What are all the documents required to open a Trading Account?

There is a role for documents in every aspect of the stock market. You need to submit documents for all types of accounts required for trading and investing in the stock market. This article will learn about the documents required to open a trading account.

Do not be afraid to submit your documents because the entire documentation process is beneficial to your trading purposes. Every individual who wishes to trade in the stock market must submit the documents, which will ultimately help reduce corruption in the stock market.

These are the documents required to open a trading account:

• Identity proof of the investor
• The evidence of the income of the investor
• The Aadhaar card of the investor

Ensure the authenticity of your documents before submitting them. In addition to the documents listed above, there are more documents that you may need to submit. Remember, the number of documents required to open a trading account depends on your depository participant. They can require you to submit as many documents as you want to move ahead with your trading account requirements. Make sure to contact your chosen DP regarding all the required documents.

Eligibility Criteria for a Demat Account

To be permitted to trade and invest in the Indian stock market, you need a Demat account, which may raise questions like what are the requirements for opening a Demat account in the mind of an investor. Contrary to most people’s beliefs, individuals do not always need to be over 18 to trade. Some brokerage firms allow the facility of Demat accounts for minors as well. An individual needs a sufficient number of documents to be eligible to trade in the Indian stock market and open a Demat account.

Documents Required for a Demat Account

A Demat account is essential in the stock market, and any investor who wishes to enter the stock market world must have one. However, they may have questions such as what documents are required to open a Demat account or who can open a Demat account. You will get information regarding what the requirements are for opening a Demat account as you move forward with your readings.

• The PAN card of the investor

• The Aadhaar card of the investor
• Identity proof of the investor
• Income proof of the investor
• two passport-sized photos

These documents are just the standard requirement, and the number of documents that need to be submitted for the Demat account opening process can increase or decrease as per the requirements of your DP.

List of Documents Qualifying as Proof of Identity

The following documents can qualify as proof of identity:

• The PAN card

• The Aadhaar card and UID (i.e., Unique Identification Number)

• Voter ID

• Passport

• Any government-provided documents

There is also your driving license, which you can submit as proof of identity.

List of Documents Qualifying as Proof of Address

You may have a question about the documents as you are curious about what the requirements are for opening a Demat account and trading account. Hence, the following documents can suffice for the address proof:

• The ration card of the investor
• The investor is the voter ID card.
• The electricity bill of the investor
• The passport of the investor

You can also submit your Aadhaar card and a state government-issued driving license.

List of Documents Qualifying as Proof of Income

Proof of income is a must document required to open both a trading account and a Demat account. 

The following documents can suffice as proof of income:

• The investor’s copy of the annual income
• An income tax return copy of the investor
• The active bank account statement of the investor
• The Demat account holding statement of the investor

There are also documents such as the income slip that you can submit.

What Documents are Needed to Open a Demat Account for a Minor

As already discussed above, minors can also open a Demat account. However, they cannot do so directly. The minors’ Demat account can get opened through the guardian or the minor’s parent. You will have to submit all the documents like:

• The PAN card
• The Aadhaar card
• The Age Certificate
• Address verification

Some of the DP may ask the guardian to submit their personal information. The Demat account of minors cannot be a part of a joint Demat account.

Other Documents for Opening a Demat Account

There can be many documents that your depository participant may ask for, like your electric bill, or in an extremely rare case, your mark sheet, your maintenance bill, the insurance papers, etc.

Documents Required for a Demat Account in the Name of an NRI

The NRI also can open a Demat account in India, but they will need to submit more documents than the typical Indian resident. These are- 

• The address proof
• Visa
• The passport
• The proof of income
• Proof of an overseas address
• Then bank account information can get submitted with the canceled cheque.
• Two to three passport-size photographs

The number of documents may increase or decrease as per your chosen DP. 

Exemptions/Clarifications to PAN

The PAN card is one of the most important documents in investing and trading, as you cannot perform any transaction in India if you do not have a pan card. A PAN card stands for a Permanent Account Number. The DP of the investor is required to verify all the details of their client’s pan card.

Mandatory KYC Updation

KYC stands for “Know Your Customer or Client”. It is a requirement that an investor must meet. The investor must fill out documents such as:

• The PAN card
• The voter identity card
• The driving license 
• Aadhaar card
• The passport

The KYC also makes it easier for the DPs to track the flow of the investors’ funds and shares in the stock market.

Benefits of a Paperless Demat Account

The paperless Demat account is easy to manage as it is right under your control, and you can operate it from your internet device like a smartphone, laptop, or computer. You can say that the accessibility of the paperless Demat account is the key benefit. However, there are other things like liquidity, as all your shares are available all the time for you to buy or sell. It provides great liquidity for your investment, and then there is transparency. You can also check the real-time valuation of your investment through the online trading platform, which can be your broker’s trading app or website.

Conclusion

Having a trading and a Demat account is an integral part of the stock market. Both perform different functions, but both of those functions are important to keep your trading afloat. The trading account and the Demat account are interlinked as all the shares you buy from the stock market using your trading account get stored in your Demat account.

Frequently Asked Questions (FAQs)