New Rules Announced For DEMAT Account Holders

One of the key components of the financial aspect of our lives is the financial market particularly investments made in the share market. According to a National Stock Exchange (NSE) of India report, as of March 2024, around 9.2 crore people have invested in the share market; the average age of investors is also dropping drastically which came down from 38 years in 2018 to 32 years in 2024. This represents the growing interest of the people of India in investments in securities through the share market.

Recently, the Security Exchange Board of India (SEBI) announced certain changes and rules in DEMAT accounts which would have a significant impact on the DEMAT accountholders. The changes would be effective from December 3rd, 2024, and aim to make certain things flexible for the DEMAT accountholders.

What Is A DEMAT Account?

The dematerialised account also known as a DEMAT account is a digital account through which an individual manages their respective investments made in various types of securities like shares, bonds, mutual funds, Exchange Traded Funds (ETFs), etc. DEMAT accounts are supervised by two main authorities. i.e. the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL).

New Rules Announced For DEMAT Accountholders

The Security Exchange Board of India has announced some major changes for both, individual clients (people who open a DEMAT account for personal uses) and non-individual clients (organisations or business entities who open a DEMAT account for business profits).

Rules For Individual Clients

A DEMAT account is almost as sensitive as one’s bank account therefore before, only the DEMAT account holder could access their respective accounts. But now, SEBI has amended this and announced that close family members of the primary DEMAT account holder can also access the DEMAT account.

The notification clearly defines ‘family’ as:

• Spouse

• Dependent children

• Dependent parents

Rules For Non-Individual Clients

Non-individual clients can also do the same and share their DEMAT accounts. However, SEBI has mentioned who can share the account’s details:

• Any member of a Hindu Undivided Family with Karta’s permission.

• Any partner of a partnership firm with all the partner’s consents.

• Trustee of a trust.

• Any person from a company with the approval of all the board members.

Rules For Inactive DEMAT Accounts

All such DEMAT accounts that would be found inactive for a month would be settled within the end of that same month. Before, this was done every 3 months but to increase efficiency in the system, the time has been reduced.

Conclusion

The new rules announced for DEMAT accountholders by the Security Exchange Board of India aim to give individual and non-individual clients a little flexibility in handling their respective DEMAT accounts.

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