Trading on the share market was not as easy as it is today. An investor had to manoeuvre a pile of paperwork before he could buy or sell stocks. This was time-consuming, led to errors, and was tedious. Of course, this process has become obsolete in this digital era. Today investors carry out their operations in minutes with a few clicks. Then what changed?
The emergence of Demat accounts revolutionized the face and functioning of stock markets since its establishment in 1996. It gives investors an online medium to sell and buy stocks. This digital advancement has made stock trading effortless, safer, efficient, and quicker. A Demat account is mandatory to engage in securities transactions (operations in equity and debt) in India.
What Is a Demat Account Number?
Every Demat account is assigned a Demat account number. This number is a numeric or alpha-numeric code specific to each account. Like, a PAN card number is unique to an individual and is a marker for identification, and a Demat account number is an identity marker in the financial world. A Demat account holder receives his Demat account number from a registered Depository Participant after opening the account.
Financial securities operations are impossible without the unique number of the account. This number allows DP and stock brokers to check the securities transactions and maintain the investment portfolio. An investor can have multiple accounts.
In such a scenario, it would be confusing to maintain separate investment portfolios for different Demat accounts without a unique account number since the registered name for all the accounts would be the same. Since every transaction is done against the singular Demat account number, it is easy to record all transactions without any errors.
What Is the Demat Account Number Format?
Being acquainted with the Demat account number format is essential to finding the Demat account number from the vast catalog of information an investor receives from the depository participant after opening his Demat account. It is a 16 digits long numeric code unique to investors. It is curated by combining the Depository Participant ID (DP ID) and Customer ID.
A Depository assigns agents like financial institutions with depository participant ID. Depository agents interface with the investor on behalf of the depository. This DP ID representing the institution becomes the first eight digits of the 16-digit Demat account number when an investor opens an account.
These financial institutions allocate eight digits long customer IDs to their Demat account holders. This code is specific to each investor and constitutes the last eight digits of the unique Demat account number. A Depository is an online cloud where all the electronic securities transactions are recorded. There are two registered Depositories in India, National Securities Depository Limited (NDSL) and Central Depository Services Limited (CDSL).
The Demat account number format varies based on the depository that assigns it. A CDSL Demat account number format is numeric. It is a 16-digit numeric code specific to each Demat account. However, an NSDL Demat account number is alpha-numeric. The first two characters of an NSDL Demat account number will invariably be 'IN.'
The first eight digits of both formats are provided by their respective Depositories. At the same time, the last eight digits are specific client IDs allotted to each account by the depository agent.
How to Know the Demat Account Number?
A person who has freshly opened his Demat account might wonder 'how to know the Demat account number. 'Knowing the number of the account is the preliminary step of using it in buying or selling shares. Upon registering the account with a depository agency, an investor receives a welcome letter or email.
This contains all vital information about the account, including the Demat account number, DP ID, Customer ID, etc. A person aware of the Demat account number format will know what to look for in the letter. Notwithstanding the depository, every Demat account number is 16 digits long. So, this is the first marker. An investor must also know his depository.
Since the depository determines the nature of the number of the account, if the account is affiliated with NSDL, one should look for a 16-digit alpha-numeric code that starts with 'IN.' While if the account is affiliated with CDSL, the account holder should look for a 16 digits long numeric code in the welcome letter.
To Conclude
A Demat account number is as unique and vital as a bank account number. Being aware of the Demat account number format and the constituents of the number of the account will enable an account holder to locate the unique code in their letter.
Even if one forgets the account number, they can piece together the unique code by combining the DP ID and his Customer ID. To deal in the stock market, an investor must have a Demat account. They must also be aware of the number of the account as they need to quote it during transactions.