Know Your Demat Account Number

Today, the stock exchanges have shifted to digital trading where the shares are purchased through online trading platforms. Furthermore, these shares are held in a dematerialised format in a Demat account.

Anyone who wants to trade or invest in the stock market must Open Demat Account with a depository participant, also known as the stockbroker. Once the Demat account is opened, the investors are given a Demat account number that presents the investors' unique identity throughout the financial market. However, a common dilemma among investors is how to know your Demat account number. If you are an investor, read on to know how to find out the Demat account number.

What are Demat accounts, and how do they work?

In India, trading used to take place by transferring securities in the form of physical certificates. However, in 1996, the Securities and Exchange Board of India (SEBI) introduced Demat accounts in the country, and it revolutionised investing by making it a digital process. One of the most important factors introduced by SEBI was a Demat account.

'Demat' refers to dematerialisation, a process by which physical securities are converted into electronic format. Therefore, a trader can use a Demat account to hold, transfer, and transact securities without the hassles of dealing with physical securities. As a result, trading has become a safer, quicker, and much more efficient method of storing securities and executing trades.

What is a Demat Account Number?

The Demat account number is a 16-digit numerical code or number that the investors receive at the time of the Demat account opening. It is unique to every investor and represents their financial identity at the time of trading or making investments in the stock market. The Securities and Exchange Board of India has made it mandatory for every investor to have a Demat account number to make it convenient for the stockbrokers and investors to assess their investment portfolios.

At the time of buying and selling shares or applying to various IPOs, this 16-digit Demat account number is quoted to represent the investor. Because of the Demat account number, the shares bought or sold by investors get credited or debited respectively from their Demat account in T+2 days.

The Demat account number is a combination of the following two elements:

• The DP ID: The depository participant Identification is the number assigned to the financial entities such as banks, brokers, etc., by the depository institutions such as NSDL or CDSL. When a customer opens the Demat account with any of these entities, the first 8 digits of the 16-digit Demat account number is the DP ID representing the Demat account opening institution.
• Customer ID: The next 8 digits of the 16-digit Demat account number is the customer ID that is given to every customer by the stockbroker who opens a Demat account with the institution. These 8 numbers are unique to every investor and can never be the same for two investors.

Hence, a Demat account number is the combination of the DP ID and the Customer ID. For example, if your Demat account number is IN03434598765873, IN034345 is the DP ID, while 98765873 is the Customer ID.

What is a Depository Participant?

The National Securities Depository Limited or Central Depository Services Limited sees a Depository Participant (DP) as an essential connection to investors. Holding an authorized agent role in the financial market, the DP operates under a license issued pursuant to The Depositories Act, 1996.

Either CDSL or NSDL assigns a unique DP ID to each distinguished Depository Participant (DP). Subsequently, the DP undergoes rigorous regulatory procedures for operational compliance and integrity assurance. This identification mechanism, by fostering accountability and traceability, enhances precision within complex financial transaction networks.

Individuals embarking on stock market ventures must first approach a DP to establish their Demat account. This serves as the secure repository for shares they acquire. The investor, although the DP physically holds them, is still and always remains, crucially, the exclusive beneficial owner of these shares, thus guaranteeing protection over ownership rights.

The Demat account, managed by the DP, serves as the central hub for all buying and selling activities. Electronic trading has eliminated the need for cumbersome paper-based share certificates. It is a field where such days are long gone. Instead, in this streamlined, secure alternative, ownership remains under the management of DP via electronic recording.

The DP plays a crucial role as a financial intermediary. It executes the crediting or debiting of an investor's account based on their buying or selling activities. This real-time adjustment, critical for ensuring accuracy and transparency in financial transactions, is its primary function.

A Depository Participant, standing as a linchpin in the contemporary financial landscape, offers investors an entrance to the electronic domain of shareholding. DPs significantly contribute to market fluidity, transparency, and accessibility by facilitating efficient and secure share management through Demat accounts.

Importance of Demat Account Number

The Demat account number is most crucial as it is the number that represents you in the financial market. Without a Demat account number, it won’t be possible to buy and sell securities. More than your registered name, the Demat account number is unique to your investments and allows the stockbrokers to cross-check transactions done in your Demat account.

Furthermore, if an investor holds multiple Demat accounts, the process of separating the investments done within the various Demat accounts would become complex. Hence, having a Demat account number helps a great deal in separating the investments of multiple Demat accounts and systematically organising the portfolio. In the case of transactional mismatch, the Demat account numbers allow investors to seek redressal through the unique identity created by the 16-digit Demat account number.

Know Your Demat Account Number

How to know your Demat account number is a vital step in making informed financial decisions. There are two depository institutions named Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL) that manage the various investments made by the investors. These depositories provide licences to various stockbrokers to onboard customers and open Demat accounts for them. The licence comes with a unique DP ID that makes up the first 8 digits of the 16-digit Demat account number and inches you closer to learning how to know your Demat account number.

Once you open a Demat account, the CDSL or NSDL, whoever is affiliated with your broker firm, will send you a letter with your Demat account number. You must check if your broker is affiliated with either or both CDSL and NSDL. It is important to know if your account is with CDSL or NSDL as you will be required to quote the depository institution at certain places, such as while applying to an IPO. It is better if the stockbroker is affiliated with both the depository institutions, as affiliation with both will help you trade seamlessly. IIFL is one of the few brokerage houses that has an affiliation with CDSL and NSDL.

Two Formats of Demat Account Number

It is vital to learn about the two formats of the Demat account number in order to know your Demat account number and understand how to find out Demat account number. The two formats of the Demat account number pertain to the two depository institutions; CDSL and NSDL. The stockbrokers will have a different DP ID if they are registered with CDSL compared to the DP ID provided by NSDL. Here is the process and the two formats of Demat account number:

The letter from your Depository will include a welcome message, important information regarding your Demat account, and your Demat account number. The format of the Demat Account Number will vary based on your selected Depository. If the depository is CDSL, your Demat account number or (Beneficiary Owner) BO ID will be a 16-digit number. For example, 4456327821390812. But, If the depository is NSDL, your Demat account number will be a 16-digit alpha-numeric number with the beginning two characters being ‘IN.’ For example, IN56732892132810. In both cases, the first eight characters are the DP ID, and the stockbroker provides the remaining to complete the 16-digit Demat account number.

Anatomy of the Demat Account Number

Often, an investor forgets the Demat account number as it is hard to remember 16 digits and even harder when it includes alpha-numeric characters. If forgotten, the investors have to search keywords like ‘How to find out my Demat account number’ or ‘Know your Demat account number’. However, if you know the anatomy of the Demat account number, it becomes easier to piece together your Demat account number.

A Demat account number is a combination of the DP ID and customer ID. The DP ID is a unique code assigned to all the DPs who can be a broking firm, a bank, or a financial institution affiliated with NSDL or CDSL. The initial 8 digits of your Demat account number represent your DP’s ID, and the subsequent 8 digits represent your customer ID. For example, if your Demat account number is IN56732892132810, then IN567328 represents your DP’s ID, and 92132810 represents your customer ID.

Hence, if you forget your 16-digit Demat account number, you can search the documents given to you by your broker to find out your Customer ID. Next, you can search the DP ID of your stockbroker online. It is mostly written on the stockbroker's website. Once you have both, you can combine the DP IP and the Customer ID to know Demat account number.

Difference Between CDSL and NSDL

Understanding the difference between CDSL and NSDL is also important in deeply learning how to find out the Demat account number because the 16-digit Demat account number is different if the stockbroker is affiliated with CDSL from the Demat account number if the affiliation is with NSDL. Hence, for avoiding mistakes while quoting your Demat account number and not remembering your depository institution, here is the difference between the Central Depository Services Limited and National Securities Depository Limited.

Before you select the right broking firm and open a Demat account or an online trading account, you must know whether the firm is affiliated with NSDL, CDSL, or both. An understanding of the difference between both mentioned below would be helpful.

Knowing the core difference between the two depository institutions can help you know your Demat account number better and represent your unique financial identity. However, you must research the affiliations of the stockbroker with either or both the CDSL or NSDL before you open your Demat account.

Indicators to Open a Demat Account

Learning how to find out your Demat account is the first step toward investing to make good profits. However, it is compulsory to open a Demat account before you are eligible to start trading. To open a Demat account, you need to approach a SEBI-registered DP. You will be able to find the list of SEBI-registered DPs on the CDSL and NSDL websites.

Follow the below-mentioned simple steps to open a Demat Account:

• Duly fill out the account opening form found on the DP website.
• Submit all the necessary documents along with the form, such as a PAN card, Aadhar card, and a passport-sized photograph.
• The whole process can be carried out online, though the broking firm may call you for verification.
• On opening the Demat Account, you would receive your Demat Account Number, and you would be all set to invest or trade in the securities market. A Demat cum Online Trading Account is the best option to experience seamless investing and trading.

Once your Demat account is opened, and you receive your 16-digit Demat account number, you can start investing through the stockbroker’s online platform. However, you should make sure that the stockbroker you choose is experienced and has a comprehensive trading platform that can allow you to trade seamlessly and avoids the situations where you have to search how to know my demat account number.

Conclusion

After the shift from the open outcry system, the Securities and Exchange Board of India made it mandatory to invest using the dematerialised process. Under the process, every investor is to have a unique 16-digit Demat account number to represent the identity while investing. Through the Demat account number, investors can quote themselves while investing and ensure their transactions are safe and transparent. Hence, investors need to understand how to know your Demat account number to trade and invest seamlessly. Just as with any other identification, the stock market identifies investors through the 16-digit Demat account number, and you must know how to check demat account number while investing.

If you are planning to open a Demat Account, IIFL is your go-to broking firm. Enjoy zero account opening fee, zero annual maintenance for the first year, and up to Rs.10,000 brokerage cashback on your transactions. With IIFL’s next-generation trading platform and award-winning research team, you can learn to invest and trade smartly with confidence. You can visit IIFL’s website or download IIFL Markets App from the app store to open your Demat account in a matter of clicks. IIFL’s trading app and platform come with comprehensive features to let you trade better than the rest.