As is the case with almost every process in the twenty-first century, demat account opening can be completed online without any paperwork or hassle.
All you need to do is select a credible depository participant, a suitable demat account offering, and submit the online demat account opening form along with the required Know Your Customer documents. In this article, we shall delve into the KYC norms for demat accounts in India.
What is the Know Your Customer process
Know Your Customer or KYC is a mandatory process followed by banks and financial institutions, amongst others, to verify the identity and other pertinent details of a prospective customer.
In addition to the verification of identity, the income and address of a customer is verified. This process is completed at the onset of a banking or financial relationship and repeated periodically. KYC norms are also adhered to for demat account opening in India.
Kyc Norms For Demat Accounts In India
As a part of the demat account opening process, SEBI-registered stock brokers must complete the process of Know Your Customer. This includes obtaining a proof of identity, proof of address, Permanent Account Number (PAN), proof of income, and latest passport size photographs from a demat and trading account applicant.
While all the aforementioned documents serve as important elements of the demat account opening KYC process, PAN serves as the unique identifier for a depository participant or stock broker. You can open multiple demat accounts in India but not more than one account with one DP or broker.
As a part of the KYC norms, a demat account opening form has the following six major KYC elements:
- Name
- Address
- Permanent Account Number
- Email address
- Mobile number
- Income range
While submitting your online demat account opening form, you are required to upload digital copies of a valid identity proof, address proof, income proof (bank account statements or Income Tax Return), PAN card, and passport size photographs.
After submitting the form and the aforementioned documents, you must complete In-person Verification via a video call. This step is mandatory for verification of your identity. During this step, the original documents are also verified by the selected DP or broker.
Should you prefer completing the KYC process offline, you can obtain the required steps from the DP or broker. This mode of KYC would require you to visit the designated office of the DP or broker and submit the required documents in person.
In addition to completing the KYC process for demat account opening, you must carefully peruse the demat account charges schedule. It is pivotal to be informed about the various types of charges associated with your demat account.
Importance Of Kyc For Demat Account Opening
Since demat account opening has become digital, the possibility of online fraud has also increased. It is, therefore, critical for DPs and stock brokers to verify the authenticity of a demat account applicant’s identity, income, PAN, and address before entering into a business association with them. Through stringent KYC measures, the interests of the demat account applicant and the DP or broker can be safeguarded.
To Sum it Up
We hope this guide on KYC norms for demat accounts is helpful to you. Before opening your demat account, you must select a credible DP and choose a demat account type with the required features.
Furthermore, it is critical to check the demat account charges and their payment schedule. It is advisable to keep the necessary KYC documents handy while filling your demat account opening form.
Frequently Asked Questions
Q1: What is KYC in the context of a Demat account?
A: KYC, or Know Your Customer, is a regulatory process where financial institutions verify the identity of their clients before opening a Demat account. It ensures that the account holder’s personal details are valid and helps prevent fraud or illegal activities.
Q2: What documents are required for KYC to open a Demat account?
A: Typically, the documents required for KYC include:
- Proof of Identity (Aadhaar card, PAN card, Passport, etc.)
- Proof of Address (Utility bill, Voter ID, Driving License)
- Recent Passport-sized photograph
- PAN card (mandatory for all investors)
- Bank account details (cancelled cheque or bank statement)
Q3: Is PAN mandatory for opening a Demat account?
A: Yes, providing a PAN card is mandatory to open a Demat account in India. It is required as proof of identity for financial transactions, including trading and investments.
Q4: Can I complete the KYC process online?
A: Yes, many stockbrokers and financial institutions offer the option of completing KYC online through e-KYC. It requires digital verification of your documents via Aadhaar-based OTP authentication.
Q5: How long does it take to complete the KYC process?
A: The KYC process can take anywhere from a few hours to a few days, depending on whether you choose online or offline verification. Online e-KYC is usually faster and more convenient.