In India, opening a Demat account or a ‘dematerialized’ account is mandatory if a person wishes to own any shares in equity or debt markets. This is applicable for any financial securities in the markets, including investments in equity stocks, debt instruments, mutual funds, commodities and derivatives, currencies, and more. As a player in the financial markets, one must carefully retain their account number.
Today, a Demat account can be opened with a bank or any other trading house acting as a brokerage firm. Through these firms, all investments of an individual are stored in an electronic form with a depository. The present system makes these brokerage forms participants in a depository system.
For many people just beginning their journey in the world of stock markets, it can be troubling to grab hold of every fact and concept at first. However, with some patience and time, the essence of the market becomes known to investors and traders. The account number is among the first few things they must understand about their trading journey.
How To Know Demat Account Number?
Whenever someone opens a Demat trading account with a broking firm, they will receive several documents from the depository. Usually, one of these documents will contain a welcome letter with all the pertinent information about the account. The Demat account number of the individual is listed on such document letter.
In India, there are two significant depositories firms, namely, CDSL and NSDL. Depending on the affiliation of a broking firm with either one of these depositories, such documents could arrive from one of them. There may be a case of dual affiliation of a broking firm with both depositories.
However, from an investor’s viewpoint, the affiliation of their broking firm with any one of the depositories has little impact on their trading journey. Once a trader opens their account, they are eligible to begin trading in the secondary markets, irrespective of the depository.
Locating Demat Number
Upon opening the welcome letter from a broking firm, one can find the number of the account listed prominently on the letter. It is a 16-digit beneficiary owner identity number. In the case of CDSL, it comprises solely of numbers, whereas, in the case of NSDL, the number begins with the prefix ‘IN’, followed by a 14-digit number.
The number is also displayed on every transaction summary when an account holder performs transactions from their account.
Purpose Of Demat Account Number
As per the existing mandates in the secondary market, the number of the account is quoted compulsorily in every transaction that traders conduct. An account stores all records of the owner's sale and purchase of securities during a financial year. Assigning a number to account holders is to overcome the need to hold physical share certificates or securities.
The transition from paper format to digital storage of securities reduces the potential risk associated with damage to physical documents. Moreover, a Demat account gives an account holder a unique identity, which also helps reduce the time involved in completing transfer formalities related to shares.
Thus, it is evident why the numbers of the account are so vital for a trader. Allotting one such number to each account holder makes it easier for the depositories to maintain the operation of digital accounts.
How To Find Demat Account Number
Most first-time entrants in the stock market do not know how to find demat account number. The number of the account includes a depository participant ID and a unique customer number. Each is unique for every account holder, no matter which broking firm they may be associated with. Due to the uniqueness of these numbers, each market participant acts as an individual player in the securities market.
The number of the account of a CDSL depository contains the Account number of the depository participant ID, the first 8 digits, and the customer ID existing with the depository participant, which is the last 8 digits. In the case of NSDL, the first 6 digits represent the ID of the depository participant. In contrast, the remaining numbers reflect the customer ID of the account holder with the depository participant.
Yet, one must take care not to confuse their account number with their DP ID. Essentially, a DP ID is a number that is allocated to a depository participant like a bank or a broking firm. Only the CDSL or the NSDL can make such allocation of DP ID. However, the number of the account is a combination of the DP ID and the unique customer ID of the account holder.
Conclusion
When investing and maintaining an account in India, one must be careful to preserve their account number. Although an account holder need not remember it, it is best to know the number. The broking firm of an individual quotes the account of an individual on their behalf whenever any financial transaction occurs.
FAQ's
Is there any difference between the client ID and the Demat account number?
In a way, the client ID and the number of the account are the same. Once an account is opened, a stock broker issues a client ID. The client ID, in part, consists of the last 8 digits of an account number. The first 8 digits of the client ID contain the DP ID.
Is it okay to share my Demat account number with anyone?
No, same as your bank account details, you must make an effort to keep your account details private. Sharing the number of the account may pose a threat to the security of your account, as any third party can easily access your portfolio and trade on your behalf. To keep your investments secure, it is best to keep the number of the Demat account private.
How long does it take to open a Demat account?
Depending on the processing time after submission of requisite documents, it might take between 7 to 20 days for your account to open. You will need to furnish certain documents to begin opening your account. After processing these documents, your account will be ready for online stock trading.
Is there a minimum balance I need to maintain in my Demat Account?
You need not maintain any minimum balance in your account. Your account remains operational despite the balance that you maintain in your account. In some cases, an account holder may not even keep any balance in their account for a certain length of time, yet their account will remain operational.
Are there any disadvantages of a Demat Account?
An account carries the obligation to make payment of annual charges. Depending on your chosen service provider, the annual charge may be low or high. Other than this, there are no disadvantages to an account. Ensure that your stockbroker provides enough supervision to facilitate the smooth operation of trading transactions in your account to avoid difficulties.