Demat Account is an account that is used to hold financial securities in electronic format. The purpose of opening a Demat account is to hold securities that have been bought or dematerialised i.e converted from physical form to electronic shares, thus making online investing and trading easy for the users.
Benefits of a Demat account
Demat account makes the entire process of investing, trading, holding and monitoring faster, convenient, and cost-efficient.
1. Low Risk:
Physical securities are very risky due to thefts, losses, or physical damages. These risks are completely eliminated with the a Demat account, which provides investors / traders with the option of holding their securities in electronic form.
2. Easy holding:
Monitoring and keeping track stock performance is difficult in physical form. Investors / traders with Demat account can make it more convenient to track all their investments through one account.
Types of Demat accounts
1. Regular Demat accounts:
These are dematerialized accounts for Indian residents. If you're a resident of India dealing with equity trading and investment, a regular Demat account is ideal for you.
2. Repatriable Demat accounts:
This is one of the two types of Demat accounts available for NRIs. A repatriable account allows you to transfer your funds abroad if you're an NRI. You need to link this account with a Non-resident External (NRE) bank account to repatriate your funds.
3. Non-repatriable Demat accounts:
If you're an NRI, you can also choose to open a non-repatriable account. This type of account does not allow you to transfer funds abroad. It needs to be linked to a Non-resident Ordinary (NRO) bank account.