Who Can Open A Demat Account

Just a normal Google search will result in hundreds of articles shoved right in your face, but a majority of them miss out on probably the most basic and yet significant detail, that is who can open a Demat Account. 

But, you needn’t worry, we’ve got you covered on that front. Here in this article, eligibility criteria for opening a Demat Account in India is one of the queries of Demat Account Rules (or the SEBI Guidelines for Demat Account) that is discussed here.

Who Can Open A Demat Account In India?

The following are the entities that are eligible for opening a Demat Account in India :

• An Indian Resident – The Law defines an Indian Resident as someone who has stayed in India for at least 182 days for a Financial Year, or spent 60 days or more in a year in India adding up to a total of 365 or more days in the previous 4 years.
• Hindu Undivided Family (HUF) – The term doesn’t only account for Hindu families solely but even Jain, Sikh, and Buddhist families fall under the ambit of HUF. The Law treats a HUF as a “person” meaning that all the tax transactions are taken out in the name of HUF as a single entity. 
• Domestic Companies – Section 2 (22A) of the Income Tax Act, 1961 defines “Domestic Companies” as Indian Companies or any such company that has made provisions to be taxed under the Act, and will further declare its income and pay dividends on the same in India. 
• Non-Resident Indians (NRI) – A NRI is a person who holds Indian citizenship but resides outside the Republic of India or is a Person of Indian Origin (PIO). 
• Clearing Member – A Clearing Member Account or Pool Account is often employed by brokers to hold securities acquired from their clients, and usually, these securities are further released to clearing corporations. 

These are all the entities eligible for opening a Demat Account in India. Now, let’s move on to take some of the most common queries that the topic may give rise to.

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Can I Open A Demat Account Without a PAN Card?

To answer that straight away, a big NO. A PAN Card is mandatory for opening a Demat Account.

PAN Card is one of the most important documents required to open a Demat account. 

As in the case of setting up an account, the process invariably involves some paperwork, Demat Account is no exception with PAN Card and Aadhaar Card being the most imperative of all the legal documents.

You will need to submit a copy of your PAN Card as well as share your KYC details with your stockbroker.

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Can A Minor Open A Demat Account?

Yes. Contradicting the popular belief that one needs to be an adult to have a Demat Account opened in their name, is the lesser-known fact that there is no mention of minimum age to be eligible for setting a Demat Account. 

Know the full procedure about How to open minor Demat Account? so that you adhere to the minor demat account rules.

A Minor can have an account set up in their name by their parents or guardians who will remain in charge of the account until the account holder legally reaches the age of adulthood.

A parent or the appointed guardian would be required to present the legal documents, namely – identity proof, address proof, age proof, and photographs on behalf of the account holder to the Depository Participant. 

If you want to open demat account for minors but are not sure about which stockbroker to choose, you can take an idea from the below list:-

Angel Broking Minor Demat Account

Minor Demat Account Upstox

Minor Demat Account Zerodha

ICICI Demat Account for Minors

HDFC Demat Account for Minors

Motilal Oswal Minor Demat Account

Sharekhan Minor Demat Account

IIFL Minor Demat Account

Minor Demat Account 5paisa

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Can NRIs Open A Demat Account?

Even though we have talked of this specific bit of information earlier in the article, the frequency of this query makes us address it once again. 

NRIs or Persons of Indian Origin (PIO) are eligible for both Repatriable and Non-Repatriable Demat Accounts. 

On a Repatriable basis, NRIs can participate in Initial Public Offers (IPO) by employing their Non-Resident External (NRE) bank account, whereas for making investments on a Non-Repatriable basis, they will be needing a Non-Resident Ordinary Rupee (NRO) account.

Also, read Demat Account Transfer.

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Conclusion

So, there you have it from our side. We hope we could deliver on our promise of enlightening you on the topic at hand and have dealt with the most commonly appearing queries appropriately.

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