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NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

Types of Demat Accounts and Account Holders

Updated 11 October 2026 · Fact-checked

A demat account holds securities in electronic form. A regular account has no holding limit on value. A Basic Services Demat Account (BSDA) is a low-cost option for small individual investors with one BSDA per person across depositories. Eligible holders include individuals, joint holders, HUFs, corporates, NRIs and minors through guardians.

Understand Types of Demat Accounts and Account Holders

A demat account is opened with a Depository Participant (DP) and holds securities in electronic form with a depository (NSDL or CDSL). Think of it as a bank account for securities. The account is in the name of one or more holders, and the holder is called the beneficial owner (BO).

The regular account is the standard account. It has no cap on the value of securities held and can hold any eligible security. Charges are set by the DP, within what SEBI and the depositories allow.

The Basic Services Demat Account (BSDA) was introduced by SEBI to give small investors a cheaper account. It carries lower or nil annual maintenance charges, with slabs based on the value of holdings. It is only for individuals. An individual can hold only one BSDA as sole or first holder across depositories, and must have no other demat account in his name as sole or first holder. A BSDA can be held singly or jointly. In a joint BSDA, the eligibility conditions apply to the first holder. Do not extend the rule to every joint holder. A BSDA has a cap on the value of securities held. If the value of holdings goes above the cap, the account is not closed. The DP may levy charges applicable to a regular account from the next billing cycle. Check the current cap and charge slabs in your latest NISM workbook, because SEBI has revised them over time.

By type of holder, accounts can be opened by individuals (single or joint), HUFs (through the Karta), corporates (companies, firms, trusts, societies, with board resolution and authorised signatories), NRIs and minors. A minor account is operated by a natural or court-appointed guardian, and the minor is the sole holder. A minor cannot be a joint holder. NRIs need to follow FEMA and RBI rules, and use the right account category such as repatriable or non-repatriable.

In the exam, questions test who can open which account, what the limits are, and which option is a trap. Learn the rules as a short list.

Key formulas to remember

BSDA eligibility
Individual only (single, or joint where the first holder meets the conditions); only one BSDA per individual as sole or first holder across depositories; no other demat account in his name as sole or first holder
Corporates, HUFs and other non-individuals cannot open a BSDA. A BSDA can be held jointly, but the eligibility conditions apply to the first holder. The rule is not extended to every joint holder. Confirm the exact wording in the latest workbook.
BSDA value cap and charges
If holdings exceed the BSDA cap, the DP may charge as for a regular account from the next billing cycle
The account is not closed. Check the current cap and charge slabs in the latest workbook. Do not rely on old figures.
Minor account
Minor = sole holder; operated by guardian; no joint holding with a minor as one of the holders
The guardian signs. On turning 18, the account is frozen for debits until the former minor submits fresh KYC and new account documents. After that, the account is changed to a normal individual account.
HUF account
Account in the name of the HUF, operated by the Karta
Account is in the HUF name, not in the Karta's personal name.
Holder categories
Individual (single/joint), HUF, corporate, NRI, minor, trust, FPI
Each category has its own documents and operating rules.

How to solve Types of Demat Accounts and Account Holders questions

Use this method for any question on types of accounts or holders.

  1. 1Identify the holder category in the question: individual, joint, HUF, corporate, NRI or minor.
  2. 2Decide whether the question is about account type (regular or BSDA) or about who may hold.
  3. 3For BSDA, test the conditions one by one: individual, one per person, no other demat as sole or first holder, within the value cap.
  4. 4For a minor, check that the account is sole name, with a guardian, and no joint holders.
  5. 5For HUF or corporate, check that the account is in the entity's name and who operates it (Karta or authorised signatories).
  6. 6For NRI, check the FEMA and RBI route and whether the account is repatriable or not.
  7. 7Remove options with absolute words that contradict a rule you know, then choose the best remaining option.

Quickest way: Eligibility checklist

When to use it: Use this when the question asks who can open a BSDA or which holder category is allowed.

  1. Say the word 'individual' first. If the applicant is not an individual, BSDA is out.
  2. Check count: only one BSDA per individual as sole or first holder across depositories.
  3. Check the other demat condition: no other demat account in his name as sole or first holder. For a joint BSDA, apply these tests to the first holder.
  4. Check value: above the cap means regular account treatment.
  5. For minors, remember sole holder plus guardian.

Common mistakes in Types of Demat Accounts and Account Holders

  • Thinking a HUF or company can open a BSDA.

    Students remember BSDA as a small investor product and assume any small entity qualifies.

    Fix: BSDA is for individuals only. Link BSDA with the word 'individual'.

  • Believing an investor can hold one BSDA with NSDL and another with CDSL.

    Students think the limit applies per depositary.

    Fix: The limit is one BSDA per individual across depositories.

  • Allowing a minor to be a joint holder.

    Students confuse the minor's account with family joint accounts.

    Fix: A minor account has the minor as the sole holder, operated by a guardian.

  • Opening a HUF account in the Karta's personal name.

    The Karta signs, so students think he is the holder.

    Fix: The HUF is the account holder. The Karta only operates it.

  • Using remembered BSDA cap and charge figures without checking the workbook.

    Old notes carry figures that SEBI has revised.

    Fix: Learn the current figures from the latest NISM workbook and mark them to revise.

  • Assuming all NRI accounts are the same.

    Students ignore the FEMA route.

    Fix: Separate repatriable and non-repatriable holdings, and follow RBI and FEMA rules.

Worked examples

Example 1

Mr. Rao has a regular demat account with a DP as sole holder. He wants to open a BSDA with another DP. Can he?

Show the solution
  1. BSDA is for individuals. Mr. Rao is an individual, so the first condition is met.
  2. A further condition is that the person must not hold any other demat account as first or sole holder.
  3. Mr. Rao already holds a regular demat account as sole holder.
  4. So he does not meet the condition for a fresh BSDA.

Answer: No. He is not eligible for a fresh BSDA while he holds another demat account as sole holder. Instead, he may ask his DP to convert his existing account to a BSDA, if it meets the BSDA conditions.

Example 2

Which of the following can open a demat account? (a) A minor jointly with his father (b) A minor as sole holder through a guardian (c) A HUF in the Karta's personal name (d) A company under a BSDA

Show the solution
  1. Option (a): a minor cannot be a joint holder, so it is wrong.
  2. Option (c): the HUF account must be in the HUF's name, so it is wrong.
  3. Option (d): BSDA is only for individuals, so it is wrong.
  4. Option (b): a minor can hold as sole holder, operated by a guardian.

Answer: Option (b).

Exam tips

  • Link BSDA to three words: individual, one, small. Most BSDA questions test one of these.
  • When an option says a minor can be a joint holder, reject it.
  • Check the latest workbook for the BSDA cap and charge slabs. Learn the numbers, because options often differ only by number.
  • Read for the word 'sole' or 'first' in BSDA questions. It decides eligibility.
  • Negative marking applies. If two options both look right, find the one that fits the exact rule.

Practice questions from Functions of Depository Participant - Account Opening

Types of Demat Accounts and Account Holders: frequently asked questions

What is the difference between a regular demat account and a BSDA?

A regular account has no cap on holding value and standard charges. A BSDA is for small individual investors, has lower charges, and is limited by a value cap. If holdings cross the cap, the account is not closed, but the DP may charge as for a regular account from the next billing cycle.

Can a minor open a demat account?

Yes, through a guardian. The minor is the sole holder and cannot hold jointly with others. The guardian operates the account until the minor turns 18. After that, the account is frozen for debits until the new major completes fresh KYC and submits new account documents. Then it becomes a normal individual account.

Can a HUF open a demat account?

Yes. The account is in the HUF's name and the Karta operates it. A HUF cannot open a BSDA, since BSDA is only for individuals.

Can an NRI open a demat account in India?

Yes, subject to FEMA and RBI rules. The account must follow the right route, such as repatriable or non-repatriable, and the DP will ask for the relevant documents.