Types of Demat Accunts in India: Regular, NRI, BSDA & More

When you invest in the stock market, you need a Demat account to hold and manage your securities safely in digital form. A Demat account is essential for buying, selling, and storing financial instruments like stocks, bonds, mutual funds, and ETFs. However, not all Demat account types are the same, and different types of Demat accounts serve different investors.

This means that the right choice for a Demat account affects transaction ease, costs, and compliance. So, in this blog we will provide a breakdown of each type of demat account and who they’re best for.

What is a Demat Account?

A Demat account (short for dematerialised account) is an electronic account that securely holds financial securities such as stocks, bonds, and mutual funds in digital form. It eliminates the need for physical certificates and reduces risks such as loss, damage, or forgery.

Having a Demat account is essential for people wanting to trade in equity and derivatives markets. With such an account, they can easily buy, sell, and manage their investments without any hassles.

Primary Types of Demat Accounts

Investors have varying financial objectives, residency statuses, and trading habits. To accommodate these differences, demat accounts come in different types. Some of the notable types are discussed below –

1. Regular Demat Account

A Regular Demat Account is the most common type of Demat account for resident Indian investors. With this single account, they can electronically trade and hold multiple financial securities, including bonds, mutual funds, etc.

The eligibility criteria for these accounts are:

• Applicants must be 18 years or older
• Must be a resident Indian
• A valid PAN card is mandatory
• Requires an active bank account for transactions
• Must provide proof of identity and address
• Have an active mobile number and email ID for communication

2. Repatriable Demat Account

A repatriable demat account is a specialised demat account for NRIs who wish to invest in Indian securities while retaining the ability to transfer funds overseas.

This account is linked to a Non-Resident External (NRE) bank account, which allows for the seamless repatriation of both principal and gains. It ensures compliance with Foreign Exchange Management Act (FEMA) regulations.

The eligibility criteria for getting a Repatriable Demat Account is as follows

• Must be an NRI, Person of Indian Origin (PIO), or Overseas Citizen of India (OCI)
• A valid PAN card is mandatory
• Requires an NRE bank account
• Must provide a valid passport and visa/work permit
• Proof of overseas residence is required
• An active email and mobile number for communication

3. Non-Repatriable Demat Account

A Non-repatriable demat account is a demat account type for Non-Resident Indians (NRIs) who want to invest in the Indian stock market but do not need the ability to transfer funds abroad.

Unlike a repatriable demat account, funds from this account remain within India. It must be linked to a Non-Resident Ordinary (NRO) bank account so that all investment proceeds such as dividends and sale proceeds stay in India.

The eligibility criteria for Non-Repatriable Demat Account is as follows

• Must be an NRI as per FEMA guidelines
• Must be 18 years or older
• Requires a valid Indian passport and overseas address proof
• Must have an NRO bank account
• PAN cards and other KYC documents are mandatory

4. Basic Services Demat Account (BSDA)

A Basic Services Demat Account (BSDA) is a simplified demat account perfect for small, infrequent investors. This type of demat account is for people who seek participation in the stock market but with the condition of not incurring high maintenance charges.

BSDA offers lower fees than a regular Demat account, making it an affordable option for those with smaller investment portfolios.

The Eligibility Criteria for Basic Services Demat Account (BSDA) is as follows –

• Indian residents only (not available to NRIs or foreigners)
• Annual income must be under ₹2 lakhs
• Limited to one BSDA per person
• No joint accounts are allowed
• Assets in the account must not exceed ₹2 lakhs

5. Corporate Demat Account

A Corporate Demat Account is a specific type of account that allows businesses, companies, or organisations to store and keep track of their securities electronically. Corporate entities intending to participate in the stock market must opt for this account for seamless management of their assets.

The eligibility criteria for these accounts are:

• It must be a legally recognised business entity like a private/public limited company.
• Company and authorised signatories must comply with KYC norms.
• A designated signatory, such as a director or manager, must operate the account.
• A formal board resolution is required for account opening.
• Necessary documents include a PAN card, address proof, and incorporation certificate.

How to Pick the Right Type of Demat Account?

Choosing the correct Demat account depends on investment needs, portfolio size, and preferences. Here is a step-by-step guide to help you make an informed decision:

• Assess Your Investment Needs: Start by identifying your investment goals and the types of securities you intend to trade such as stocks, bonds, ETFs, mutual funds, etc.
• Check Repatriation Requirements: If you are an NRI or PIO, and repatriation of your investment funds is a priority, opt for a repatriable Demat account. The reason is that with a repatriable Demat account, you can transfer funds abroad while investing in the Indian securities market.
• Consider Cost-Effectiveness: Make sure to run a cost evaluation, as different types of Demat accounts have different costs. For example, a regular Demat account has a standard maintenance fee, while with a BSDA account, you may experience reduced charges.
• Evaluate Ease of Use: A regular Demat account has advanced functionalities requiring you to be equipped with some experience. However, it’s exactly the opposite with a BSDA account, which has basic features. Additionally, many providers now offer a Demat Account App with intuitive features, making it easy for both beginners and experienced investors to manage their portfolios on the go.
• Research Service Providers: Look for factors such as reputation, customer service quality, online trading platforms, ease of account opening, and fees to open Demat account. Ensure the provider is registered with the Depository Participant (DP) and adheres to SEBI regulations.

Is a Demat Account Mandatory?

A Demat account is mandatory for trading and investing in most securities in India. If you wish to buy or sell shares on stock exchanges like the NSE or BSE, a Demat account is essential, as shares are held electronically. It is also required for exchange-traded funds (ETFs), bonds, government securities, and mutual fund units if they are in dematerialized form.

Conclusion

If you’re planning to trade or invest in the Indian stock market, a Demat account is a must. But not all Demat accounts are the same. The right one for you depends on how much you plan to invest, whether you need to move funds internationally, and the costs involved.

If you’re a frequent trader, a regular Demat account works best. Small investors can cut costs with a BSDA account. NRIs have two options repatriable accounts allow overseas fund transfers, while non-repatriable ones keep the funds in India.

Knowing your options can save you money and ensure compliance with regulations. Choosing an SEBI-registered depository participant makes transactions hassle-free and keeps your account running smoothly.