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Can a demat account be opened without a PAN card?

2 Mins 07 Feb 2021 0 COMMENT

Your PAN Card is a mandatory requirement to open a Demat account.

How to open a Demat account?

Before we answer the question, let us first try and understand what a Demat account is. A Demat account holds all shares and securities in a Dematerialised or electronic format. As per SEBI norms, Demat accounts are just as necessary as trading accounts for people who wish to invest and trade in the Indian stock market. One cannot invest in shares and securities without a Demat and a Trading account.

Additional Read: Top Features & Benefits of Demat Account

Demat account opening

Demat accounts can be opened offline by visiting the office of a stockbroker or a bank offering Demat facilities. You can also open a Demat account online. Many brokers offer a free Demat account opening facility. Few brokerage houses also provide three accounts – Demat, Trading, and Savings combined in one, through their accounts.

Additional Read: Which is the Best Demat Account in India

Additional Read: Things to check before opening a Demat account

Documents needed for opening a Demat account

As a part of the Demat account opening procedure, you need to submit some documents and complete the KYC (Know Your Customer) process. As such, you need to submit your proof of identity and address, and a copy of your PAN card as per the Official Valid List (OVD) of documents.

Additional Read: Documents Required To Open A Demat Account

Additional Read: Who can open a Demat Account? Know the Eligibility Criteria

Is a PAN card a must for Demat account opening?

Yes, it is. You cannot open a Demat account without a PAN card. The SEBI made the PAN card mandatory for opening a Demat account. The investor needs to show the original PAN card while opening a Demat account. Additionally, you have to submit a self-attested copy of your PAN card.

If the Demat account has joint holders, each of the joint account holders is also required to submit their PAN card.

The Importance of PAN card

PAN stands for Permanent Account Number. A PAN card is an important document that all Indian citizens must have. Your PAN number lets the Income Tax department link all financial transactions made by you. According to the IT Department, PAN is the sole identification for all financial transactions in the securities market, irrespective of transaction amounts.

As per the law, a person can hold only one PAN card. Once assigned, your PAN number does not change during your lifetime – whether you move to another city or country (become an NRI).


Documents required to open demat account and trading account | demat account documents | ICICI Direct

How to invest without a PAN card?

Earlier, you were allowed to make investments in Mutual funds to the tune of Rs. 50,000 without a PAN card. However, after the revised SEBI norms that flexibility does not exist. Now, a PAN card is a mandatory requirement for opening your Demat account and for investing in stocks, mutual funds, and other securities. This is applicable for any previous investment that may have started without submission of a PAN card too. You will need to submit a PAN card copy as a verification procedure to continue your earlier investment. Simply put, the possession of your PAN card serves as a prerequisite without which no financial market investment is possible for Indian citizens and NRIs.

The only exception to this rule is Indians that belong to scheduled tribes of the North East. You will be allowed to open a Demat account even if you do not have a PAN card if you belong to Arunachal Pradesh, Sikkim, Manipur, Tripura, Nagaland, Mizoram, and some parts of Assam. You will also be allowed to make investments up to Rs 50000 in financial market securities. But, this exemption will apply to you only on submission of valid identification and address proof that serves as evidence that you are a resident of one of the places mentioned above.

Demat account and PAN card

You can open multiple Demat accounts against one PAN card. There is no limitation to the number of Demat accounts you can open. However, all these Demat accounts will be linked to the same PAN card.

Additional Read: Why Demat Account is Must for Today's Investors

Disclaimer: The contents herein mentioned are solely for informational purposes and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.