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The journey of depositories began with the establishment of NSDL, the oldest depository in India. At present, there are two depository institutions in India, NSDL and CDSL. All the depository participants are registered either with NSDL or CDSL, or both of them. In this article, we will discuss what a depository participant is, its role and how to open an account with a depository participant.
Depository participant refers to a registered agent/stockbroker of the depository. It acts as an intermediary between the depository and the investors in the stock market. In India, all the depository participants are registered under sub-section 1A of Section 12 of the SEBI Act, 1992. In order to function as a depository participant and provide services to investors in the stock market, it is necessary to obtain a certificate of registration from SEBI.
Depository participants provide a secure and transparent record-keeping platform wherein investors can hold and transparent securities in dematerialized form. They have a tie-up with depository institutions.
A depository institution is essentially an institution that is authorized by SEBI to hold securities in a dematerialized electronic form. Depositories do not provide services directly. Through the depository participants, the depository institutions can carry out their activities. The relationship between depository participants and depositories is governed by the Depositories Act, 1996.
Depository participant examples include stock broking platforms like Zerodha, Upstox, Motilal Oswal & Kotak Securities.
The primary role of a depository participant is to act as a link between the depository and investors, take care of investor-level demat accounts for securities and assist in the trading process by connecting investors to NSDL and CDSL depository institutions.
Based on this role, the key functions of depository participant are:
To help investors in opening accounts with the depository.
To settle trades done on the stock exchange connected to the depository.
To dematerialize securities.
To rematerialize securities.
To pledge or un-pledge securities for loan purposes.
Closure of demat account.
Transmission of securities.
Mutual fund conversion.
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You can open a demat account with the depository participant of your choice. The process might differ accordingly. However, here are some basic steps which must be followed:
You must search for the DPs in India and the depository participant charges for the services they offer. According to your preference, you can open an account with the depository participant.
While opening an account, you will be required to add basic details such as your name, date of birth, email address, and mobile number.
You must provide the bank account details for the bank account through which you want to withdraw money for trading and investing. In the same bank account, you will also receive the money after selling your securities.
You will be required to upload all the required documents asked by the depository participant. The documents include PAN card, valid residence proof, balance sheets, recent photographs, aadhaar card, driving license, voter ID, passport, utility bills and bank account statements.
The depository participant will verify all the details and documents. This can take a few days. In case there are any issues, they might call you or send you mail. If there are no issues, your account will be opened successfully and you can start investing and trading in the stock market.
To find out your depository participant ID, open your stock broking app and go to your profile. Your ID will be mentioned there.
If your demat ID is a 16-digit numeric code, then your depository is CDSL. However, if the first two digits are alphabets while the remaining 14 digits are in numbers, then your depository is NSDL.
A depository participant is a depository institution’s agent. With the help of depository participants, depository institutions like CDSL and NSDL can provide their services successfully. The depository participants help the investors to invest in securities safely and easily through the stock broking apps. The investors do not need to carry their securities in a physical form.
If you want to become a stock broker in India, it is necessary to receive authorization with the Securities and Exchange Board of India (SEBI). To obtain the stock broker license easily, connect with Registrationwala or click on start your application button given below. We’ll take care of all the paperwork involved!
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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