You have a wide range of investment alternatives on the stock market, which is a big component of the financial market. One can open demat account with the brokerage and start investing in stocks and derivatives. Opening a demat account enables the buyer and seller to acquire stocks without really owning any of them. A demat account can also be used to monitor the performance of your investment over time. When creating an account with a brokerage firm, there are several factors to think about, such as fees and availability. In addition, there are certain steps to follow. Linking your Aadhaar Number with the demat account is one such mandatory thing. Let’s learn more about it today.
What is a Demat Account?
The term “Dematerialization” (abbreviated as “Demat”) refers to the process of converting physical shares and securities into electronic forms. Shares must be kept in electronic format rather than paper in Demat Accounts. Demat Accounts aid in maintaining the security of shares, preventing their loss or the danger of fraud. It’s a simple approach to transact in securities quickly. For the purpose of trading shares on stock exchanges, it is necessary to have both a Demat account and a trading account.
The Depository Act, which was passed in 1996, mandates the use of a Demat account. The National Securities Depository Limited (NSDL) was founded in 1996 in order to assist this. Three years later, the second organisation was established. That is, the Central Depository Services Limited (CDSL). The two firms act as custodians for all investor-owned electronic securities. Additionally, they provide a demat account opening facility through other depository participants.
How To Link Aadhaar With The Demat Account
Here are the complete steps to link your Aadhaar information to your demat account.
Step 1: Open the ‘Link Aadhaar with Demat Account’ page on the NSDL website.
Step 2: After the page opens, look for the “Get Started” option.
Step 3: Enter the demat account number (DP ID), client ID, PAN number, and name of the Demat account holder.
Step 4: The entire demat account information will be displayed on the screen.
Enter the verification code in step five.
Provide your DOB, gender, and Aadhaar number in Step 6
Step 7: Click on the “Proceed” button after checking that all the information is right.
Step 8: In accordance with NSDL records and Aadhaar, an OTP (One Time Password) would be produced and given to the registered cellphone number or email address.
Step 9: Type the OTP into the box and press the “Submit” button.
Step 10: The information will be verified and authenticated.
Step 11: After that, your Aadhaar will be linked to the Demat account or accounts.
Documents Required While Linking Aadhaar With Demat Account
You must keep the following documents ready before you initiate the process of linking Aadhaar with a demat account.
- Aadhaar card
- Depository participant (DP) name
- Depository participant (DP) ID
- PAN
Also, keep your registered mobile number active during the linking process.
Advantages Of Linking Aadhaar Number To Demat Account
The following are the benefits of linking Aadhaar to demat accounts.
- Using the validated data from the Aadhaar card, e-KYC clearance will be simple.
- Increased transparency in the investment process will stop fraud. Nobody has to be concerned about having their account cancelled. Trades may be conducted more quickly and without a lot of paperwork.
- Investors would be able to simply switch brokerage companies based on their preferences after Aadhaar is planted.
- Because switching brokerage companies would be simpler, there will be more competition in the market, which will push brokerage firms to reduce their rates.
- It will be simpler for the investment regulator to monitor transactions and thwart fraud.
Conclusion
It is crucial to remember that three parties—a bank, the depository participant, and the investor—are involved in the process of opening a demat account. For trading to take place smoothly, your bank account and the demat account must be linked. By linking your Aadhaar Number to your demat account, you may make sure that the transactions are properly authenticated. This keeps the account safe and also facilitates easy transfer of funds to the bank account.
Several brokerage houses are offering excellent services to comply with all such guidelines. On well-known platforms such as blinkX online stock trading app you can easily link your Aadhaar number online. All you have to do is to visit their online portal and follow a few simple steps. As the entire process is online you can complete it without stepping out of your house.
