If you’re interested in investing in the share market, it is necessary that you open a demat account. Short for dematerialised, demat accounts allow you to hold all your market instruments in the electronic form. Through you demat account, you can buy and sell shares, mutual funds, money market instruments, government bonds, and exchange traded funds and other instruments available in the investment market. To conduct trades through your demat account, you need to first know how to find demat account number and the entities involved in providing demat services. Here’s all you need to know.
Opening the demat account – depositories and depository participants
Before you can open a demat account, you need to understand two very important terms – depositories and is depository participants.
Depositories – definition
A depository is essentially a financial institution that holds all your securities (shares, mutual funds, debentures, bonds, etc.) in the electronic format, that we commonly refer to as demat accounts. These institutions are mainly responsible and are held accountable for securely keeping all you investment instruments and maintaining a record of all the trades you conduct through your online demat account. There are two main depositories authorised by the SEBI in India, namely the National Services Depository Limited (NSDL) and the Central Depository Services Limited (CDSL).
Depository Participants – Definition
Depository Participants, also known simply as DPs, is typically an entity that serves as the agent of the two above mentioned depositories i.e. NSDL and CDSL. Financial institutions such as banks as well as brokerage firms serve as DPs and are the main link between the depositories and investors. These DPs offer online demat accounts through which you can conveniently invest in the share market and conduct trades, while your investment instruments are safely parked in the electronic form in the demat account. The relation between the depositories and DPS is governed in accordance with the provisions of the Depositories Act, 1996.
Checking the demat account number
Now that you know what depositories and DPs are let’s find out how to check demat account number. Here are the steps:
1. Open your demat account through a DP online or by visiting their branch.
2. The DP will send you a welcome kit featuring the details of the depository with which your account is opened. Your demat account could be opened either with NSDL or CDSL, depending on which depository your DP is linked to.
3. Once you open the welcome kit, you will find a letter containing a 16-digit number.
4. This 16 digit number is your demat number. It is important to understand which depository is maintaining your demat account. This, you can gauge through the format of the demat number.
5. In case the CDSL is your depository, then you will be allotted a 16 digit number, for instance – 1234567891011123.
6. On the other hand, if the NSDL is your depository, your demat account number will feature the letters ‘IN’ followed by 14 numeric digits; for instance IN12345678910112.
So if you are confused about how to find demat account number, just remember who your chief depository is. Alternatively, you can reach out to your DP to find out your demat number.
Final word: Demat accounts are mandatory and make it easy for you to conduct your trades easily. Although a few DPs may offer free demat accounts, make sure that you check if any additional costs are levied for your market transactions. It is better to select a DP offering great services and facilities that one that does not charge for demat accounts or offer good facilities.