What is DP ID in a Demat account and where to find It?￼
The adoption of Demat accounts has revolutionised the way the Indian stock market works. It has eliminated the need to carry and store paper certificates of securities and made transactions quicker and safer.
All Demat accounts in India are registered with two depositories. These are Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). The depositories work with intermediaries called Depository Participants.
Who is a depository participant?
The DP or depository participant is an agent registered under either of the two depositories NSDL or CDSL. Financial institutions, such as banks or brokerage firms, generally offer the services of a DP.
They work as a connection between the investors and the depositories. They guide investors throughout the entire process of Demat account opening and resolve any queries raised by the investors.
All depositories and DPs in India are regulated by the Securities and Exchange Board of India (SEBI).
What Is DP ID?
Everyone with a Demat account has an account number provided by the depository. An account number generally consists of 16 numeric (CDSL) or alphanumeric code (NSDL). Out of the 16, the first 8 reflect the DP ID and the last 8 show the customer ID. Thus, the account number is the sum of both the DP ID and the customer ID.
Where Can You Find the DP ID and Demat Account Number?
A Demat account is opened after the submission and verification of an investor’s documents. Once the account is opened, the DP provides an investor with a welcome letter that contains all account information, including the account number. The account number contains both the DP ID and the customer ID.
Note that if you have opened a Demat account with CDSL, instead of a Demat account number you will see a BO (Beneficiary Owner) ID.
How DP ID Varies for NSDL and CDSL Demat Accounts?
A Demat account registered with CDSL will have sixteen digits as an account number. For example, if 0000000011111111 is your account number, then 00000000 is your DP ID and 11111111 is your customer ID.
A Demat account registered with NSDL starts with “IN”. After this there are fourteen numbers. For example, if IN00000011111111 is your NSDL Demat account number, then IN000000 is your DP ID and 11111111 is your customer ID.
What are the roles of a DP?
There are several vital duties that a Depository Participant performs. These are:
- Demat account opening
A depository participant is required for opening an investor’s Demat account as investors cannot approach depositories like NSDL or CDSL directly. They act as a point of contact between a depository and an investor.
- Dematerialisation of securities
Investors having physical certificates of securities need to approach depository participants to convert their holdings into the dematerialised form. DPs provide investors with a “Dematerialisation Request Form” (DRF) which needs to be filled out by investors.
- Rematerialisation of securities
If investors holding a Demat account want to convert their holdings into paper documents, DPs provide them with a “Rematerialisation Request Form” (RRF). On filling out this form, investors can convert their Demat account holdings into physical forms.
- Settlement of securities
A depository participant is responsible for facilitating the entire transaction done through a Demat account. They review and maintain the transparency of the entire process.
- Maintaining a record of securities
A DP is responsible for maintaining the record of all securities held and transacted by investors in their Demat accounts. In case of any discrepancies, a DP guides an investor to a proper solution.
- Extending loans against securities
A DP is also services by extending loans against securities held by an investor. In this case, the investor cannot sell the pledged shares till their loan is fully paid. The amount of loan sanctioned depends on the market value of shares held by an investor.
- Supporting off-market transactions
Off-market transactions involve the direct buying and selling of shares between two investors. In this case, transactions do not occur on stock exchanges. DPs also facilitate these kinds of transactions.
- Lowering paperwork and risk factors
With the introduction of DPs, the entire process of investing in securities through Demat accounts has become easier. Paper documents have been reduced significantly and with that, the risk of forgery is also eliminated.
- Freezing a Demat account
DP is also responsible for freezing your Demat account if it stays inactive for a period of three or more years.
Thus, we have a clear idea about the importance of a DP in the entire process of security transactions. We have also learnt that a Demat account number consists of both DP ID and a customer ID. In case of any guidance or resolving any quarries related to security exchange, you should consult the customer service of your DP.
Frequently Asked Questions
Is DP ID the same for all?
No, the DP ID is an eight-digit unique code given by depositories to each depository participant registered under NSDL or CDSL.
What are DP charges in trading?
There is a fixed amount that is levied by the depository (NSDL or CDSL) for every transaction, regardless of the number of shares.
Is TDS applicable on DP charges?
No, TDS is not applicable to DP charges. But GST is added to it.
How should I choose a depository participant?
When choosing a DP, you should check their quality of customer service, charges levied on transactions, the user interface of their platform and customised services (if any).