When you open a Demat account in India, there are certain guidelines that you need to followed as per the Securities and Exchange Board of India (SEBI). SEBI guidelines for Demat accounts in India are with respect to opening the account, as well as closing it. These SEBI guidelines for Demat account are as follows:
SEBI guidelines for Opening a Demat account
To make the process uniform while ensuring the smooth submission of the right information, certain documents have to be submitted. These documents are government issued and are as follows:
- Application form that is duly filled
- Proof of address
- PAN card
- Bank Statement to link to one’s bank account
As per SEBI guidelines for Demat account, one is required to submit all these documents to their broker or depository participant of their choosing. After one’s application is processed by verifying and authenticating these documents, a Demat account will be opened in one’s name.
It is possible to open more than one account in the same name with the same broker/DP or with a separate one. However, one has to fulfill all the KYC norms. This includes proof of identity and address proof, PAN and more, as stipulated by SEBI.
SEBI guidelines for Closing a Demat account
While there are no strict guidelines for closing a Demat account as per SEBI, some soft rules have to be followed for your depository participant to close your account. Here is the procedure for closing a Demat account in India.
- Fill out the necessary form required when you wish to close your account.
- Give out the necessary information like your DP’s ID, your Client ID, as well as any current information that should match your record.
- Give the reason behind closing your account. You need not have a strong reason for closing your account, as whatever reason you provide will serve as a form of feedback for your DP.
- As per the account details that are provided, any balance in your Demat account will be transferred.
- After a week to ten days your account will close. Ensure you are clearing all leftover dues before you choose to close your account, or your DP is required to keep your account operational.
General SEBI guidelines for Demat Account
The following guidelines are general recommendations by SEBI that apply to opening and running your Demat account in India. The goal with announcing these guidelines are to make the stock market a safer place. These guidelines need to constantly be updated and carefully monitored for any changes. SEBI continues to update the guidelines.
- All Demat account charges are predetermined so one can prevent stock brokers from overcharging.
- Verifying that you are the account holder is mandatory.
- It's compulsory as per SEBI guidelines for Demat account to link your PAN card to your Demat account as per KYC rules.
- To maintain your Demat account, no minimum amount is necessary.
- Annual charges need to be paid by the account holder as well as a percentage of your trading as mandatory brokerage charges.