Month: January 2022

Every investor and trader must know the list of charges levied on their investments and transactions. One of them is depository participant charges or DP charges. Most of the traders, especially new ones, are oblivious to these charges. Some were mindful of them but not sure of why and how much they are levied per transaction or sale made on the investment. Well, don’t worry, this article aims to cover everything you need to know about depository participant charges or DP charges. Now without any further ado, let’s jump into the concept and further details.

What are Depository and Depository Participants?

A depository is a reflection of a banking organization or an institution. It holds securities or shares or bonds or any underlying asset bought and sold online or offline by the traders in the stock market via a depository participant. The depository offers similar services to that of a bank. They store all the trades made by the investor/trader in an electronic format, making it easier to monitor or track all the trade events and monetary balances online. In India, National Securities Depository Ltd (NSDL) and the Central Depository Services India Ltd (CDSL) are the two main national depositories acting as regulatory authorities for all the depository participants. The aforementioned two bodies oversee all the activities and trades made by traders via depository participants. 

Shares bought and sold by traders through the depository participants are held by  CDSL and NSDL. Depository participants or stockbroking companies/organizations/institutions/firms are agents or intermediaries acting as a connecting bridge between traders and depositories. All the depository participants are registered under CDSL or NSDL or both. Materialization and dematerialization of shares/securities, opening demat accounts for investors, transferring shares from one demat to another demat account, settling transactions of all the trades, acting as a clearinghouse, pledging, and pledging of securities, are a few trading and financial services offered by the depository participants.

What Are DP Charges?

DP charges or depository participant charges are the charges levied in return for the services offered by them to the traders/investors. Just like commercial banks levy minimal charges for the services they offer to the customers on a monthly basis, the DP also does the same for delivering their services. The depository participant charges or DP charges have no relation to the annual maintenance charges (AMC) or brokerage charges. Simply put, it’s a nominal transaction fee levied by depository participants/stockbroking firms on the sale of shares/securities through/by using your demat account. 

Who Levies DP Charges and Why?

Depository participants and depositories levy DP charges for the services they offer to the traders or investors. The DP charges remain flat irrespective of whatever holdings the trader has sold by using their demat account. The depository participant or DP or stockbroker acts as an intermediary between traders and depositories (CDSL and NSDL). For example, Tradesmart Online will be your depository participant when you choose to open or maintain your demat account with them. However, the DP charges differ from one depository/depository participant to another.

Now, these charges are levied by depository participants because, as stockbroking firms, they have to pay membership charges for operating under one of the two depositories – CDSL or NSDL. The DP or depository participants also incur fixed costs and other expenses for maintenance and smooth running of the firm. So, the depository participants recover their share of costs from the traders in the form of DP charges (depository charges and broker charges).  

How Much DP Charges Are Levied By A Depository Participant?

It’s obligatory on the part of the traders to pay the DP charges levied by the depository participants. These charges are collected on the sale of your shares made through the demat account. The  Central Depository Services India Limited levies DP charges of Rs 13 + Rs 5.50, per day/per company. The National Securities Depository Limited levies DP charges of Rs 13 + Rs 4.50, per day/per company. 

For your better understanding, here’s an example for you. Raju wants to sell Reliance shares in the market/exchange. He also has his demat account linked to Tradesmart Online. Now, if Raju’s account is opened with CDSL, then he’s liable to pay a sum of Rs. 13+5.50 to sell one Reliance share on that particular day.  If Raju’s account is opened with NSDL, then he’s liable to pay a sum of Rs. 13+4.50 to sell one Reliance share on that particular day.

Until and unless stockbroking firms become depository participants, they cannot offer or levy any charges from the traders. Once the customer is onboarded as a trader with Trade Smart Online, he/she has to shell out multiple charges other than DP charges. It includes demat account opening fee, commission, brokerage fee, and many other expenses. So, here are the charges for the demat account.

S.No	Particulars	Charges
1	Account Opening Charges	Free*
2	Dematerialisation charges	Rs 500 per certificate
3	Demat transaction charges	Rs 15 + Service tax
4	Off Market transfer (DP)	Rs 25 + Service tax
5	Inter DP transfer	Rs 25 + Service tax
6	Trade on phone	Rs 20 + per executed order plus service tax
7	Physical contract note / other statements etc	Rs 20 per contract note + courier charges
8	Demat AMC	Rs 300 + Service tax
9	Cheque dishonour charges	Rs 200 per instance
10	NEST Instant fund transfer charge	Rs 8 + service tax
11	Third party fund transfer charges
	For refund in 2 working days	Rs 400
	For refund in 15 working days	Rs 200

Bottom Line

If you have a demat account and using it successfully, then you are obliged to pay the DP charges for using the broker’s services. Regardless of the sales, the DP charges remain the same. They depend on the number of securities/shares sold by the trader in the stock market. At any cost, the trader cannot eschew paying the DP charges to the depository participant. Moreover, there are other charges related to trading like annual maintenance charges, brokerage charges, and other fixed charges. It’s important that every trader must and should know the list of charges before dealing with the trading and demat account services. However, some charges differ from one stockbroker to another.

In India, demat accounts are on a rising swerve for electronic investments, especially within the young adult populace. And why not?!, they definitely are a great way to have enhanced electronic financial assets. India today holds almost 4 crore demat accounts, however, on the other hand, more than 75% of those demat are dormant.

Inactive demat accounts are not a wise holding, given that the accumulated incurred charges end up with you losing money instead of benefitting from it. Alongside the financial drain, the account might end up turning out to be a liability. In case of inactivity, or you have more accounts than needed which are not required anymore, the smart thing to do would be to close the unused accounts.

Why close dormant accounts?

While demat accounts are responsible for safeguarding the securities, there have been instances about illegal diversion of securities by fraudsters in the past. If you keep the demat account dormant, they become targets to get hacked by fraudsters. A demat account is considered dormant if there is no trading activity observed for a period of 12 months as stated by the National Stock Exchange (NSE) in its circular dated 10th February, 2020.

Before closing a demat account, there are certain points that you should know before initiating the process. For example, an in-person verification is mandatory, for both opening and closing a demat account, it is not acceptable to just do it online or via a phone call or an email. However, you can initiate the closure process online, making the process easier and quicker using your DP’s demat account closure form. 

Here is a consolidated list of all the necessary steps to be taken to close a demat account for your convenience:

1. Check there are no pending shares, overdue charges, or penalties in the account. In case there are active shares or balances, consolidate them into one account, and then close the demat account.
2. Download the Account closure form online from the TradeSmart website.
3. Fill in the details of the account holders, along with your ID and the DP ID,
4. Signature of one/all account holders is mandatory on the closure form (POA holder’s signature is not valid for account closure)
5. Align the KYC details with the account records – Name and address details must match the details you provided in the account closure form and the records with the Depository
6. Specify valid reason to close the demat account (voluntary closing of account or due to death of account holder or other unavoidable reasons)
7. Ensure that a bank official submits and verifies the self-attested identity proof copy. This step is compulsory.
8. Any unused DIS (delivery instruction slip) booklet must be returned to the DP.
9. Hard copy submission of all paperwork and id proofs at the nearest DP’s office or by mail to the concerned office DP office (for verification of all self-attested identity proofs)

In case of the account holder’s sudden demise, the following needs to be done:

• If specified, the nominee will need to present ID proof, then they will receive the securities or shareholdings that are in the demat account, once transferred, the account will be closed.
• In the case there is no nominee indicated, the legal heir of the deceased individual must request transfer of the account ownership to their name, or get the shares transferred to a demat account in their name.

If there are pending shareholdings prior to an account closure, the following steps need to be done:

• Within the two national depositories NSDL and CDSL, in case of an intra depository transfer, an Intra Delivery Instruction Slip(DIS) needs to be presented, in addition to the selection of the off-market transfer option.
• Then the original Client Master List from the account with the details must be obtained,
• Next in the form, fill in the relevant details of the shares to be transferred along with their ISIN’s. Ensure that the details match.
• Post this, the documents must be submitted in person or be mailed at the DP office,
• After that for closure, it is mandatory for an official to verify the closure form, post self-attestation, before the whole process is finalised.

Once all the paperwork and formalities have been completed, it takes about 7 to 10 workings to close the account. There are no charges for account closing with any DP in India. 

How to Close A Demat Account

Demat account is the doorway to trading in stock market/stock exchanges. Every trader who wants to buy or sell shares in the stock market has to create or open a demat account. Now, here comes the bigger problem at hand – to select the best depository participant. If opening a demat account is one thing, searching for the right depository participant is another thing. 

When you start your quest for the best DP to open your new demat account, it’s pivotal to analyze everything related to the DP. Starting from features to a spectacle of services they offer to the bunch of charges they levy on selling shares via your demat account, and many other details – you have to delve into everything concerning the depository participant. 

To receive an amazing trading experience, not only do you have to look into all the aforementioned aspects, but also, finding the right depository participant and opening the best demat account is concomitantly necessary. If you feel that it’s easy to find a depository participant that ticks all your checkboxes, then you must have been mistaken. Until and unless you know inside-out about trading and demat account, figuring out the best DP out of the lot wouldn’t be a walk in the park.

There are no limitations and restrictions concerning opening multiple demat accounts as well. Generally, when you connect with a depository participant or a stockbroking firm, they open both trading account and demat account together. So, this shouldn’t be an issue that you must focus on. You can open as many demat accounts as you want, but ensure that you open new accounts with different depository participants. Because there’s a principle or rule that a trader or an investor cannot create multiple demat accounts with the same depository participant.  

You must be curiously thinking about what depository participant has anything to do with the demat account, and vice-versa. But there’s so much you should learn and know about the depository participant (DP) and demat account opening with the DP.

 

Here are the key pointers that’ll help you to choose the best demat account:

1. Create Your Trading and Demat Account With The Same DP
   

   The easiest enroute to open a demat account is by creating it with the same depository participant where you have opened your trading account. Both the accounts are opened by the DP to simplify the account creation procedure. If you create your demat and trading account with the same DP, it’ll not only help you to trade efficiently but also allow you to monitor the trades on a single screen. In addition to that, it abridges the process by going online. When it comes to offline, the trader has to send a self-attested debit instruction slip (DIS) to make a sale happen. This is not the case with online trading. The DP promptly transfers your shares to your demat account after the sale of your shares in the stock market. 

2. Check The Demat Account Accesibilty Through Your DP
   

   This is another important check that every trader or investor may do. Depository participants or stockbroking firms allow you to have access to both your trading and demat accounts via the same online website. But sometimes, a few depository participants or stockbroking firms don’t have this feature. So, whenever you want to check your demat account, you have to sign in with your login details shared by your service provider. It’s a bit troublesome to do that every time. In the future, if you ever plan to open a new demat account with any DP, do verify this aspect with them. 

3. Check The Service History Of The DP
   

   Another way to know the credibility and popularity of any depository participant is through the online reviews written by multiple users and traders who used or are using this platform. Reading those reviews gives you a gist of what kind of platform that DP is providing, the kinds of features available with them, charges levied by them, pledging of shares, their responsiveness towards online queries, dematerialization, rematerialization, and the way they are running their operations. If you feel any off-vibe about a particular DP, you can simply quit looking further and go for searching a better DP by following the same steps we have shared. 

4. Check and Compare The Charges Levied By The DP With Other Depository Participants
   

   If you are a demat account user, then you must be knowing the list of charges you have to pay upfront to the depository participants. For those who don’t know, here’s a summary of charges you have to splurge from your pockets – brokerage charges, depository participant charges (DP charges), physical and duplicate statement charges, dematerialization and rematerialization charges, annual maintenance charges (AMC), depository membership charges, and other fixed costs. As and when you get a list of these charges, make a note of these and compare the same with other depository participants to get a bigger picture. By doing so, it gives you a basic idea of DP’s point of vantage. However, savings should not be the first priority on your checklist, instead, how the depository participant gives you the services should be. 

List Of Other Factors To Consider

So far, you have learned the key pointers that every trader must consider to open the best demat account. Now, there are some other factors that you must make notes of before taking the final call about the opening of the best demat account.  

1. Account Opening Should Be Simple
   

   Frankly, no one likes anything that’s arduous, and that includes opening a new demat account with the depository participant. So, finding the right DP that makes your work easier should be the pick of your lot. SEBI has drafted proper guidelines about demat account opening, where all the depository participants have to abide by. Nowadays, the procedure to open a demat account with the DPs has been simplified with a simple e-KYC. You submit all the necessary documents online, and voila, after the verification and self-identification confirmation, your new demat account gets opened and ready to use.   

2. Inbuilt Software and Smooth Interface
   

   The best way to go with account opening is to take the 2-in-1 account (trading cum demat account) to enjoy uninterrupted services offered by a single depository participant. However, one thing you must check before jumping into account opening is the inbuilt software and user interface. Go to their web-based application as well as their application on your smart device and check how smooth is their interface. Because all the key aspects like placing orders online, buying and selling shares, debits and credits to the demat account, and every other aspect related to your demat account should happen smoothly and seamlessly without a hitch. Finally, ensure that you are able to access the depository participant’s portal from the website and the application easily at your convenience. At the end of the day, you should be able to switch between apps, place orders, and make some quick profits on any regular trading day or intraday.

3. Trading and Brokerage Charges
   

   Competition in the trading business is literally high, as you find multiple DPs at every nook and corner of the world offering the same type of services. Now, what’s causing the competition here? Well, it’s the brokerage charges. The lower the broker charges, the higher the chances the traders would subscribe to that particular DP. The bargain to curtail the brokerage charges takes place between brokers and traders all the time. In addition to that, every year the trader is charged with an annual maintenance charge for holding your demat account with them. The AMC or annual maintenance charges range between Rs 500 to Rs 1000 annually. Whenever you sell a share in the market, the DP throws DP charges at you. As and when the shares from your demat account get debited, the depository participant is obliged to pay a fee to the regulatory depository (NSDL or CDSL). The same charges are carried forward to your account. Simply put, on the sale of your shares, the DP pays a certain fee as charges to NSDL or CDSL, and later, they’ll recover it from you in the form of DP charges. There are plenty of other costs that add up to your total. So, compare the costs and be aware of them before you make any decisions w.r.t opening the best demat account.

4. Services Beyond Demat Account Opening
   

   Depository participants not only provide you with the basic demat account services but also provides key analytics of online trading in real-time. This helps traders to make informed decisions with respect to buying and selling shares in the market. The data provided by the DP is associated with multiple factors like political, economic, social, technological, environmental, and legal. These analytics affect the overall performance of the share. Knowing these trends prior helps traders to make better decisions with regard to trading. Other than that, they also provide timely alerts, demat inflows, demat outflows, real-time trading data, industry-related information, etc. Make sure you check with the depository participant whether they offer all the aforementioned services or not. Because they are like value-added services that determine the best demat account. 

Summary 

There are an array of things that a trader must look into before hopping into opening an online demat account with any depository participant. To identify the best demat account, you need to check out the kinds of services provided by the depository participant. Well, it’s not just basic services, because, at the end of the day, quality wins over quantity. Moreover, traders should check out for the user complaints on depository participants. Fewer the user complaints, the better the depository participant. Tradesmart Online provides an all-in-one account where you can avail all types of premium trading and demat account services at your doorstep. You can enjoy the trading experience in the comfort of your home. So, what are you waiting for? Open the trading and demat account with Tradesmart Online right away, start trading, avail good profits, and increase your bank balance. Now that you are aware of every detail on how to choose the best demat account, it’s just a matter of minutes to kickstart your trading safari.  

The TradeSmart advantage

TradeSmart offers an easy to register and use platform for traders, especially if you’re new to trading and want to learn more about it. Here are some of the features it offers

• Simple And Minimalistic Interface. Easies for new users/beginners.
• Instant Fund Transfer through Netbanking and UPI
• Cover, Bracket and After Market hours orders (Advanced order types)
• 80+ Indicators and Trade From Charts
• Day And Night Themes
• Easy IPO registration 
• Easy and Simple to place and monitor orders, holdings, positions, etc.
• Single Sign In (No separate login to Back office and access to profile details)
• Biometric login process for more safe and secure trading

And it takes less than 10 minutes to create a demat with TradeSmart. Head over to the website or download the app to get started on your trading journey

Demat accounts are already easy enough to open these days and hardly takes any time. But these conveniences and ease of trading in securities come with their own cost. There are charges levied at different levels, so, before deciding on a DP, the necessary step is to check on the various charges levied on the opening and operating of a demat account with multiple depository participants, since all DP’s levy different charges.

The Fees and charges levied with opening a demat account

TradeSmart offers one of the most competitive and attractive services among many different depository participants today. The charges of TradeSmart to open a demat account is not only competitive and affordable but are also transparent to ensure the trust of the customer is intact when opening an account. Below is a table summary of the charges.

Particulars	Charges
Account opening charges	Free*
Annual Maintenance Charges (AMC)	Rs. 0 (for the first year)
Dematerialization of share certificates (per certificate)	Rs. 500
Rematerialization of share certificates	Rs. 500 (CDSL Charges + 500 per certificate of 100 shares or 5% of value whichever is higher)
Conversion of Mutual Fund units	Rs. 0
Destatementization	Rs. 0
Reconversion of Mutual Fund units into Statement of Account	Rs. 0
Redemption/Restatementization	Rs. 0
Postal charges (for offline demat accounts)	Rs. 25 per document

If the particulars of the table are still unclear to you, we’ve broken them down and explained them in detail below to give you a better understanding.

Account Opening Charges

The first and foremost cost that comes on is the expense associated with opening a demat account and the formalities that come herewith. This is a one time fee which is a nominal amount charged by the DP in the beginning, and it varies based on the kind of DP (private financial firm, government or commercial bank etc.) you have chosen. In some cases the DP also waives any charges for the first year to encourage trading and charge for the next year. TradeSmart is Free* to open a demat account. Certain Stock Holding Corporations offer refundable lifetime charges to open and hold an account for a longer-term.

All About Demat Account Charges

 

Custodian Charges

Some DP’s charge a fee for safekeeping of your shares that may be one-time, monthly or annual. The number of securities determine the custodian charges levied per account, in addition to safety fees for the holdings. The charges are within the ranges of 50 paise to 1 rupee per attached ISIN. Certain DP’s do not levy any custodian fees in case a one-time fee has already been paid to the depository. 

Annual Maintenance Charges

The annual account maintenance costs, also known as the Folio maintenance charges, have to be paid in advance, at the beginning of each financial year, and these charges again vary from one DP to another. Generally, this charge ranges between 300 to 900 rupees, and sometimes, many agencies propose a zero maintenance fee for the first year to compete in the market with a higher hold of customers. In such a case, the clients are billed for the annual charges from the second year onwards for their demat accounts. TradeSmart also does not charge any AMC for the first year but from the second year onwards there is annual fee of Rs. 300.

One way to save money on the maintenance charges front, is to, one, open a savings account in combination with a demat trading account, as this helps to lower the maintenance charges by quite a margin. Or a demat account with one bank that’s attached to a savings account in another, since having both with the same bank or firm can lead to a higher annual fee.

Things to note:

• Annual maintenance charges are valid for inactive, and frozen demat accounts as well
• A DP can freeze a demat account if it remains inactive for longer than the stipulated time, and still levy annual charges on the same
• Though multiple demat accounts are allowed for any individual, it also turns up the combined costs for each account opening and maintenance, both monthly and annually
• An efficient way to manage your trading portfolio, in accordance with the charges levied, is to have two accounts, a trading account, and one that will hold the long term investments 
• Safekeeping of shares is not a concern with the DP, hence stays unaffected by the costs since the management of demat accounts is done either by CDSL or the NSDL. This keeps the quality of services provided by the DP unaltered, even if the custodian and maintenance charges are lower than its competitors.

Dematerialization of Shares

The process of converting the physical shares into electronic form that can be stored in a demat account is called dematerialization. If you still hold physical shares of the company you invested in and want to convert it into electronic mode then DP/brokers can do it. Normally they charge a nominal fee per share or some DPs charge a flat rate based on the total value of the securities. TradeSmart also dematerialises shares at a fee of Rs.500 per share. The Dematerialization charges of Rs.500+GST per certificate are for listed stocks only. The Dematerialization charges shall be Rs.500+GST per lot of 100 quantities of unlisted stocks.

Rematerializtion of shares

The process of converting electronic shares into physical shares is called rematerialization. The conversion process attracts a small fee as well but this practice is usually not followed today as everything is done electronically.

Destatementization

This is the process of converting mutual funds units from its physical form to electronic dematerialized form. DPs do charge a nominal fee for this as well but there is no fixed price for this.

Restatementization

The process of converting the mutual funds units kept in the demat account into its physical form is called restatementization. The mutual fund units are represented in the physical form through a Statement of Account (SOA) and the process to get this done may or may not be chargeable.

Redemption Charges

This is the process of selling back the mutual funds units to the company you purchased them from. The amount will be credited to your account based on the valuation of the funds on the particular date you filed for redemption.

Postal Charges

In the case of offline demat accounts, the physically transferring of documents and statements of accounts to the postal address of the trader incurs a certain which is known as postal charges. If you have an electronic demat account then these charges won’t apply to you.

Cheque Dishonour charges

A cheque is a negotiable instrument and serves as a mode of payment for many even today. However, there are cases where the cheque submitted bounces which can lead to problems and legal action can also be taken which can lead to imprisonment. To discourage cheque bouncing by customers, TradeSmart charges Rs. 200 every time a cheque bounces or gets dishonoured.

Transaction Charges

Next comes the transaction costs. Now different depository participants charge differently for movement of securities in each account. These charges might be only on credit, only debit or on both. This charge can be a consolidated monthly fee or a per transaction deduction with the transaction cost being a flat fee or a fixed percentage of each transaction, pre-determined by the bank. Additionally, some DP’s impose additional transactional charges for failed transactions, mailing costs, service taxes, non-periodic account statements, and other government services tariffs. 

TradeSmart charges extremely competitive and affordable prices and to encourage traders they have two options, TradeSmart Power Plan for large size trades and TradeSmart Value Plan for small size trades. Below are the transaction charges offered by both.

TradeSmart Power Plan

Category	Fee
Monthly Fee (fixed)	Rs. 0
Equity delivery	Rs. 15 per order
Equity Intraday	Rs. 15 per order
Equity Futures	Rs. 15 per order
Equity Options	Rs. 15 per order
Currency Futures	Rs. 15 per order
Currency Options	Rs. 15 per order
Commodity Futures	Rs. 15 per order
Commodity Options	Rs. 15 per order

TradeSmart Value Plan

Category	Fee
Monthly Fee (fixed)	Rs. 0
Equity delivery	0.07%
Equity Intraday	0.007%
Equity Futures	0.007%
Equity Options	Rs. 7 per lot
Currency Futures	0.007%
Currency Options	Rs. 7 per lot
Commodity Futures	0.007%
Commodity Options	Rs. 7 per lot

There are a plethora of DP’s available in the market, offering a wide gamut of services and multifarious competitive charges. Demat accounts have upturned the world of investments and trading accessible and easy to understand, but investors need to be aware of the internal disguised costs and the other given charges before delving into it.

The Gen-Z is fortunate to have been living and maturing in an era when financial literacy is rising above from a mere popular lingo and becoming a reality embraced by all. But amidst the din, it is easy to feel a little lost about the seemingly-heavy terminologies like securities, Demat account, SIPs etc., simply because formal education syllabi leave us gravely handicapped as far as basic financial know-how is concerned. So whether you are preparing to begin on the journey of personal finance or planning to take up Finance as an elective in college; starting off with the basics is always the best idea.

The first step towards becoming an investor is opening a Demat account. Short for de-materialised, a Demat is very similar to your bank account; it holds your shares and securities much like the latter that holds your savings or liquid funds. It is a repository of all the investments an individual makes; shares, securities, exchange-traded funds (ETFs), bonds and mutual funds (MFs). In India, the Securities and Exchange Board (SEBI) has laid out the rules for opening a Demat a/c. The procedure is quite simple, can be completed online, and requires the user to submit some documents as various proofs. Before we head out towards the list of necessary documents, there are some things to know beforehand. As per SEBI mandate, two agencies (or as they are called technically, depositories) namely NSDL and CDSL provide free Demat account services. Intermediaries – banks or stockbrokers – called Depository Participants (DPs) facilitate these services.

Let’s dive straight into the list of documents needed to open a Demat account:

• Proof of Identity (POI)

  Identification documents such as UID / Aadhar, Driving License and Voter’s ID certify identity. Complete list of documents that qualify as POI is provided later in the article.
  

  List of documents that qualify as Proof of Identity

  • PAN card: Apart from being a mandatory requirement, a PAN with a valid photograph is also an admissible proof of identity.
  • Unique Identification Number (UID): Any one among Aadhaar card / Passport / Voter ID card / driving licence functions well for the purpose.
  • Identity (with applicant’s photo) attesting document issued by any of the following agencies:
  • Central or State Government and its departments
  • Statutory / Regulatory bodies
  • Public Sector Undertakings (PSUs)
  • Scheduled commercial banks or public financial companies
  • Universities / Colleges affiliated to universities
  • Member IDs professional bodies like ICAI, ICWAI, ICSI, Bar Council among others can issue for their members.
    
    

• Proof of Address (POA)

  Documents such as Passport, UID and Ration Card certify address or place of stay. Complete list of documents that qualify as POI is provided later in the article.
  

  List of documents required as Proof of Address

  Documents admissible as Demat account proof of address include:

  • Passport (check for date of expiry)
  • Voters ID card (with valid photograph)
  • Registered sale or lease agreement of the house
  • Driving licence with photograph
  • Maintenance bill
  • Insurance paper
  • Utility or telephone bills
  • Electricity bills (older than 3 months are not permissible)
  • Passbook or bank account statement
  • Proof of address attested by bank managers of scheduled banks, scheduled co-operative banks, gazette officer, notary public, elected representatives of legislative assemblies (MLAs), elected members of parliament (MPs)
  • Documents issued by Central or State Government and its departments, Statutory / Regulatory bodies, Public Sector Units (PSUs), Scheduled commercial banks or public financial companies, Authorised universities (or colleges affiliated to universities), Professional bodies like ICAI, ICWAI, Bar Council among others can issue it for their members.
    
    

• Proof of Income
  

  Copy of ITR Acknowledgement etc. can be used as Proofs of Income. Other documents that can be used are elaborated upon later.
  

  List of documents required as proof of income

  • A photocopy of the Income Tax Return (ITR) acknowledgement slip submitted to the Income Tax Department during filing of income tax
  • Proof of Salary in the form of a recent Salary Slip or relevant document which proves income or net worth like Form 16
  • A Net Worth Certificate certified by a Chartered Accountant; alternatively, a photocopy of the Annual Accounts duly audited by a qualified Chartered Accountant
  • Current bank a/c statement reflecting the income history of the client for the past six months
  • A statement of existing Demat account holdings with an eligible DP
  • Other documents that substantiate ownership of assets through self-declaration along with documents supporting the claim
  • Cancelled personalized cheque 
  • Documents to substantiate ownership of assets
  • Bank account statements for last six months

• Proof of Bank Account
  

  As evidence of holding a bank account, Cancelled Cheque is used.

• Permanent Account Number (PAN)
  

  Holding a PAN card is mandatory for opening a Demat account in India. The same has to be provided when opening one. (Except for those who are specifically exempt from obtaining PAN; as elaborated later)

• Photographs
  

  If you are opening the demat offline, have at least three copies of your passport size photographs handy. 

Documents needed to open a demat account for a minor

You can also open a demat account holder for minors with TradeSmart. But in this case, the minor will be the sole holder of the account, meaning no joint holders or nominees can be appointed. Only the minor’s father or mother can be considered a guardian. In case the relationship is not parental, then a guardian can be appointed by a court order. The account can only be operated by the parent or the legal guardian. Here is a list of documents needed for minors. 

• Minor’s PAN card copy
• Minor’s birth certificate copy
• A copy of the parent or guardian’s PAN card with the photo clearly visible
• Proof of bank accounts in the name of the minor
• Address proof of the guardian

Power of Attorney

Along with the other documents you will also need to sign agreement papers like the Power of Attorney (POA) given to the broker for transfer of securities to settle margins, for settlement of trades and transfer of funds from your account. It is a way of legally letting your DP take financial actions on your behalf, of course, subject to your approval. The thing to be remembered here is that one, the POA document should have your Demat and bank account details and, two, it must be given out in the name of the broker / DP and not in the name of the employee concerned.

Document Attestation

The documents need to be attested by any among the following.

• A Gazetted Officer, Notary Public, Manager of a Scheduled Commercial/Cooperative Bank or Multinational Foreign Banks. Ensure that you have incorporated the Name, Designation and office seal affixed on the copy.
• In the case of Non-Resident Indians (NRIs), authorised officials of overseas branches of Scheduled Commercial Banks registered in India, Court Magistrate, Judge, Notary Public, and Indian Embassy/Consulate General in the country where the client resides can attest the documents.

Exemptions / Clarifications to PAN

• In case of transactions undertaken on behalf of Central Government and/or State Government and by officials appointed by Courts e.g. Official liquidator, Court receiver etc.
• Investors residing in the state of Sikkim.
• UN entities/multilateral agencies exempt from paying taxes/filing tax returns in India.
• SIP of Mutual Funds up to Rs. 50,000/- p.a.
• In case of institutional clients, namely, FIIs, MFs, VCFs, FVCIs, Scheduled Commercial Banks, Multilateral and Bilateral Development Financial Institutions, State Industrial Development Corporations, Insurance Companies registered with IRDA and Public Financial Institution as defined under section 4A of the Companies Act, 1956, Custodians shall verify the PAN card details with the original PAN card and provide duly certified copies of such verified PAN details to the intermediary.

Even in such cases, sufficient documentary evidence in support of such claims for exemptions is collected.

Since everything is online now, the procedure is more or less the same across DPs and platforms, and so is the document list necessary. Some DPs can ask you for additional certificates as identity, address, and income proof. Once all the documents are submitted, verified, and checked by the departments concerned, your DP will open your account after which you can commence trading.