Eligibility Criteria to Open Demat account

A ‘demat’ or dematerialized account keeps all your securities like commodities, ETFs, and more in an electronic format. It is not possible to trade on the Indian stock market without a Demat account. Want to open a Demat account ? It helps to learn that in India, two main depositories will hold your Demat account. These are the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). There are minimal eligibility criteria to get started as a trader, but it helps to know what they are. Here’s everything you need to know about opening a Demat account.

Eligibility to open Demat account

The following are the eligibility criteria for opening a Demat account.

Age :

It might be contrary to the common assumption, but you do not need to turn 18 before you open a Demat account for the first time. In fact, there is no minimum age to invest in the Indian stock market. Hence, both adults and minors can have Demat accounts that enable stock market trading. If you are under 18, your Demat account can be opened by your parents/ appointed guardian in your name once all your important documents are submitted. Your parents will be in charge of your Demat account until you turn 18. Once you reach 18, a depository participant will send an advisory to you so they can obtain documents to transfer details to your official Demat account.

KYC details :

KYC or Know Your Customer is a mechanism where one can confirm the identity, address, and income of an individual. In India, if you wish to open a Demat account online or not, your KYC is necessary to get started. Your PAN card will be necessary which can be submitted online or offline as a scanned or xeroxed soft copy. Additionally, there you may be asked to submit your Aadhar card as well or instead of your PAN. Luckily, you can easily do KYC online which makes for a hassle-free process.

Documents Required to Open a Demat account:

Beyond your KYC documents, if you wish to open a Demat account you will be asked for additional soft copies and documents. These are as follows:

Proof of Identity:

Firstly, there is the proof of identity documents. These include your PAN, Aadhar, Passport, Voter’s ID, and more. Usually, you are required to present two or more passport-sized photos of yourself as well. For your identity proof, an Identity card may be used. This ID has to be issued by any of the following parties: Statutory/Regulatory Authorities, Central or State Government, scheduled commercial banks, public sector undertakings, professional bodies like ICSI, ICWAI, and ICAI, and also debit or credit cards issued by banks.

Proof of Address :

For address proof, documents like your driver’s license, ration card, flat maintenance bill, registered lease or sale agreement of residence, insurance copy and more can suffice. Additionally, you may be required to present any utility or appliance bills. Even a bank account statement which is not more than 3 months old helps a lot. Even the proof of address in the name of one’s spouse may be accepted.

Proof of Income

The proof of income is also usually required when one is opening a Demat account in India. Any of the following documents classify as proof of income, ITR (Income Tax Return) photocopy, or acknowledgment slip submitted by the ITR during one’s tax filing process. A certificate of one’s net worth issued by a chartered accountant also qualifies. A photocopy of one’s annual accounts which is both audited and qualified by one’s Chartered Accountant. A relevant document like a salary slip or Form 16 also classifies as a proof of income. A current bank statement reflecting earnings from the last six months also qualifies.

Conclusion

In a growing economy, diversifying one’s income by investing in the stock market is one of the best things to consider. It helps you grow your wealth over time, teaches you the discipline of investing in ideas and companies you care about, and potentially create a nest egg that you can fall back on in times of crisis. To get started with stock market investing, you will need to open a Demat account online or in person.

Anyone can open a Demat account although it is recommended that you do so once you are an adult. There is no age limit required to open an account. However, you will be required to submit certain KYC documents like identity, income and address proof. You can open a demat and trading account with IIFL. One neither has to pay account opening charges nor demat maintenance charges for a year with IIFL Demat and Trading charges. The firm will verify your documents which completes the process of opening up your Demat account. You will receive a client ID will which can be used for all your stock market transactions.

Open Demat Account at IIFL