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Business News/ Markets / Stock Markets/  Want to open a demat account? Here's a list of documents you are required to submit
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Want to open a demat account? Here's a list of documents you are required to submit

It's crucial to gather all the necessary documents beforehand to ensure a smooth application process. Let's take a look at the key documents required to open a demat account.

Key documents required to open a demat account. (MINT_PRINT)Premium
Key documents required to open a demat account. (MINT_PRINT)

Opening a demat account is essential for anyone seeking to engage in the Indian stock market. This virtual account securely holds various assets such as shares, bonds, etc. in electronic form, streamlining the process of trading. With quick settlement times, it has significantly contributed to the growth of online share trading in India.

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The mechanism is straightforward: whenever you sell shares, your demat account is debited, and conversely, when you purchase shares, your demat account is credited. These accounts are managed by two central depositories in India: the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL).

To open a demat account, you can go through a depository participant, who acts as a bridge between you and the depository. The process is known for its simplicity, seamlessness, and speed. Many platforms offer the option to open a demat account online free of charge, making it convenient to kickstart your investment journey. However, it's crucial to gather all the necessary documents beforehand to ensure a smooth application process.

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Read here: How can one open a demat account? Here are 4 simple steps to follow

Let's take a look at the key documents required to open a demat account:

- Valid proof of identification (PAN card is mandatory)

- Valid proof of address

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- Valid proof of income

- Valid proof of bank account

- Recent passport-sized photographs

- Signature on White Paper

List of documents admissible as proof of identity

- Permanent Account Number (PAN) Card

- Valid government-issued Aadhaar Card

- Valid Driving License

- Voter Identification Card

- Passport

Read here: Can investors hold multiple demat accounts in India? MintGenie answers

List of documents admissible as proof of address

- Passport

- Aadhaar Card

- Driving License

- Voter Identity Card

- Ration Card

- Lease agreement or registry of your house

- Insurance policy issued in your name (comprising your address)

- Electricity bills, gas bills, or landline bills (for a period not earlier than the preceding three months)

- Last three months' bank account statement or passbook

Read here: Why do I need a demat account for stock trading?

List of documents admissible as proof of income

- Recent Salary Slips

- Form 16

- Bank account statement of the past six months, comprising income details

- Income Tax Return acknowledgement form (copy)

- Net worth certificate issued and authenticated by a Chartered Accountant

While providing your PAN card details is a prerequisite for opening a demat account, certain entities are exempt from this requirement. These include:

- Residents of Sikkim.

- Transactions executed for court-appointed officers.

- Transactions carried out for the Government of India or any state government.

- United Nations entities that are not obligated to file taxes in India.

- Multilateral agencies exempted from tax filing in India.

For these exempt categories, the PAN card details are not mandatory during the demat account opening process.

Read here: What is a demat account and how does it work?

FAQs

Can multiple demat accounts be opened?

Yes. An investor can open more than one account in the same name with the same DP and also with different DPs. For all the accounts, the investor has to strictly comply with KYC norms including Proof of Identity, and Proof of Address requirements as stipulated by SEBI and also provide a PAN number. The investor has to show the original PAN card at the time of opening of demat account.

Can I transfer funds from one demat account to another demat account?

No, you cannot directly transfer funds from one demat account to another. Each demat account is linked to a specific bank, so any withdrawals or deposits must occur through that associated bank.

Can someone else operate my demat account on behalf of me on the basis of a power of attorney?

Yes. If the investor authorises any person to operate the account by executing a power of attorney and submitting it to the DP, that person can operate the account on behalf of the BO.

Read here: Demat account offers more than just facilitating buying, selling of shares. Here are 5 main benefits

Is it compulsory for every investor to open a demat account to trade in the capital market?

Yes. As per the available statistics at BSE and NSE, 99.9% of transactions take place in dematerialised mode only. Therefore, in view of the convenience of trading in dematerialised mode, it is advisable to have a beneficial owner (BO) account for trading at the exchanges.

Can any information submitted at the time of opening a demat account be modified at a later date?

Yes. Except for the type of account, all other information, such as the name of the account holder, address, bank details, date of birth, etc. can be changed.

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Published: 05 Mar 2024, 04:09 PM IST
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