What are KYC norms for Demat Account

The share market gives access to a variety of financial instruments. We can apply different strategies to extract the maximum out of these assets. However, one requirement remains common regardless of the trading strategy you use to obtain your respective goals. That is a Demat account. To unlock the immense potential of the stock market, we need a demat account. However, demat account opening involves mandatory fulfilment of Know Your Customer (KYC) requirements.  KYC requirements are now mandatory as both the Reserve Bank of India and the Securities and Exchange Board of India (SEBI) have made it compulsory in all financial dealings in our country. Today, let’s learn about the KYC norms for a demat account. 

What is KYC?

Before delving into the details of the requisite KYC norms for the demat accounts, let’s have a better understanding of what KYC is. As already stated, KYC is an acronym for the “Know Your Customer” procedure. It refers to the process of authenticating the identity of an individual. Based on the requirements, individuals obtaining financial services may need to meet different levels of KYC standards, such as documentation. This is because the institutions providing these services must adhere to stringent KYC guidelines as prescribed by government authorities. KYC is beneficial as it prevents fake information from entering the database of brokerage houses, facilitating demat account opening. KYC is normally a one-time process unless otherwise stated or required.

  KYC involves identity and address verification. Face and Iris verifications are common practices. Digitisation has had a positive impact on KYC. We can update our KYC details sitting in our living room. Advanced technologies such as biometric capturing facilities, NFC, or AI-based identity recognition systems are useful, to name a few. However, the range of services may differ based on the organisation providing the demat account. For instance, Share India provides complete solutions to complete the KYC procedure online in a few steps. The firm pioneered rendering services leveraging the multi-dimensional usability of Aadhaar. Aadhaar-based updation and confirmation of personal details make it highly convenient to update your KYC anytime. 

Necessary Documents for KYC

While demat account opening, individuals will need certain documents to comply with KYC guidelines. As per the guidelines of SEBI, KYC involves the following six attributes for a demat account opening. 

• Name
• Address
• Permanent Account Number (PAN)
• Mobile number
• Email address
• Income 

One must provide the necessary documents which prove the genuineness of the details regarding the above six points, as shared with the DP. Here’s the complete list of documents that would get your job done for the demat account opening.

For proof of identity 

Investors can submit the following documents as proof of their identity.

1. PAN card with photograph 
2. Voter’s identity card
3. Passport
4. Aadhaar card
5. Driving licence

In addition, the documents showing identity issued by authorised government bodies are also acceptable by the brokerage firms. The below-mentioned agencies can provide the same.

• Departments of Central or State Government 
• Public Sector Undertakings (PSUs) or Corporations
• Statutory as well as regulatory bodies
• Membership IDs from professional bodies like ICAI, Bar Council, ICWAI, Scheduled commercial banks or ICSI
• UGC recognised Universities or colleges affiliated with such educational institutions

For address proof 

You can submit the following, which can validate your address. 

1. Passport
2. Driving Licence
3. Aadhaar card
4. Voter ID
5. Utility bills such as electricity, telephone, piped gas, water bill etc., which are not less than six months old.
6. Documents pertaining to your health or other insurance 
7. Address proof attested by authorised gazetted officers like bank managers of scheduled banks or co-operative banks, notary etc.
8. The elected representatives of legislative assemblies or parliament, i.e., your local MLA or MP, can also give you the undersigned and attested document to authenticate your address details.

For Income Proof

You will have to provide the following set of documents for proof of your income.

• Permanent Account Number (PAN) along with a copy of PAN card
• Your Salary receipts/slips
• Income tax return (ITR) papers
• A net worth certificate issued by a registered chartered accountant

Conclusion

KYC is a mandatory step for demat account opening. It consists of confirming the details shared with a stockbroker during the account opening process. As mentioned above, the investors can provide certain documents to complete the KYC. The process of updating KYC is pretty easy. Firms like Share India provide online facilities too. Customers can visit the “update KYC” page on their website to complete it easily. You can mention the details and upload the scanned copies of relevant documents. Moreover, e-KYC facilities are prevalent now, simplifying the process to a large extent.