There is no need for real certificates when you have a Demat account, which stands for “dematerialized.” It is an electronic storage facility that holds digital copies of securities like stocks, bonds, mutual funds, ETFs, and other financial instruments.
The types of Demat account are based on where the investor lives, their wants for repatriation, and portfolio size.
The different Demat accounts
- A normal demat account
This is the normal account for buying and selling stocks online. If you want to trade in the Indian stock market, this is the best way to do it.
Residents of India (people who live in India) are eligible.
What’s important: You can trade stocks, mutual funds, initial public offerings (IPOs), and other securities, but you’ll have to pay standard fees for upkeep and transactions.
2. Demat account for basic services
A cheaper version of the standard account that was made available by SEBI to help small investors. It works the same way, but fees are lower for items with low values.
Indian residents with small portfolios (up to ₹2 lakh in total holdings across all stocks) are eligible.
What’s important: For holdings up to ₹50,000, there are no yearly maintenance charges (AMC). For holdings between ₹50,000 and ₹2 lakh, the AMC is ₹100, and it changes to regular if the holdings go over ₹2 lakh.
Good for beginners or sellers who don’t do it very often.
3. Account for Repatriable Demat
Designed for investors from outside of India, this product lets them buy Indian securities and send money back to their home country, including any gains.
People of Indian descent (PIOs) or non-resident Indians (NRIs) can apply.
What’s important: It has to be connected to a Non-Resident External (NRE) bank account, follow FEMA rules, and let you bring money back from abroad (up to a cap like $1 million per year after taxes).
4. Account for Non-Repatriable Demat
This type is similar to the repatriable type, but it limits the movement of funds to other countries and encourages investments in India.
Nominees must be NRIs or PIOs.
What’s important: Linked to a Non-Resident Ordinary (NRO) bank account; investments and profits can’t be changed into or sent back to a foreign currency; gains are subject to TDS.
How to Open Demat Account that is correct for you
Choose an agent or broker. Pick one based on your type. Check out reviews, fees, and apps.
Online option (Most used):
Go to the website of the bank and hit open demat account. Following this, you will be asked to enter your contact details. Provide the relevant proofs and proceed to verification.
Verification in full: Do e-KYC with an Aadhaar OTP or video, and add information about the candidate.
Activation of Account: Once approved (this could take minutes or days), get information and start dealing.
For NRIs or BSDA, you must say what kind you want when you apply. Talk to the broker’s help if you’re not sure. There are risks with investments, so do your homework or talk to a financial expert.
