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In the stock markets, one word you get to hear often is the KYC or the Know Your Client formality. Before opening an equity trading account, you need to do the KYC and that broadly requires submitting details like your PAN card, cancelled cheque, proof of identity, proof residence to the broker for SEBI records. In addition, if you want to trade in F&O, additional proof of income and recent tax returns filed are also sought.
When we talk of KYC, what are the documents required for opening trading account? What are the specific pieces of documents that can be submitted as proof of residence or proof of identity and have these to be submitted in original, duplicate or attested by a gazetted officer? Let us start off our journey on documents required for trading account. Normally, you open a trading cum demat account so the same documents apply for both; trading and for demat account.
For opening the equity trading account, you must be prepared with all the basic documents in original for verification and in duplicate. Let us first look at broadly, the documents to be submitted for the purpose of account opening and then for the specific documents that are acceptable as valid proofs.
The following must be submitted for account opening.
Most of these documents above are self-explicit. Here is a detailed list of documents that are actually accepted under each of these specific proofs sought as part of KYC.
You can submit any of the below mentioned documents as proof of identity
Normally, PAN is a mandatory document and is demanded by brokers as separate from any of these other proof of address documents.
You can submit any of the below mentioned documents as proof of address.
You cannot normally submit the same document for proof of residence and identity, although some brokers do accept it. The KYC insists on two separate documents, unless it is Aadhar based e-account opening. Here are a few points. Firstly, the name and address must match with other documents. In case of leased accommodation, provide link documents for electricity, telephone bill.
If the broker is also your DP, as is the preferred scenario, you can have a single set of document submissions. Otherwise, you must do it twice. Also, you can sign POA only for trading account and not for demat account or savings account. That is safer.
Trading account opening is normally now done as a 2-in-1 account. But it begins with willing up the account opening form and completing your KYC by submitting all the requisite documents. Once the account opening form is verified and documents checked with the original during the in-person verification (IPV), your trading account is activated.
With the launch of the e-account or digital trading account, you can finish the entire account opening process online using your Aadhar data by allowing your broker to link with your Aadhar database. With POA not required, you can actually do it fully digitally.
Nothing stops anyone from trading in equity as long as you can submit all the necessary valid KYC documents and go through the account opening process. Of course, you must be able to fund the account with margins, irrespective of whether you intend to buy the stock for delivery or for intraday trading or you want to trade in futures and options.
NACH Mandate is a kind of authorization provided to Institutions to credit or debit funds for specific purposes. NACH Platform has over 75,000 banks and hence it automatically becomes nationally acceptable. NACH can be used to credit pay-outs, dividends and also to debit regularly to a specified account.
The bank funds can be transferred in a number of ways. The easiest and safest way is to use the NEFT / RTGS / IMPS mode. The credit is available in less than 2 hours. You can also use the payment gateway provided, but that entails charges for each transaction. You can also fund by cheque / DD, but you only get funds after 3 days once the cheque is realized.
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