What Are KYC Norms For Demat Account

Opening a Demat account is a necessary first step for investing in the stock market. Just like you need a bank account for managing money, a Demat account is required to hold securities in digital form. However, before this account is activated, every investor must fulfil KYC norms as mandated by Indian financial regulators.

KYC, or Know Your Customer, is a verification process that involves collecting and validating identity and address details of investors. This step ensures that the financial institution knows who is accessing the securities market and helps in preventing fraud, money laundering, and unauthorised transactions.

The Securities and Exchange Board of India (SEBI), which regulates the Indian capital markets, has made it compulsory for all investors to complete KYC before opening a Demat or trading account.

To complete your KYC, you must provide a combination of identity and address proof documents. Here’s a list of acceptable documents:

In many cases, Aadhaar-based eKYC can be used for faster verification.

The KYC process consists of multiple steps to ensure accurate verification of investor details. These include:

Document Submission

You must provide copies of your PAN, address proof, and a passport-size photo. In some cases, in-person verification may be required.

In-Person Verification (IPV)

This step involves confirming the identity of the applicant by meeting them in person, or via live video verification if processed online.

KRA Registration

Once KYC is completed with a registered intermediary, the details are stored with a KYC Registration Agency (KRA), which can be accessed by all SEBI-registered entities.

Biometric Authentication (if online)

Many platforms use Aadhaar-based biometric authentication for paperless KYC, ensuring both speed and accuracy.

KYC for a Demat account can be completed either online or offline. Both methods serve the same purpose but differ in convenience and time.

Offline KYC

• Fill and submit physical KYC form
  

• Attach self-attested copies of required documents
  

• Complete IPV at the office or through a representative
  

• Processing time: 2–5 working days

Online KYC

• Enter details via broker or DP's digital platform
  

• Upload scanned copies of documents
  

• Conduct video IPV using webcam or smartphone
  

• Aadhaar-based eKYC is often available
  

• Processing time: Within 24–48 hours

Online KYC is generally faster and is preferred by most modern investors.

Depository Participants are agents who facilitate the opening of Demat accounts for investors. They are responsible for collecting KYC documents and verifying them before account activation.

Some DPs also offer Aadhaar-based KYC through OTP authentication, while others may use more advanced facial recognition and liveness detection features.

DPs are also required to periodically update and reverify KYC details, especially in cases of change in address or other personal details.

Not completing your KYC correctly can lead to the rejection of your Demat account application. Inactive or incomplete KYC may result in:

• Freezing of existing Demat or trading accounts
  

• Restrictions on buying/selling shares
  

• Penalties for non-compliance in certain cases

Investors must also update their KYC whenever there’s a change in address, contact details, or bank account.

You can check your KYC status online through any KRA portal such as:

• CVL KRA
  

• NDML KRA
  

• CAMS KRA

You simply need to enter your PAN number to verify if your KYC is active and valid across SEBI-registered intermediaries.

SEBI has introduced digital KYC norms to streamline the process and eliminate manual errors. Here are some key updates:

• Video-based IPV is now accepted for digital account openings
  

• Aadhaar eKYC is valid for small investments (up to ₹50,000 annually)
  

• Use of DigiLocker for document storage and instant sharing
  

• DPs must validate mobile numbers and email IDs linked to Aadhaar

These changes have made onboarding more secure and efficient.

KYC norms play a critical role in ensuring that Demat accounts are only accessed by verified and legitimate users. Whether you’re a first-time investor or updating your details, understanding and complying with these norms is crucial for smooth and uninterrupted trading. With options to complete KYC both online and offline, investors can choose the route that best fits their convenience.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.