holding is withing Rs 50,000. Also, the maintenance charges between Rs 50,000 and Rs 2Lakh are Rs 100 per annum. With this, SEBI has made it very easy and encouraging for people who are yet to make their Demat accounts and invest in the stock market.
Important Note: You don’t require a Demat Account if you are trading in Futures and Options. Futures and Options trade comes with an expiry date, and thus a Demat account doesn’t hold any information on its trade whether it is about your purchase or sale.
Repatriable Demat Account:
If an individual is an NRI (Non-resident Indian), a repatriable Demat Account Type is necessary to make any investment in the stock market of India. This type of account allows the transfer of money abroad. You need to have a Non-Resident External Bank Account to open a repatriable Demat Account.
If you have recently become an NRI, you need to close the regular Demat account you were associated with as a resident of India. If you didn’t have any Demat account back then, you need to create a new one. Once you have done the account set up, your account is ready to make any fund transfer to the Non-Resident Ordinary Demat Account. As an NRI, your repatriable Demat account can only be used to make fund transfer up to USD 1million from January- December.
Non-repatriable Demat Account:
Like a Repatriable Demat Account, this type of account is for an NRI. But it differs on the point of fund transfer, non-repatriable Demat account doesn’t allow any transfer of the fund abroad. You must have an NRO bank account linked to the Demat account.
These above mentioned Demat accounts are made specifically to serve various purposes. For any resident Indian, a regular Demat account can help them process all their stock market investments and keep track of transactions other than Futures and Options. It is very simple to create; we at TradeBulls can even help you further by helping you make the right investment choices as per your financial goals.
Also if you are an NRI the world of trading is totally different, there are many restrictions that have been put, you can always rely on our professional traders to help you in that course like conforming to the rules of Foreign Exchange Management Act that make a repatriable/ non-repatriable Demat account.