It is necessary to understand what a Demat account is before going into the types of Demat accounts and what type of account is beneficial for a particular person. A Demat account, also known as a Dematerialized account, keeps track of how many shares and securities an investor has – it can be described as a necessary account to hold financial security in the digital format.
In this article, you will find out the basics, i.e. why it is important to open a Demat account, the steps to open one, what is a repatriable Demat account, its features and what is AMC in a Demat account. Let’s first understand why it is essential to open a Demat account.
Why is it essential to open a free Demat account? The answer to this is quite simple. Let us take a look at the importance of opening a Demat account.
- It is a digitally secure way of holding shares and financial securities.
- It eliminates the chances of physical theft, robbery, or damage to official documents or certificates.
- It helps ensure the quick transfer of shares.
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How to Open a Demat Account?
If you are wondering how to open a Demat account, there are some simple and easy steps.
Step 1: The individual needs to fill out a form to open a Demat account with the authorities.
Step 2: Details of important documents, like the PAN card, must be shared with the bank. Accurate details of the PAN card and bank must be entered to carry out transactions.
Step 3: Online verification of KYC details is a must for the third and final step.
Repatriable Demat Account
A repatriable Demat account is used by Non-Resident Indians (NRIs). With this account, an NRI can invest in the Indian stock market from anywhere in the world. It allows immediate transactions from foreign places, which are immediately reflected on the Demat account. Those who wish to hold a repatriable Demat account need to be first associated with an NRE bank account.
An NRI repatriable account is like any other Demat account with the sub-status of “NRI Repatriable”. The major difference between repatriable and non-repatriable Demat accounts is that the former allows the transfer of proceeds abroad.
- An NRI Demat account will be linked with an NRO bank account only.
- At one time, only 1 million dollars can be transferred to the account.
- NRIs have to open two accounts, repatriable and non-repatriable, for each kind of investment.
Documents Necessary to Open an NRI Repatriable Demat Account
- Identity proof
- Address proof
- Income proof
- Bank details
- Copy of Visa
- FEMA declaration
What is AMC in a Demat account?
AMC or Account Maintenance Charge is the charge that is required to maintain the Demat account. It is required to keep the account active. It is not a voluntary charge and is, in fact, imperative for the individual to pay if they wish to keep the Demat account active.
Some brokers in India also offer free AMC Demat account. Customers are not required to pay a yearly fee to keep the account active. Some conditions may be applied for a one-time fee. A free AMC Demat account typically does not require any fee or charges.
Repatriable accounts are available in all banks, and one can get more details and information from the broker. However, the repatriation of the funds depends on the rules of the two banks and the rules of the government of both countries.
To sum up, a Demat account helps hold financial securities in a digital market, and a repatriable Demat account allows NRIs to be a part of the ever-growing and diversifying Indian stock market.