Understanding Demat Accounts: From Minor Accounts To Nsdl Vs Cdsl Explained

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Bored of paying high maintenance fees for your Demat account? Well, you can open a Basic Service Demat Account (BSDA) that does not charge an AMC if the value of your holdings is below INR 4 lakh. There are various options beyond the regular Demat account, depending on your country of residence and investment needs.
This blog provides you with knowledge of the different types of Demat accounts you can open in India.
What are the Different Types of Demat Accounts?
Currently, you can open four different types of Demat accounts in India. Here are the details of these four different types of Demat accounts:
 

Regular Demat Account

 
This is a common type of Demat account available for people who reside in India. You can hold unlimited securities, including bonds, stocks, derivatives, and mutual funds, using a regular Demat account. These Demat accounts are offered by depositories like the National Securities Depository Limited (NSDL) and Central Depository ...
... Services Limited (CDSL). You have to pay an annual maintenance fee (AMC) each year to the broker or depository participant (DP).
 

Basic Service Demat Account

 
The BSDA is the basic version of a regular Demat account. This type of Demat account is primarily used by infrequent investors. You do not have to pay AMC if the value of your holdings is below INR 4 lakh.
However, if the value of your holdings is between INR 4 lakh and INR 10 lakh, you have to pay only INR 100 as AMC. The limitation of BSDA is that you cannot open more than one BSDA with your PAN.
 

Repatriable Demat Account

 
A repatriable Demat account is offered to the Non-Residents of India (NRI) to transfer their earned money abroad. NRIs having a Non-Resident External (NRE) bank account can open this type of Demat account. However, it is important to note that one can repatriate a maximum of USD 1 million per year with this Demat account.
 

Non-Repatriable Demat Account

 
This type of Demat account is also for NRIs but comes with some restrictions. A non-repatriable Demat account needs a Non-Resident Ordinary (NRO) bank account. With this Demat account, NRIs cannot transfer their proceeds of sale to their country of origin. However, they can move the funds to other domestic Demat accounts within India.
 

Minor Demat Account

 
Although it is not a type of Demat account, a minor Demat account allows legal parents to trade in the Indian stock market on behalf of their children. The parents can manage the Demat account until the minor turns 18. Then the account will be transferred to the minor’s name. With this account, parents can invest in mutual funds, stocks, and other securities.
Opening a minor Demat account introduces children to the stock market, which makes them aware of their savings and focus on long-term investment planning.
How Do NSDL and CDSL Function?
You must wonder if the buying and selling of shares are conducted with the use of a Demat account, then what is the function of CDSL and NSDL? Depositories like NSDL and CDSL hold your securities through your Demat account. They perform when companies have to provide dividends to the investors or shareholders.
Key Differences Between NSDL and CDSL
Both the NSDL and CDSL come with features like dematerialisation and rematerialisation of physical securities, electronic securities transfer from one Demat account to another, and electronic pledging. However, the differences between NSDL and CDSL are quite evident, and they are as follows: 

Parameters

NSDL

CDSL

Size

As of February 2024, NSDL holds more than 3.5 crore Demat accounts in India. 

As of May 2024, CDSL holds more than 11.56 crore  Demat accounts in India.

Market share

NSDL has a higher market share due to its early establishment.

Lower market share compared to NSDL.

Major shareholders

Major shareholders of NSDL are the NSE, IDBI Bank, HDFC Bank, State Bank of India (SBI), and Unit Trust of India.

BSE, SBI, Bank of India, Bank of Baroda, Life Insurance Corporation of India, and Union Bank of India are the major shareholders of CDSL.

Operating markets

The functioning market is the NSE.

The functioning market is the BSE.

Format of Demat account number

NSDL provides a 14-character code that starts with ‘IN’.

CDSL provides a 16-digit code.

Final Words
While using a Demat account in India, you need to know about the different types of Demat accounts, minor Demat accounts, and the key differences between NSDL and CDSL. Understanding these crucial concepts not only expands your knowledge of stock market investments but also introduces your children to the stock market.