A Demat account or dematerialized account is every investor and trader's gateway into India's dynamic stock market. To open this account, however, investors need to meet certain eligibility criteria set by NSDL and CDSL.
NSDL and CDSL are the 2 main depositories responsible for managing and operating the Demat account in India. Before you apply to open a new Demat account, it's important to check your eligibility and set requirements.
Eligibility Criteria for Opening a Demat Account
Investors can open a demat account by filling out a KYC form, producing a PAN card, and supplying proof of identification and residence. Before submitting an application, you must meet these criteria:
- Age
Everyone above 18 years of age is eligible to apply for a Demat account. However, contrary to popular perception, you can still open a Demat account if you are under the age of 18. If you are a minor, your mother or father can open a demat account within your name. Your parents or guardians will manage a Demat account till you reach adulthood and complete KYC.
- PAN and KYC Information
To open a Demat account in India, you must possess and present your PAN card. You must also complete the digitized Aadhaar-based KYC method. In KYC or Know Your Customer, you affirm your identification, address, and income by means of presenting important documents.
Who in India Can Open a Demat Account?
In India, several categories of individuals and entities are eligible to open a Demat account, subject to meeting certain criteria set by the Depository Participants (DPs) and regulatory bodies like the Securities and Exchange Board of India (SEBI).
- Resident Indians: Any Indian citizen who is a resident of the country can open a Demat account by submitting the required documents. These documents include a PAN card, Aadhaar card, passport, or other valid identity and address proofs.
- Non-Resident Indians (NRIs): NRIs are eligible to open a Demat account in India, provided they have a valid Indian address proof. They need to submit additional documents like a copy of their passport and proof of their overseas address.
- Foreign Nationals (NRE): Foreign nationals with valid Indian address proof can also open a Demat account in India. They may need to provide additional documents like a copy of their passport, visa, and address proof overseas.
- Hindu Undivided Families (HUFs): HUFs, which are a unique form of joint family ownership recognized in India, can open a Demat account. The Karta (head) of the HUF acts as the authorized signatory for the account.
- Companies: Both domestic and foreign companies can open a Demat account in India. They need to submit documents like the company's incorporation certificate, Memorandum and Articles of Association, board resolution, and authorized signatory details.
- Trusts and Societies: Trusts and societies registered in India are eligible to open a Demat account. They need to provide documents like the trust deed, registration certificate, and authorized signatory details.
- Partnership Firms and Limited Liability Partnerships (LLPs): Partnership firms and LLPs registered in India can open a Demat account by submitting documents like the partnership deed, registration certificate, and authorized signatory details.
Required Documents for Demat Account Opening
You must submit the following documents when opening a Demat account in India:
- Identity Proof: A PAN card, Aadhaar card, passport, voter ID card or driving licence can all be used as identity proof by an individual.
- Address Proof: Address evidence can be any of the following: an Aadhaar card, a passport, utility bills (water, electricity, or landline), bank statements, or a rental agreement.
- Photographs: Current, passport-sized photos of the applicant or applicants and the designated signatures are needed.
- Proof of Income: Applicants for some DPs could be required to provide income documentation such as bank statements, income tax returns, or salary slips.
- Bank Proof: Usually needed is a canceled cheque or bank statement displaying the applicant's bank account information.
- Demat Account Opening Form: The DP will offer the applicant a Demat account opening form to complete and sign.
Conclusion
As long as you satisfy the requirements imposed by regulatory bodies and DPs, you can open a Demat account. Online Demat account opening is both seamless and swift. After following and completing eKYC, you will receive your credentials via email.
