You might have heard a lot about Demat & Trading Account in India. If you are planning to invest your money in the share market, you must be curious to learn about the various types of demat and trading accounts available.
We had already discussed about what is a Demat and Trading account and its meaning. Let’s revise what it is?
A Demat account is a place to hold your shares and securities in electronic form. But, if you wish to buy/sell securities, you need to have an online trading account as well. Therefore, a trading account simply acts as an interface between a demat account and an investors bank.
So, here we shall be highlighting the most common types of demat and trading accounts in India.
Types of Demat Account:
1. Regular Account: A demat account that is exclusive for the residents of India.
2. Repatriable Account: For Non Resident Indians (NRIs) who wish to transfer funds abroad. It requires an associated NRE account.
3. Non-Repatriable Account: For NRIs, but doesn’t facilitate transfer of funds abroad. Further, it requires an associated NRO account.
The above categorization was on basis of residency. Now, let’s analyse in general, the numerous types of demat and trading accounts.
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Types of Demat & Trading Accounts in India
Here’s a broad classification of demat and trading accounts in India. You can opt for one based on the combination you need.
1. Equity Demat Account
An equity demat account allows to store your shares in demat form. When you buy and sell shares through your trading account, they get stored or are taken out from this account.
2. Equity Trading Account
You want to trade in equities, you must have an Equity trading account. So, are you thinking to trade in shares? If yes, opening an equity demat and trading account is a pre-requisite. You have to open an Equity trading account with a registered stockbroker recognized by the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE).
3. Commodity Demat Account
This is a demat account used to store commodities in electronic form. What an Equity demat account does for an Equity trading account, a commodity demat account does for Commodity trading.
4. Commodity Trading Account
If a trader wishes to trade in commodities, having an equity trading account only won’t suffice. You must open a separate Commodity trading account to carry on such transactions. You can open a Commodity trading account with a commodity broker registered with a recognized commodity exchange of India. The most common exchanges are Multi Commodity Exchange (MCX) and National Commodity and Derivative Exchange (NCDEX).
Apart from above, you get demat and trading account opening options from stockbrokers and authorized banks in the following ways:
2-in-1 accounts
A combination of a Demat and a Trading account, they allow easy integration between the two. So, 2-in-1 accounts allow seamless transfer of shares from demat account to trading account. These days, most of the stock brokers offer instant online 2-in-1 demat and trading account opening. Have you opened one? Do share your experience with us.
3-in-1 accounts
Besides, 2-in-1 accounts, banks offering brokerage services give you an additional facility. They integrate your demat and trading account with your banking services. So, you have a Demat, Trading and a Bank account, all at one place. This allows seamless transfer of funds from your bank account to trading account. However, that doesn’t guarantee any extra advantage since popular brokers in India already provide easy transfer of funds. Therefore, it doesn’t make much of a difference!
Types of Trading Accounts in India
On the basis of services offered, you can open the following:
A Discount Broking account
Discount brokers charge a discounted rate or a flat fee per executed trade for using their platform. Usually, these are low brokerage models providing limited services. Zerodha, a pioneer in discount broking, is the biggest example of spreading the discount broking trend in India. What are you waiting for? You can easily open a Demat and Trading account with one of the best discount brokers in India.
A Full Service Broking account
A full service broker provides a plethora of services like advisory, wealth management, etc. in addition to their trading platform. If you like to avail additional services, you can choose to open a demat and trading account with a full service broker. Otherwise, for stock and commodity trading, a discount broking account may be sufficient and inexpensive.
The type of account is primarily based on your priorities and requirements. Analyse them first and then move ahead!
Having knowledge on the different kinds of demat and trading accounts shall definitely guide you. The next time you read about any of these, you can happily tell what they signify.
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Disclaimer: There is a high degree of risk involved in trading. The details given on this website are for informational purpose only and cannot be constituted as professional advice in any regard. Please follow due diligence while investing your money.
Now, can you figure out which type of demat account is most suitable for you? Which demat and trading account have you opened? Feel free to share your views.
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