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Trading and Demat Account Starting from the basics

Investing or trading in a financial market, be it the stock market, currency market, or commodity market is one of the easiest ways to create wealth. However, before you proceed, there are certain prerequisites that you would have to satisfy. One of them is the trading and demat account opening. Wish to know what these accounts are? Continue reading to find out. 

What is a demat account? 

A demat account is an electronic account that’s used to safely store various securities like shares, debentures, bonds, and mutual fund units, among others. Each time you purchase securities through an exchange, your demat account is credited, and when you sell securities, the same is debited.

There are four primary types of demat accounts that you can open - a regular demat account, a basic service demat account, a repatriable demat account, and a non-repatriable demat account. Let’s take a quick look at what each of them is. 

  • Regular Demat Account 

The regular demat account is for individuals who are residents of India. You can open a regular demat account with any one of the following two depositories in the country - the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL). 

  • Basic Service Demat Account 

A Basic Service Demat Account, also abbreviated as BSDA, is also for resident individuals. However, they’re more suited for small investors who don’t regularly invest or trade in the financial markets. Unlike a regular demat account, BSDA comes with lower charges and maintenance fees. Also, individuals desirous of opening a Basic Service Demat Account are allowed to only have one demat account in their name.

  • Repatriable Demat Account

A repatriable demat account is for non-resident individuals (NRIs) desirous of investing in the Indian financial markets. This account should mandatorily be linked with a Non-Resident External Rupee Account (NRE) account and allows the investor to repatriate up to USD 1 million to an account outside India in a calendar year. 

  • Non-Repatriable Demat Account 

A non-repatriable demat account is also for non-resident individuals who wish to invest in the Indian markets. However, unlike a repatriable demat account, the funds that you get from the sale of securities held in a non-repatriable account cannot be transferred outside India. A non-repatriable account is required to be linked to a Non-Resident Ordinary (NRO) account. 

What is a trading account? 

A trading account is again an electronic account that facilitates the purchase and sale of securities from an exchange. Depending on the stock broker that you sign up with and the segments that you wish to trade in, your trading account may vary in appearance and function. 

Some stock brokers, like Motilal Oswal, allow you to open 2-in-1 trading accounts, where a trading account and a demat account are linked together to facilitate faster and more seamless trades. 

How does a trading and demat account facilitate a trade? 

Now, when you wish to purchase securities from an exchange, you would have to do it through a trading account. The purchased securities are then automatically credited to the demat account that’s linked with the trading account. And similarly, when you sell securities on an exchange through a trading account, they’re automatically debited from the demat account that’s linked with the trading account. This is how trading of securities is done electronically with the help of a demat and a trading account. 


So there you have it - the basics of trading and demat accounts. If you’re someone who wishes to invest in financial markets, consider opening a Motilal Oswal trading account. It is not only simple and easy to use but also allows you to place trades even when you’re on the move using your smartphone. So, head on over to the website of Motilal Oswal today and open a demat account in your name. The process shouldn’t take more than a few minutes to complete. 


Related Articles: Want to Open a Demat Account? Here's What You Should Know | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account


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