The Securities and Exchange Board of India, or SEBI, has allowed current Demat account and trading account holders an extension to update KYC (Know Your Customer) documents. According to a circular issued by SEBI, to open and maintain a Demat account in India, investors must submit six attributes that comprise KYC information. This information may constantly change and to keep information recent, customers must keep information updated.
The Indian stock markets have seen a flurry of trade and investment in the past few years. The momentum has abated, but the rise in the opening of Demat accounts just tells us that more and more people are looking in the direction of the share markets to invest. However, if you have opened a Demat account or are about to open a Demat account online, you will know that you have to provide some documents for authentication and verification of yourself. These are called KYC documentation, and it is mandatory to provide if you wish to have a Demat account. The information provided in your KYC documentation has to be updated at regular intervals, according to SEBI regulations. In case your details are not updated on time, your Demat account stands to be deactivated, and any linked trading account shut.
SEBI has extended the deadlines it had previously set for making Demat accounts KYC compliant. Besides updating information, some Demat accounts are not KYC compliant, and this is against the regulations of SEBI. In a move to encourage investors to keep Demat accounts active, SEBI has given investors an extension in the deadline to make their Demat accounts KYC compliant by 30 June, 2022. KYC documents are necessary to provide security to current Demat accounts and SEBI wishes to encourage more people to invest in securities by this lenient extension.
With stock investors still riding high from previously experienced gains in the stock market, the demand for investment in shares is only growing. The circular by SEBI has prompted many current investors to update their KYC information or make it compliant to prevent account suspension, consequently curtailing any trading activity. In the present day, if you open a Demat account, you have to have your KYC documentation in order first. Therefore, if the deadlines for present Demat account holders had not been pushed back, accounts would be shut and trading would cease. This would have adverse implications for activity in share markets, and on the economy overall.
If you wish to open a Demat account online or offline, in order to trade and invest in the stock market, you have to submit your relevant KYC documents to your DP (depository participant) which may be your bank or brokerage. The following KYC details must be compulsorily updated in your Demat account:
These details were made officially mandatory from June 2021, and SEBI officials acknowledge that this recent extension will be the very last, despite potential harsh outcomes.
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