When an investor wants to invest in the stock market. They need to open a Demat account in any Depository Participants (DPs) which is registered under CDSL and NSDL (Two depositories service provider in India which are registered with SEBI).
DP is the retail broking website under which an investor opens a Demat account which helps investors to deal with securities.
The DPs must be registered under any depository system in India (i.e. NSDL and CDSL) and these have their own format of Demat account number.
NSDL is affiliated to NSE whereas CDSL is affiliated to BSE. Opening a Demat account is a very simple process after choosing any depository system from the above.
The investors need to complete their KYC by fill a form and investors have to submit a copy of their PAN card and residency proof with their bank details (copy of cancelled cheque or passbook or bank statement containing their name, account number, IFSC, and MICR code).
Please remember to take original documents for verification. In case investors are unable to present the original document for verification, then photocopy should be attested by any public notary.
Investor’s DP may ask additional proof of identity/address to meet its requirements in addition to the above-mentioned. There is no requirement of holding the minimum balance in a Demat account or investors can maintain zero balance in their account in both depository systems.
Remember that investors cannot open a Demat account directly with CDSL and NSDL. The process of open an account can be done through depository participates only.
After completion of all requirement then investors Demat account will be opened, and investor’s DP will provide them DP ID, Client ID (an ID which identifies client itself and clients portfolio) and a copy of Investor’s Client Master Report which containing investor’s Demat account details, tariff sheet and ‘Rights & Obligations of Beneficial Owner and Depository Participant’.
Both Client ID and DP ID both are 8 characters long code. For example, in the case of CDSL if the investor’s Demat account no. is 9876543219876543, then 98765432 is Client DP ID and 19876543 is the Client ID. Another example, in the case of NSDL, if the investor’s Demat account no. is IN76543219876543, then the DP ID is IN765432 and Client ID is 19876543.
To ensure that all details of the account holder have been recorded correctly in the depository system so account holder should need to verify its Client Master Report.
As per data of NSDL, there are the total number of 278 DPs and 1,95,70,101 Investors Accounts in NSDL on 29th February, 2020. Another side as per data of CDSL, there are the total number of 599 DPs and 2,11,81,937 Investors Accounts (excluding closed accounts) on 31st March, 2020.