What are the Documents Required to Open a DEMAT Account Online?

Demat accounts hold financial instruments and stocks in electronic format. These accounts eliminate damage, thefts, and other risks associated with the storage of physical securities. Also, they provide convenience while trading online and SEBI has made it mandatory to open a demat account to invest in most financial instruments. 

Accessing and analyzing the investment portfolio becomes easier through a demat account. Also, as it is an essential component of online trading, it facilitates faster processing of transactions like selling, buying, and transferring securities. Due to these features and benefits, open a demat account online has become a necessity for those who want to invest in money market instruments. 

Which details are cross-checked while opening a demat account?

Personal details like your name, address, etc. are verified by a DP (Depository Participant) with whom you open a demat account online. To verify these details, they ask for documents such as Pan Card, Aadhaar Card, Passport, Ration Card, or any other ID card approved by the government departments or public institutions.

The details pertaining to your income can be verified by providing the latest salary slips and bank account statements. The DPs also need to verify your bank details for which they may ask for a cancelled cheque or copy of your passbook. After submitting these documents, the application to open a demat account will be processed quickly. 

Why is submitting a PAN card copy mandatory while opening a demat account? What are the exceptions to this rule?

Investing in the Indian stock market is easier once you open a demat account and trading account. You can open a demat cum trading account from the same DP. However, submitting a copy of your PAN card is mandatory as it can be used to track all your financial activities. 

It is also compulsory for PIOs (Person of Indian Origin) and NRIs (Non-Resident Indians) to submit a PAN card while opening a demat account online. However, certain individuals and entities can open a demat account without a PAN Card under these conditions:

• UN agencies and some other bodies who get tax exemption can open an online demat account without producing a PAN Card copy. Their status needs to be verified by the DP through some other means. Residents of Sikkim who are exempted from paying taxes can also open a demat account without submitting a copy of their PAN Card. 
• People belonging to the tribal regions of Mizoram, Arunachal Pradesh, Manipur, Nagaland, and specific regions of Assam’s North Cachar Hills can open a demat account without submitting a PAN Card. However, the value of their investments cannot exceed Rs. 50,000. The DP must verify their identity and address through other documents. 
• SEBI registered entities under Section 12 of the SEBI Act, 1992 can also open a demat account without a PAN card. However, their accounts can be frozen upon failure to submit a PAN card after 30 days of opening the account. 

FAQs

1. How to open a demat account for a minor?

To open a demat account for a minor, the parent or legal guardian has to submit the documents that verify the age, identity, and address of the minor applicant. Once these documents are submitted, the DP will verify the same and create a demat account for the minor. 

2. How to change address in a demat account?

To change the address in a demat account, you need to download the account modification application and print it out. After that, all the required details need to be filled-up accurately and documents like identity proof, new address proof, etc. need to be submitted along with the application form. 

3. Which entities are involved in the opening of a demat account?

The following entities are involved in the demat account opening process:

• The two major depositories in India i.e. CDSL (Central Depository Securities Limited) and NSDL (National Securities Depository Limited) 
• DP, bank, brokerage firm, or any other financial institution that offers the demat services 
• The clearing departments like NSCCL (National Securities Clearing Corporation Limited) and ICCL (Indian Clearing Corporation Limited) that handle the credits and debits of shares on behalf of NSE (National Stock Exchange and BSE (Bombay Stock Exchange) respectively