Every trader who wishes to buy shares or other electronic securities in the financial markets requires a Demat account. If you want to invest in any kind of Dematerialised financial instrument or security (except mutual fund units), you need to first open a Demat account with your preferred depository participant (DP). When you do this, you will receive a Demat account number.
Let us examine what this number means, why it is important, and how to know your Demat account number.
What is a Demat account number
A Demat account number or Beneficiary Owner (BO) ID is a string of 16 characters that is unique to each Demat account. Every Demat account holder requires this number to log into their account and access their electronic share or security holdings. The Demat account number occurs on every official communication related to the trades you make in the financial market.
The first 8 digits or characters of the Demat account number represent the Depository Participant ID. The DP is an entity through which you can open a Demat account with either of the two depositories in India — National Securities Depositories Ltd. (NSDL) and Central Securities Depositories Ltd. (CDSL). The next/last 8 characters make up the client ID or the customer ID, which is unique to each trader. These characters are assigned by the DP.
Demat account number formats
Depending on the depository with which you open your account, the Demat account number format can be any one of two types, as outlined below:
- CDSL Demat account number format: The Demat account number for an account opened with the CDSL consists of 16 numbers. The first 8 numbers are the DP ID, and the next 8 numbers are your unique client or customer ID.
- NSDL Demat account number format: If you open an account with the NSDL instead, the first two characters will always be ‘IN.’ This will be followed by 14 numbers. The first 8 alphanumeric characters make up the DP ID, and the next 8 numerals are your client ID.
How to check your Demat account number
If you already have a Demat account, you need to know what your Demat account number is. In case you have misplaced or forgotten this crucial information, you may be wondering how to know what your Demat account number is. The good news is that it is quite easy.
Whenever a new Demat account is opened, the stockbroker/DP typically sends a welcome email and/or letter to the account holder. You, too, would have received such a message or email from your DP. All you need to do is search for these details in your inbox to find your Demat account number.
Why is a Demat account number important
A Demat account number is a vital detail for any trader who holds (or plans to hold) securities in the electronic format. It is the identifying feature for the Demat account, which is used to hold such Dematerialised securities. It is important for the following reasons:
- Account identification: A Demat account number is unique, thus making it easy to identify the account from which securities are sold and the account to which they must be credited.
- Smooth transactions: With a Demat account number, it is also possible to buy, sell or transfer securities more efficiently and easily. It simplifies the process and minimises paperwork too.
- Convenience: Having a Demat account number means that you can hold your investments electronically. This is infinitely more convenient than holding them in the physical format. Also, with a Demat account number, you can access and track your holdings at any time.
- Improved safety: Without a Demat account number, you can only hold your securities in the physical format. This is highly risky because physical certificates are prone to vulnerabilities like damage, loss, theft or other physical issues.
- Regulatory compliance: Physical certificates are not only risky; they are also no longer permitted as holdings by the Securities and Exchange Board of India (SEBI). So, a Demat account is now mandatory in India.
Conclusion
Your Demat account number is an important credential that acts as a gateway to online trading. Ensure you safeguard this crucial detail and avoid sharing it with third parties. This will prevent unauthorised access to your Demat account. Also, now that you know how to check your Demat account number, you can always recover it in case you forget the exact string of 16 characters in this unique identifier.
