Demat accounts are on the rise in India, especially after the recent highs of the stock market. Somehow, the following lows don’t matter to most investors who see the stock markets in India as powerful forces to propel them to fruitful investment and good returns. If you are savvy enough to invest in India’s stock markets, you should also be clever enough to follow some rules and regulations, or your Demat account, an account which is most essential for any investor of stocks and other securities, may be suspended.
Demat account opening is the initial step you need to take when you wish to involve yourself in the investment of stocks and other securities that are held in this account. A Demat account is an account that holds your securities, whether stocks, commodities, mutual funds, etc, or any other in electronic/digital form. It is often linked to a trading account so you can buy and sell shares smoothly. To open a Demat account in India, it is vital that you submit certain details in order to open the account and maintain it. Demat account information needs to be updated periodically as information and details of account holders may change. In a new rule by the National Securities Depository Limited (NSDL), all depository participants (DPs) have to request their customers to update Demat accounts with their latest and most recent information, or accounts may be suspended.
A depository participant or DP is a bank or broker that you open your Demat account with. During the Demat account opening process, you need to submit mandatory KYC or Know Your Customer details, such as your valid proof of age, address and identity. These documents are verified and transmitted into electronic systems where they are stored pertaining to your Demat account. To open a Demat account, such documentation may be physically verified by your DP, and you can upload them online too, if your account opening procedure is done online. In a recent circular, it was stated that all KYC information regarding each Demat account in India should be recent and up-to-date. If it is found that the information is not current, Demat accounts would be deactivated by April 2022.
When you open a Demat account, you have to provide your DP with important information that is relevant to your account and financial record. This information is contained in documents like your PAN Card and Aadhaar Card. Nonetheless, there are 6 important KYC details that should always be recent and updated:
The requirement of mandatory information is a necessity to maintain security and safeguard Demat and trading accounts from any fraudulent activity. Prior to June 2021, such KYC attributes were not compulsory, and many instances of fraudulent practices took place with accounts. In order to keep accounts safeguarded, KYC information is a must. When you open a Demat account with Motilal Oswal, you must provide your latest KYC information, or you will not be able to trade or hold securities in a Demat account.
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