Types of Demat Accounts
There are different types of Demat accounts in India, each designed for a specific investor profile and use case.
1. Regular Demat Account: This is used by India's resident investors who want to buy or trade equities or any other financial products. It is suitable for long-term holding and active trading, and generally there is a yearly maintenance fee unless the fee is waived off under some specially designed plan like BSDA (Basic Services Demat Account).
2. Repatriable Demat Account: This is used by Non-resident Indians (NRIs) who want the means to move their investment income out of India if they choose to do so. It must be linked with an NRE (Non-Resident External) bank account and is approved under the Portfolio Investment Scheme (PIS). This type of account allows both investment in Indian securities and repatriation of funds.
3. Non-Repatriable Demat Account: Also designed for NRIs, this account is linked to an NRO (Non-Resident Ordinary) account. It enables NRIs to invest in Indian securities, but without the option to transfer funds abroad. It’s suitable for those who want to invest earnings sourced within India.
4. Minor Demat Account: This account is opened in the name of a minor and operated by a legal guardian until the child turns 18. It’s typically used for gifting securities or starting investments early.
5. HUF Demat Account: Designed for Hindu Undivided Families, this account is managed by the head of the family (Karta). It allows investments under the HUF entity rather than individual names.
6. Corporate or Institutional Demat Account: Used by companies, LLPs, and partnership firms for holding and trading securities under their business name. These accounts come with additional documentation and regulatory requirements.
Choosing the right type of Demat account ensures better control over investments and compliance with regulatory norms, especially for NRIs and organisations.