Did you know that by 2023, only 8% of the Indian population had invested in mutual funds?
Compared to other developed countries, the number is staggeringly low. Much of the reluctance towards investing in mutual funds, equity, and other assets stems from the lack of awareness. Besides the perks of such investments, Indians are also widely unaware of how to go about them.
If you are to invest in mutual funds, bonds, or equity, one of the first things to do is set up a Demat account. It is essentially a specialised account that stores your material securities in a digital form and allows you to perform your transactions electronically.
While opening a Demat account isn’t too hard, beginners might find the process a little overwhelming. This blog is a comprehensive guide on the documents required for a Demat account. Read on for a better understanding of the requirements to open a Demat account and prepare the necessary documents accordingly.
Unsurprisingly, proof of identity is one of the basic criteria for opening a Demat account. The following documents for Demat account can be used to prove your identity.
PAN cards are issued by the Income Tax Department of India and carry a unique 10-digit unique alphanumeric code. Among the Demat account opening documents, your PAN is a mandatory proof of identity, with a few exceptions.
Issued by the Unique Identification Authority of India (UIDAI), the Aadhaar card carries a 12-digit unique identification number. Its very purpose is to serve as a proof of identity.
Issued to Indian citizens aged 18 years and older by the Election Commission of India, the Voter ID card is yet another popularly accepted document for identification. While its primary purpose is to serve as identity proof while casting votes, it has also found other purposes, such as being one of the acceptable documents for Demat account opening.
A driving licence is a legal permit authorising the holder to drive specific types of vehicles. However, the nature of the information it carries, including a photo ID of the licence holder, also makes it a valid proof of identity.
Yet another official document issued by the Government, a passport entitles you to travel to and from other countries under its protection. It also certifies your identity and citizenship and has thus become a credible identity proof.
Alternatively, you may also use other identification cards issued by the following bodies as Demat account opening documents:
Suggested Read: Top 5 Benefits Of Having Multiple Demat Accounts
Besides your identity, you’re also required to present acceptable proof of your address among the documents required for Demat account. Here’s a list of valid documents you may use for the purpose:
As a document issued by the government specifically for unique identification, your Aadhaar Card qualifies as proof of residence.
This is one of the various additional purposes of your voter ID card mentioned earlier – you may use it as proof of residence alongside identity.
The information on your driving licence includes your address. Since you’re already required to produce a valid proof of address when applying for a driving licence, you may also use it as one.
Like your driving licence, your passport carries your address too and requires you to produce an address proof at the time of application. This makes it a valid document to use as proof of residence.
State governments in India issue ration cards to households eligible to purchase food grains at subsidised prices from the public distribution system. However, you may also use it as address proof as well.
Alternatively, you could also use one of the following documents in case the above aren’t available:
As you can see, several documents double as both proof of identity and residential address. In case you’re using an Aadhaar Card, Voter ID Card, Driving License, or Passport as ID proof, there’s no need for a separate document as proof of residence.
Lastly, the documents required for a Demat account also include proof of income. Here’s a list of documents that would serve the purpose:
Individuals are required to submit an Income Tax Return (ITR) form to the Income Tax Department of India, declaring their income and taxes payable during a fiscal year.
Certified by a chartered accountant, a net worth certificate details an individual or organisation’s financial position and outlines all their liabilities and assets.
You may also submit a current bank account statement that comprises the history of your income over the last six months before the date of application.
A Demat account holding statement from an authorised depository participant detailing all the information regarding your Demat holdings.
Other acceptable documents required for the Demat account that you may use as proof of income include:
You may also self-declare any assets you own, provided that the declaration is supported by relevant documents.
While producing your PAN card is usually mandatory among the documents required for a Demat account, here are a few exemptions
If your PAN copy does not have a signature, the applicant's photo is unclear on the PAN card, the IFSC or MICR is unclear on the bank proof, the address proof is not self-attested or clear, a minor is added as a nominee, or the photograph is missing on the KYC page, these can all lead to your demat account opening being put on hold. It is essential to ensure all your documents are submitted correctly to have a smooth process.
Attempts to use forged documents can have severe repercussions. It is interesting to note that individuals applying for a Demat account for their minor children will have to submit their own PAN card and address proof, as well as the minor’s documents.
Now that you have a thorough understanding of the requirements to open a Demat account, it shouldn’t pose a problem any longer. As you may see, there are plenty of documents that you may alternatively use for each purpose. The PAN card is the only one among the documents required for a Demat account that you are mandated to submit, and there are still exceptions.
Offering a comprehensive range of investment services, dedicated and reliable relationship managers, and sophisticated technology, we can make Demat investments a breeze for you. Get in touch with us for expert advice and insights into Demat accounts and make informed investment decisions.
Delve into the world of futures and options trading with Sharekhan expert guidance. Our comprehensive resources and intuitive platform empower you to make informed decisions and capitalize on market movements.
Embark on your stock trading journey with Sharekhan's comprehensive platform. Learn the fundamentals of equity trading, gain insights into market trends, and access powerful tools to make informed investment decisions.
Safeguard your investments with Sharekhan's secure and reliable Demat account. Our platform offers robust security features to protect your holdings, ensuring your investments are in safe hands. Open Demat account today and enjoy peace of mind while you invest.
Make informed mutual fund investment decisions with Sharekhan's expert guidance. Explore a wide array of funds to match your financial goals and risk tolerance. Start building your wealth today.
Leverage Sharekhan's market knowledge and experience to make informed decisions in the initial public offering (IPO) space. Our research and analysis equip you with the insights you need to identify promising IPOs and participate in their growth potential.