Having a single or joint Demat account is one of the essential requirements for trading securities in the Indian market. A Demat account, as its name implies, is an account that acts as a secure repository for your securities in dematerialized form. A depository participant opens this account with either the CDSL or the NSDL (DP). A Demat account can be opened online; however, the joint account can only be opened offline.
Can Demat Account Be Joint?
Yes. Demat accounts can be joint. All financial accounts like Mutual Funds, Insurance, Bank accounts, and Fixed Deposits can be joined. Feasible to get a joint account, you and your spouse should need to be applying for a joint account, and it is possible only if you are a resident of India and both have Indian IDs. Also, there should not be any adverse credit reports. Please note that if you are applying for a joint account, you will be the account holder of the account.
What Is a Joint Demat Account?
You can open a combined account online like a joint bank account. These crucial traits have been enumerated below as characteristics of such an account.
- There can be a maximum of 3 account holders for a combined account.
- One of the joint holders of the account is the account's principal holder. In contrast, one or two of the other joint holders are its secondary holders.
- Each joint holder of an account must verify the transactions in the account.
- A shared account's holders are exempt from paying annual maintenance fees separately.
- An account's ownership passes to the surviving joint holders if one of the joint holders passes away. The advantages of the account pass to the nominee upon the death of all joint holders.
How To Open A Joint Demat Account in India?
Opening a joint account online is simple. Similar steps are taken to open a single account.
- A joint account cannot be formed online for an account to start.
- The application must be printed, filled up, and then submitted by the Investor at the branch of your DP.
- Choose whether you want to open a single- or joint-holder account.
- The Demat form must include the first holder's correspondence address. The first holder will receive all correspondence.
- All holders must provide their KYC documentation along with passport-sized photos.
- All holders must produce identification documents, including their PAN cards, proofs of identity, and addresses.
- Complete the form with your signature, upload all the paperwork needed to start an account, or deliver it in person by going to the branch office of the brokerage company of your choice.
- The applicant will receive an account number and login information for that account once all verifications have been completed.
In most cases, there are two unique circumstances in which a joint account may be formed when there are actual shares in a combined account. Second, when you wish to liquidate the account associated with a joint account, you hold with another broker and transfer the shares to another account.
A group of individuals may form an account, but it will never be referred to as a joint account if a single organization holds it. A single account cannot be changed into a joint account; a joint account may only be opened during the application process of an account opening.
The only way to add a new holder to an account is to add that person's name as the nominee. A nominee has no operational control over the account. Still, they can use it once the account has been transferred to them with all of the ex-first holder's privileges.
Benefits of Joint Demat Account
Two or more individuals hold a joint Demat account with equal rights and responsibilities. This type of account benefits those who want to invest together in a securities market. It allows them to pool their resources & make joint investments.
It also offers flexibility and convenience as each account holder can access the account and make transactions from any location. Moreover, a joint Demat account also helps in estate planning as the account can be passed on to the surviving account holder in the event of the death of one of the account holders.
For some people, a joint account is the best way to keep track of their benefits. Here are some advantages of getting a joint account:
- You and your partner can both easily keep track of your benefits
- Since the account is shared, you can each contribute to it and make decisions about how to use the funds
- With a joint account, you can take advantage of various investment opportunities together.
How to Add Joint Holder to Demat Account?
Suppose an individual is the sole holder of the account. In that case, he can add joint holder(s) only by applying the Demat Section of the concerned Regional Office of the Bank. However, the joint holder(s) can open a new Demat account without the application of the prime holder. The joint holder(s) can then operate the account by submitting their KYC.
Conclusion
A shared account facilitates easy access to the account for all users and promotes financial literacy among all participants. A nominee for your account is crucial because it enables correct use of the account after the original account holder transfers his rights.
The Investor should also be aware that once the account has been formed, a second holder's name cannot be added to that account. Instead, a nominee must be added to the account if the first holder wants to add a second name.
The shares from the prior account cannot be transferred or traded until a new Demat account has been formed in the names of the remaining joint holders. It should be in the same sequence as the old account if one of the joint holders passes away.
Frequently Asked Questions:
Is opening a joint Demat account online possible?
Opening an online joint Demat account is simple. Similar steps are taken to open a single Demat account. You must go to the chosen depository participant's official website and have all the required KYC documentation.
Is it possible to open a second Demat account?
Companies and partnership entities are also permitted to hold Demat accounts. The decision to add additional users to an account must be made when the account is opened. You cannot add a new user to an already open account. Opening a new account is your only option.
Who may manage a shared depository account?
A trading account cannot be opened jointly by investors. Only one name may be used to open a trading account. This can be attributable to the fact that each trading account is associated with the unique PAN number of the investor. However, individual investors can create joint accounts.
After death, what happens to the joint Demat account?
The surviving joint holder of an account becomes entitled to the securities upon the death of the joint holder. This procedure calls for an application in a predetermined format and supporting documentation to prove the holder's demise.
Can a joint holder be added to an existing Demat account?
Companies and partnership entities are also permitted to hold Demat accounts. The decision to add additional users to a Demat account must be made when the account is opened. You cannot add a new user to an already open account. Opening a new Demat account is your only option.
How much money is required to create a Demat account?
It should be noted that a Demat account doesn't need you to have a certain number of shares/ securities, unlike every savings account where we must maintain a minimum balance. You don't need a minimum balance to operate a Demat account, and you can start one with no money at all.