When you open a Demat account in India, there are certain guidelines that you need to follow as per the Securities and Exchange Board of India (SEBI). SEBI guidelines for Demat accounts in India concern opening the account, as well as closing it. These SEBI guidelines for Demat account are as follows:
SEBI guidelines for Opening a Demat account
To make the process uniform while ensuring the smooth submission of the right information, certain documents have to be submitted. These documents are government-issued and are as follows:
– Application form that is duly filled
– Proof of address
– PAN card
– Bank Statement to link to one’s bank account
As per SEBI guidelines for a Demat account, all these documents are to be submitted to the broker or depository participant of one’s choice. Once one’s application is processed after verifying and authenticating all these documents, a Demat account will be opened in one’s name.
It is possible to open more than one account in the same name with the same broker/DP or with a separate one. However, one has to fulfil all the KYC norms. This includes proof of identity and address proof, PAN and more, as stipulated by SEBI.
SEBI Guidelines on Closing a Demat Account
Although SEBI has no stringent rules in terms of closing a Demat account, you have some soft rules that you follow so that your depository participant can close your account. This is the process to close your Demat account in India. Fill in the form they will provide for you, in case you wish to close your account.
– Provide information such as DP’s ID, your Client ID, and whatever relevant information your record will have to match.
– State your reason for closing your account. You need not have a good reason to close your account, as whatever you give is just a form of feedback to your DP.
– According to the account details that are given, the balance in your Demat account will be transferred.
– Your account will close after a week to ten days. Ensure you are clearing all leftover dues before you choose to close your account, or your DP is required to keep your account operational.
General SEBI guidelines for Demat Account
The following guidelines are general recommendations by SEBI that apply to opening and running your Demat account in India. The goal of announcing these guidelines is to make the stock market a safer place. These guidelines need to constantly be updated and carefully monitored for any changes. SEBI continues to update the guidelines.
– All Demat account charges are predetermined so one can prevent stock brokers from overcharging.
– Mandatory verification that the person whose account is created is the owner of the account.
– It is necessary according to SEBI guidelines to link your Demat account with a PAN card. As per KYC rules.
– No minimum amount needs to be kept in a Demat account for its maintenance.
– The holder of the account and percentage trading done is necessary for the mandatory brokerage charges as annual charges.