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 October 31, 2024
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NATIONAL SECURITIES DEPOSITORY LIMITED

Participant Interface

Annexure

Master Circular on 'Account Opening' - Version 1

Sr.No

Topic

(I)

Guidelines in respect of account opening in case of individuals (Non-Body Corporate)

1

Individuals, Karta of HUF, Partners in case of Partnership firm, Guardian in case of minor account

1.1

In-person verification of applicant(s) at the time of opening depository account

1.2

Execution of agreement

1.3

Submission of valid proof of identity / proof of address

1.4

Collection of KYC documents in case of joint holdings

1.5

Verification of Documents

1.6

Exercising of due diligence

1.7

Application of stricter criteria in selecting KYC documents

1.8

Concurrent Audit with respect to account opening

2

Procedure for capturing of demographic details of the account holder(s)

2.1

Capturing of PAN details

2.2

Capturing of local and correspondence address

2.3

Capturing of Bank details

3

Mode of capturing the details in the DPM System

4

Procedure for opening HUF account

5

Procedure for opening of a minor account

5.1

Procedure to be followed by DPs on minor attaining majority

5.2

In case minor account is frozen due to non-compliance of PAN requirement

5.3

Minor as a nominee

6

Accounts opened in the names of Partners for holding securities that belong to a Partnership firm

7

Non-Resident Indian / Foreign National (NRI/FN)

7.1

KYC documentation for NRI and FN Clients

7.2

Opening of NRI (Repartiable/Non- Repartiable) account

7.3

Reserve Bank of India (RBI) Clarification with respect to NRI / FN

8

Opening of account of an illiterate person

9

Opening of an account of a Blind person

10

Procedure to be followed with respect to Nomination

11

Procedure for change in demographic details

11.1

Change of address

11.2

Change of Signature

11.3

Change in status of Standing Instruction

11.4

Change in bank details such as account type, account number, name, address and MICR

11.5

Addition / Deletion / Modification of Power of Attorney holder(s)

11.6

Make a nomination / Cancel the Nomination

(II)

Guidelines in respect of account opening in case of Body-Corporate

1

Procedure for opening account of a Body-Corporate

1.1

Documents to be obtained at the time of opening depository account

1.2

Verification of documents

1.3

Verification of PAN, address and bank details

2

Additional requirement with respect to Foreign Corporate Bodies

3

Opening of an Escrow Account

4

Procedure for change in demographic details

4.1

Change of address

4.2

Change of authorised signatory

4.3

Change in status of standing instruction

4.4

Change in bank details such as account type, account number, name, address and MICR

4.5

Addition / Deletion / Modification of Power of Attorney holder(s)

(III)

Depository accounts opened in the capacity of Individual/Body Corporate as applicable

1

Opening of promoter account

2

Opening of DR account

3

Opening of a Commodity Account

4

Procedure regarding operations of account through Power of Attorney

(IV)

Procedure for opening and shifting of Clearing Member (CM) Account

1

Opening of CM Account

1.1

Closure and shifting of CM Account

1.2

Procedure for change of name of a CM account

2

Opening of Margin Account

(V)

FAQs related to Account opening

(I) Guidelines in respect of account opening in case of individuals (Non-Body Corporates)

1) Individuals, Karta of HUF, Partners in case of Partnership firm, Guardian in case of minor account

1.1) In-person verification of applicant(s) at the time of opening depository account (NSDL/POLICY/2007/0016 dated March 16, 2007)

(a) At the time of opening depository accounts, the staff of the Depository Participant (DP) should establish the identity of the applicant(s) (including guardian in case of minor account) by verifying the photograph(s) affixed in the account opening form (Annexure J) as well as proof of identity document(s) as mentioned below in point no.(I)(1)(1.3), with the person concerned. Further, in case of joint accounts, 'in-person' verification needs to be carried out for all the holders of the account.

(b) The staff of the DP only should carry out 'in-person' verification. The DP should not outsource or assign the activity of 'in-person' verification to an outside agency.

(c) Upon the applicant(s) submitting the account opening form, proof of identity & address documents and PAN details, staff of the DP should follow the procedure as given below:

(i) Verify the identity of the applicant(s) as clarified in point no.(I) (1) (1.1) (a) above.

(ii) After due verification, affix a stamp on the face of the account opening form or on the document(s) collected as proof of identity to the effect that the identity of the applicant(s) is verified 'In-Person'. The stamp should carry the following details:

  • Name of the DP and DP Id,

  • Name / Details of Branch/Service Centre,

  • Details of the DP staff who has carried out 'in-person' verification (Name, Employee code if any, Signature),

  • Date and place where 'in-person' verification was carried out.

  • Signature of the applicant(s) signed in the presence of the DP staff. In case of joint accounts, all holders should sign in the presence of the DP staff.

(d) If the DP wishes to keep the above records mentioned in point (I) (1) 1.1 (c) (ii) (i.e verification details) in an electronic form, prior approval from NSDL should be obtained as per the NSDL Business Rule 16.4.1. Further, the DP should ensure that the records are made available to NSDL officials, SEBI or any other Statutory Authority, whenever required.

(e) DPs can stamp or print the 'in-person' verification details on the account opening form (Annexure J). Such details may be stamped or printed on any page, as the DP may deem fit without making illegible the other details mentioned in the account opening form. However, attachment of separate sheet to the account opening form or affixing stickers on the account opening form carrying 'in-person' verification details will not be permitted. (NSDL/POLICY/2007/0022 dated April 18, 2007).

(f) In regard to 'in-person' verification, SEBI has advised both the depositories as follows (NSDL/POLICY/2007/0068 dated November 12, 2007):

(i) to observe strict compliance in conducting 'in-person' verification of Beneficial Owners at the time of opening demat accounts (SEBI letter no. F.No.47-2006/ISD/SR/106435/2007 dated October 17, 2007).

(ii) to ensure that 'in-person' verification is carried out by the staff of the DP and to follow uniform procedures to ensure strict KYC compliance while demat accounts are opened with DPs (SEBI letter no. F.No.47-2006/ISD/SR/108089/2007 dated November 6, 2007).

1.2) The applicant should fill up the Account Opening Form as per the format given in Annexure J of the Business Rules of NSDL and submit the same to the DP alongwith the agreement (as per Annexure B in the Bye Laws) duly executed on a stamp paper of appropriate value. Further, the DP shall be responsible in deciding the value of the stamp paper. The schedule of fees to be charged by the DP to the Client should form a part of the agreement.

1.3) The applicant should submit any one of the following as a valid proof of identity / proof of address alongwith a photocopy: (NSDL/PI/2004/1622 dated September 7, 2004)

(a) Proof of Identity (POI) :

I. Passport

II. Voter ID Card

III. Driving license

IV. PAN card with photograph

V. Identity card/document with applicant's Photo, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till the     time the applicant is a student),

g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members,     and

h) Credit cards/Debit cards issued by Banks.

(b) Proof of Address:

I. Ration card

II. Passport

III. Voter ID Card

IV. Driving license

V. Bank passbook / Bank Statement (NSDL/POLICY/2007/0074 dated December 01,     2007)

VI. Verified copies of

a) Electricity bills (not more than two months old),

b) Residence Telephone bills (not more than two months old) and

c) Leave and License agreement / Agreement for sale.

VII. Self-declaration by High Court & Supreme Court judges, giving the new address        in respect of their own accounts.

VIII. Identity card/document with address, issued by

a) Central/State Government and its Departments,

b) Statutory/Regulatory Authorities,

c) Public Sector Undertakings,

d) Scheduled Commercial Banks,

e) Public Financial Institutions,

f) Colleges affiliated to Universities (this can be treated as valid only till the     time the applicant is a student) and

g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

1.4) In case of joint holdings, POI and Proof of address documents must be collected in respect of all the account holders.

1.5) An authorised official of the DP should verify the photocopies of documents submitted with their corresponding originals and put his/her signature on them with remarks "verified with original" before proceeding to open the account.

1.6) The aforesaid documents are the minimum requirement for opening of a beneficiary account. DPs are advised to exercise due diligence while establishing identity of the person to ensure the safety and integrity of the depository system.

1.7) DPs can apply stricter criteria and accordingly, decide to accept selected documents out of the list of documents prescribed above (point no. (I) (1) 1.3), as POI and Proof of Address (NSDL/PI/2004/2117 dated November 25, 2004).

1.8) 100% verification needs to be carried out in respect of account opening by the Concurrent Auditor of the DP. The Concurrent Auditor should conduct the audit in respect of all accounts opened during the day, by the next working day. In case the audit could not be completed within the next working day due to large volume, the auditor should ensure that the audit is completed within a week's time. DPs would be required to appoint a firm of qualified Chartered Accountant(s) or Company Secretary(ies) holding a certificate of practice for conducting the concurrent audit. DPs in case they so desire, may entrust the Concurrent Audit to their Internal Auditors. (NSDL/POLICY/2006/0021 June 24, 2006 and NSDL/POLICY/2007/0017 dated March 22, 2007).

(2) Procedure for capturing of demographic details of the account holder(s)

(2.1) Capturing of PAN details

(NSDL/POLICY/2006/0007 dated March 3, 2006)

(i) DPs should obtain a photocopy of the PAN card of the person(s) seeking to open the account and verify the same with the original PAN card.

(ii) Further, the name of demat account holder(s) should be compared with the name appearing on the website of the Income Tax Department (ITD) i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp or alternatively subscribe to the internet based service of NSDL (NSDL/POLICY/2007/0048 dated August 14, 2007)On this website, the name can be sought against the given PAN.

(iii) In case the name(s) do not match or the PAN is not present in the Income Tax database, DPs should seek necessary clarification from the account holder(s) and activate such accounts in the DPM System only after the discrepancy is resolved.

(iv) In case of joint accounts, the PAN of each of the joint holder should be captured in the DPM System after making verification as explained above. As all DPs are aware, DPM System is enabled to capture PAN of all joint holder(s) of a demat account.

(v)After verifying the details of PAN as mentioned above, the staff of the DP should affix a stamp as 'PAN verified', on the photocopy of the PAN card(s).

(vi) Thereafter, PAN flag(s) should be enabled in the DPM System. (NSDL/POLICY/2006/0012 dated March 25, 2006.)

2.1.1) With respect to PAN, Clients may have reported the following problems:

(a) PAN card has been lost / misplaced or PAN card was never received but has the PAN allotment letter from the ITD;

(b) Change in the name of the Client due to marriage or voluntary action etc., (in case of individuals) or due to merger, amalgamation etc (in case of a corporate entity).

In this regard, DPs are advised that the ITD issues a new PAN card with the same PAN with changes in PAN data, for the above reported problems. For detailed procedure, DPs may refer http://www.incometaxindia.gov.in or http://www.tin-nsdl.com (NSDL/POLICY/2006/0024 dated July 7, 2006)

2.1.2) With effect from September 15, 2007, DPs have been restricted from modifying the PAN of a holder in a Client account in DPM System, once the PAN flag has been enabled. (NSDL/POLICY/2007/0052 dated September 13, 2007).

(2.2) Capturing of local and correspondence address (NSDL/PI/2005/1102 dated June 22, 2005)

(a) DPs can capture two addresses in the DPM System for a Client (first holder/sole holder) i.e. local and correspondence address. The Client Master Report and Export will carry both these addresses.

(b) For both local and correspondence address of a Client, DPs should ensure that they collect and verify the KYC documents as mentioned in point nos. (I) (1) (1.3) (Individual) and (II) (1) (1.1) (Body-Corporate) and only then the same should be captured in the DPM System.

(c) The local address would be the default address that would be forwarded to the Registrar & Transfer Agent (RTA) as well as used for printing Transaction Statement (SOT) from DPM System. However, the Client has the option to request the DP to use the other address i.e. correspondence address for the aforesaid purposes. In such a situation, the DP should disable the default indicator under the option "Beneficiary Address Local" (referred to as 'Address Preference Flag' in batch file import format). DP may note that for all existing accounts, the local address would be the default address.

(2.3) Capturing of Bank details (NSDL/PI/2000/2295 dated December 20, 2000):

Complete bank address including 9-digit MICR code is necessary for the Issuers to undertake distribution of corporate benefits directly to the bank accounts of beneficial owners. DPs are hereby advised to obtain a specimen copy of cheque and capture 9-digit MICR codes for all the accounts opened with them. Further, DPs are advised to capture bank address details strictly in the manner described below:

Row 1 : Building / Tower / Apartment / Palace / Chamber / Mansion
Row 2 : Street / Road / Marg / Lane / Avenue / Rasta
Row 3 : Area name
Row 4 : City name
Pin code : Bank address pin code

(3) Mode of capturing the details in the DPM System

(a) The DP should enter the details of the Client as mentioned in the Account Opening Form, in the DPM System after verifying with the POI and Proof of Address. It may be mentioned that DPs can avail the facility of Bulk Verify and Release with respect to opening of Client accounts in the DPM System (NSDL/PI/2007/0019 dated April 4, 2007).

(b) The DP should capture the Client's signature(s) as given in the Account Opening Form in the DPM System.

(c) The DP should save the details and enter the Client account number (Client ID) generated by DPM System in the Account Opening Form.

(d) The DP should print the Client Master Report and give it to the Client alongwith a copy of the Agreement. Such information should be provided only after the account is in "Active" status in the DPM System. (NSDL/PI/98/583 dated November 18, 1998)

(4) Procedure for opening HUF account

(a) Open the beneficiary account in the name of the Karta of the HUF.

(b) POI and Proof of Address of 'Karta' should be obtained as mentioned in point no. (I) (1) (1.3).

(c) PAN details of the HUF should be captured in the DPM System after due verification. (NSDL/POLICY/2006/0031 dated August 9, 2006)

(d) A mandate may be taken from the accountholder that the cheques drawn in favour of 'Karta' can also be collected in the account of HUF and vice-versa as Clients who have opened HUF accounts in the name of 'Karta' may face difficulty in encashing cheques / demand drafts in respect of dividend / interest warrant, since the bank account has been opened in the name of HUF. DPs are advised to take note of the above and provide a copy of 'Client Master Report' so as to enable the Clients to suitably take up the matter with their banks. A copy of the letter received from RBI, clarifying the stand to be taken with respect to bank account that are opened in the name of HUF may be provided at the request of the Client's bank. (NSDL/PI/2005/0159 dated January 27, 2005 and NSDL/POLICY/2007/0064 dated October 19, 2007)

(5) Procedure for opening of a minor account

SEBI has intimated to NSDL clarifying the position on operation of the depository accounts held in the name of minors as follows:

"Under [The] Hindu Minority and Guardianship Act, 1956, permission of court is required in the case of transfer by a natural guardian of immovable property of a minor. However, shares are not immovable property. Section 2(7) of Sale of Goods Act, 1930 includes shares within the definition of "goods". Neither the Indian Contract Act nor the Sale of Goods Act provide for transfer by sale or otherwise by guardian/natural guardian of goods/movable property in the name of minor to the effect that permission of court is required in the matter of such transfer. In the case of accounts of minor in banks also, the guardian is entitled to open, operate and even close the account also. The DP account can, therefore, be operated by a natural guardian without any order from the court though the same is neither expressly permitted nor prohibited." (NSDL/PI/2000/323 dated March 17, 2000)

DPs should follow the below given procedure for opening demat account of a minor: (NSDL/POLICY/2007/0004 dated January 11, 2007)

(i) Account opened in the name of minor should not have joint holder(s).

(ii) Obtain POI, Proof of Address and the photograph of the Guardian as per the procedure laid down in point no.(I) (1) 1.3 above.

(iii) Photocopy of school leaving certificate / Marksheet issued by Higher Secondary Board of respective states, ICSE, CBSE / passport of the minor / original or attested or notarized (in case of photocopy) birth certificate of the minor to ascertain the date of birth of the minor. At the time of accepting either of these documents, DP should verify the same with the original.

(iv) PAN details of the minor should be captured in the DPM System after due verification. (NSDL/POLICY/2006/0031 dated August 9, 2006)

(5.1) Procedure to be followed by DPs on minor attaining majority (NSDL/POLICY/2007/0004 dated January 11, 2007)

On minor attaining majority (i.e. 21 years of age in case of minor whose Guardian is court-appointed or 18 years where minor's account is represented by a natural guardian), DPs should follow the procedure given hereunder. Further, to ascertain the minors who have attained majority, DPs can access module 'Reports' / Master List / Minor turned Adult available in the DPM System (Report displays accounts that are in status 'Active', 'Suspended for Debit' and 'Suspended for Debit & Credit')

(i) Communicate to the Client (minor attained major) about opening fresh demat account. If the Client does not respond within one month from the date of communication, DPs are advised to suspend the account for debit and disable the standing instruction for credit pertaining to the account of minor.

(ii) On Client approaching the DP for opening a new account, DPs are advised as follows:

(a) Follow the account opening procedure mentioned in point no. (I) (1) above including executing an agreement with the Client, as prescribed under Annexure B of the Bye Laws of NSDL.

(b) DPs are advised to note that ITD issues a new PAN card with same PAN with changes on PAN data, on minor attaining majority. For detailed procedure, DPs may refer http://www.incometaxindia.gov.in or http://www.tin-nsdl.com. DPs are advised to direct their Clients accordingly, obtain new PAN details of the Client, follow the procedure laid down in point no. (I) (2) (2.1) above and capture the same in the DPM System. After due verification, enable the PAN flag in the DPM system.

(5.2) In case minor account is frozen due to non-compliance of PAN requirement

(a) Obtain photocopy of PAN card of the Client who has attained majority. Further, the PAN card should carry the details of the Client in the capacity of a major and not of a minor.

(b) DPs should satisfy itself that the PAN details submitted by the Client are indeed of the same Client who has attained majority. In this regard, DPs may call for any additional documents and / or clarifications to ascertain and satisfy itself about the identity of the Client.

(c) After following the procedure mentioned in point (I) (2) (2.1) above, DPs are advised to file the photocopy of the PAN card alongwith the KYC documents of the minor.

(d) Thereafter, DPs are advised to follow the procedure in the belowgiven sequence:

(i) Remove the suspension by initiating unfreeze instruction in the account of the minor. Ensure that the status of the unfreeze instruction is 'Closed,Settled',

(ii) Transfer the securities to the account of the Client i.e. Client who has attained majority. The account may be opened with the same DP or any DP as per the choice of the Client. DPs can ascertain the target details of the Client by obtaining the Client Master Report from the target DP.

(iii) Immediately close the account of the minor.

DPs may submit the claim for waiver of transaction fee charged on account of minor attaining majority, once a month, (not later than two months after opening the new account) to NSDL. Further, DPs are requested to note that if the Client has opened a new account in its name, however, with joint holdings, such an account with joint holdings shall not be eligible for waiver of transaction fees. (NSDL/PI/2005/0395 dated March 4, 2005)

5.3) In case a minor is a nominee, then DPM System has the facility to enable/capture the following additional information: (NSDL/PI/2005/1102 dated June 22, 2005)

  • Flag to indicate whether nominee is a minor;

  • Date of birth of the minor nominee; and

  • Details of name and address of the Guardian of the minor nominee.

(6) Accounts opened in the names of Partners for holding securities that belong to a Partnership firm (NSDL/POLICY/2007/0009 dated February 12, 2007)

(i) The account should be opened only in the name of Partners and the securities that belong to the Partnership Firm can be held in this account.

(ii) Obtain POI and Proof of Address of the Partners as per the documents mentioned in point no. (I) (1) 1.3. Further, obtain a copy of the Partnership Deed to verify the names of Partners.

(iii) Obtain an undertaking in the prescribed format from the Partners to the effect that the Partners would comply with the provisions of the Companies Act, 1956 and other applicable statutes in respect of securities of the Partnership firm held in the account opened in the name of the Partners.

(iv) PAN details of the Partnership firm should be captured against the names of all the Partners after due verification (NSDL/POLICY/2006/0031 dated August 9, 2006).

(v) Capture the bank details of the Partnership firm.

(7) Non-Resident Indian / Foreign National (NRI/FN)

7.1) Procedure to be followed by DPs with respect to KYC documents and PAN of NRI (Repartiable/Non- Repartiable) and FN at the time of opening an account in the respective category:

(i) Obtain POI and Proof of Address of the applicant as per the procedure laid down in point no. (I) (1) 1.3 above.

(ii) Obtain a declaration from the Client that he/she has complied and will continue to comply with FEMA regulations.

(iii) DPs are advised to obtain photocopies of Proof of Address in respect of foreign address where the NRI/FN is residing and verify the same with originals. In case the NRI/FN Clients have Indian address, DPs are advised to obtain photocopies of Proof of Address of local address and verify the same with originals. Further, in case if the NRI/FN has submitted only Proof of Address of the country (foreign address) where the NRI/FN is residing, in such a situation, DPs may capture the foreign address in both local and foreign address field given in the DPM System.

(iv) If DPs find it infeasible to carry out 'in-person' verification of the NRI/FN Client by their staff and/or verify the original KYC documents (POI and Proof of Address i.e. foreign address, where the NRI/ FN is residing) alongwith PAN card, in such a situation, it is clarified that:

(a) the account opening form and photocopies of the KYC documents and PAN card should be duly signed by the account holder; and

(b) photocopies of the KYC documents and PAN card is attested by the Indian Embassy/Consulate General of the country where NRI/FN is residing; and

(c) the attestation is to the effect that it has been verified with the originals.

DPs should open the depository accounts or accept the PAN card only after it is satisfied with the authenticity of the documents (POI, Proof of Address and PAN card).

(v)In case where 'in-person' verification for NRI/FN Client has been carried out by the staff of the DP or if he/she personally visits the office of the DP to submit the KYC documents and PAN card, in such a situation, the NRI/FN would be exempted from obtaining attestation, on KYC documents and PAN card.

(NSDL/POLICY/2007/0022 dated April 18, 2007, NSDL/POLICY/2006/0049 dated October 19, 2006 and NSDL/POLICY/2006/0067 dated December 28, 2006).

(7.2) NRI (Repartiable/Non- Repartiable) account (NSDL/PI/98/007 dated January 2, 1998):

(i) While opening an account for an NRI Client, the DP should obtain copy of the RBI approval letter, if any, for acquiring securities, alongwith the account opening form and other necessary documents.

(ii) The account should be opened in the name of the NRI in the DPM System under repatriable category when securities are held on repatriable basis and under non-repatriable category when securities are held on non-repatriatable basis.

(iii) DPs are advised to capture the following details in the DPM System against the RBI reference number and date :

(a) If the NRI has at any time purchased securities from the secondary market, i.e., under Portfolio Investment Scheme, then the RBI reference number and date mentioned in the RBI approval letter should be entered.

(b) If the NRI has never purchased securities from the secondary market, but the securities have been allotted in the primary market, i. e., under Direct Investment Scheme, then the DP should mention the following :

RBI Reference No. : "Under General Permission"

RBI Approval Date : Present date

(Subsequently, whenever the NRI gives dematerialisation or receipt instructions in respect of purchase of securities from the secondary market, the RBI reference number and date should be entered therein)

(c) If the NRI does not hold any securities, then the DP should mention the following :

RBI Reference No. : "No Holdings"

RBI Approval Date : Present date

(Subsequently, whenever the NRI gives dematerialisation or receipt instructions in respect of purchase of securities from the secondary market, the RBI reference number and date should be entered therein)

(iv) While processing dematerialisation, receipt, delivery or pledge instructions from NRI Client, the DP must obtain a copy of the relevant RBI approval letter (e.g., RBI approval letter for sale in case of delivery instructions). The DP need not obtain copy of the RBI approval letter for every instruction, if the same approval applies to each such instruction.

(7.3) RBI Clarification with respect to NRI/FN :

(NSDL/PI/2000/1891 dated October 6, 2000)

RBI vide its letter dated July 18, 2000 to one of the DP of NSDL has issued the following clarifications with regard to permission to open Bank Account and Depository Account to sell shares acquired under ESOP by FN:

(a) RBI approval is not required for opening demat account.

(b) RBI has not put any condition that for opening of demat account, the non-resident shareholder must have a bank account. The demat account may be opened as per the norms of NSDL and the concerned bank.

(c) RBI has already granted General Permission for sale of shares on stock exchanges by non-residents and for sale of shares by negotiated deals, application in TS-1 form may be submitted to concerned Regional Office of RBI for obtaining permission.

(d) FN can sell the shares held under ESOP on stock exchange without RBI permission.

DPs are required to ensure that all transactions in the account are in compliance with FEMA regulations. Accordingly, DPs are advised to obtain from the NRI/FN, necessary documents evidensing general/specific approvals as may be required under FEMA regulations.

(8) Opening of account of an Illiterate person

(NSDL/PI/2002/0709 dated May 3, 2002)

NSDL has prescribed the procedure for affixing thumb impression (in Annexure J of Business Rules) while filling an account opening form by an illiterate person. In this context, DPs are advised to follow the below mentioned procedure:

(a) Illiterate person(s), at the time of opening an account with a DP must affix the thumb impression (left hand thumb in case of a male and right hand thumb in case of a female) on the agreement as well as on the account opening form.

(b) All accounts opened by illiterate person(s) (hereinafter referred as Clients) must be either introduced by an existing account holder or must be attested by applicant's bank.

(c) The Client(s) must come in person to open the account and submit instruction forms and affix his/her thumb impression in the presence of the official of the DP. The DP should identify the Client(s) by verifying the photograph submitted by the Client(s) and read out/explain the contents of the account opening form, DP-Client agreement and delivery instruction form to the Client(s). The official of the DP should then put his signature and remarks "Details explained to the Client(s)", on the account opening form, copy of the agreement and delivery instruction form.

(d) In case such Client(s) is/are temporarily or permanently disabled due to which he/she cannot come in person to submit the instruction form as mentioned in point (c) above, the thumb impression of the Client(s) on the instruction forms must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate or a similar authority holding a Public Office and authorised to use the Seal of his office or a manager of the account holder's bank. The Client should also produce a medical certificate about his/her disability.

(e) A remark should be put in the DPM System (under the authorised signatory details under "Signatories" screen) at the time of opening the account that the account holder is illiterate or disabled. Further, the instruction forms issued to such Client(s) should be pre-stamped as "Thumb Impression".

(f) At the time of opening of account, the aforesaid rules should be explained to the Client(s) in the presence of a witness, who will have to sign the agreement and the account opening form, as a witness.

DPs should note that the aforesaid guidelines are in addition to the existing guidelines with regard to opening of an account and executing instructions.

(9) Opening of an account of a Blind person (NSDL/POLICY/2007/0049 dated August 21, 2007)

(a) Obtain POI, Proof of Address and the photograph of the blind person(s) (hereinafter referred as Client) as per the procedure laid down in point no. (I) (1) 1.3. Carry-out 'in-person' verification of the Client as per the procedure laid down in point no. (I) (1) 1.1. Obtain PAN card of the Client and follow the procedure laid down in point no. (I) (2) 2.1.

(b) The DP should read out and explain to the Client, the contents of the account opening form and DP-Client agreement whenever so requested by the Clients. In case the Client is an illiterate, DP should follow the procedure laid down in point no. 8.

(c) The DP should capture the Clients' signature(s) as given in the Account Opening Form in the DPM System. Further, a remark should be put in the DPM System (under the authorised signatory details in 'signatories' screen) that the Client is "Visually Challenged". Further, if the Client is illiterate, then DP should put in the remark as "Visually Challenged and Thumb Impression".

(d) For issuance, re-issuance and processing of Delivery Instruction Slips (DIS) of such Clients, DPs are advised to follow the procedure laid down in NSDL Circular No. NSDL/PI/2004/1401 dated August 5, 2004. DPs would also be required to comply with NSDL Circular No. NSDL/POLICY/2007/0011 dated February 15, 2007 regarding SEBI circular on DIS. It is also added that the DIS issued to such Clients should be pre-stamped as "Visually Challenged" or "Visually Challenged and Thumb Impression" as the case may be. Further, these Client(s) should visit the office of the DP to deliver the DIS, only if they are illiterate.

DPs are requested to note that the above mentioned procedures will be applicable for new accounts opened since August 21, 2007 (issuance of the revised circular) as well as for processing of DIS for the existing Clients.

(10) Procedure to be followed with respect to Nomination

(a) The Client(s) may make a nomination of his/their account in favour of any person by filing with the relevant DP the form laid out in Annexure JA of the Business Rules. In the case of joint accounts, all the account holders shall be required to affix their signatures to the said form. Such nomination shall be conclusive evidence of the Client(s) disposition in respect of all the securities in the account for which nomination has been made.

(b) The nomination can be made only by individuals holding beneficiary accounts on their own behalf singly or jointly. Non- individuals including society, trust, body corporate, partnership firm, karta of HUF, holder of power of attorney cannot nominate. If the account is held jointly, all joint holders will sign the nomination form.

(c) A minor cannot nominate. However, a minor can be a 'nominee'. In that event, the name and address of the Guardian of the minor nominee shall be provided by the beneficiary owner.

(d) The Nominee shall not be a trust, society, body corporate, partnership firm, karta of HUF or a power of attorney holder. A non-resident Indian can be a Nominee, subject to the exchange controls in force, from time to time.

(e) Nomination in respect of the beneficiary account stands rescinded upon closure of the beneficiary account. Similarly, the nomination in respect of the securities shall stand terminated upon transfer of the securities.

(f) Transfer of securities in favour of a Nominee shall be valid discharge by the depository against the legal heir.

(g) The cancellation of nomination can be made by individuals only holding beneficiary accounts on their own behalf singly or jointly by the same persons who made the original nomination. Non- individuals including society, trust, body corporate, partnership firm, karta of HUF, holder of power of attorney cannot cancel the nomination. If the beneficiary account is held jointly, all joint holders will sign the cancellation form.

(h) On cancellation of the nomination, the nomination shall stand rescinded and the depository shall not be under any obligation to transfer the securities in favour of the Nominee.

Further, DPs are also requested to refer rule 12.6.3 of Business Rules of NSDL with respect to details on nomination.

(11) Procedure for change in demographic details

11.1) Change of address (NSDL/PI/2004/1622 dated September 7, 2004):

(a)While processing requests for change of address received from Clients, DPs should obtain the following documents:

(i) a written application for change of address from the Client. (In case of joint holdings, all holders must sign the application);

(ii) POI [copy of any one of the documents mentioned in I (1) 1.3 (a) above of the Client (sole holder or either of the holders) visiting the office of the DP];

(iii) latest transaction statement of the account received from the DP. In case a Client (sole holder or either of the holders) personally visits the DP's office to submit an application (signed by all holders in case of joint holdings) for change of address alongwith necessary documents (POI / proof of address) mentioned in point no. (I) (1) 1.3, the DP need not obtain the transaction statement from such Client; (NSDL/POLICY/2007/0030 dated June 18, 2007).

(iv) Proof of new address (copy of any one of the documents mentioned in (I) (1) 1.3 (b) above) alongwith the original documents of the new address.

(b) The Client should personally visit the office of the DP where the Client maintains and operates his/her account and submit the application for change of address. However, in case the Client expresses inability to personally visit the office of the DP, the application for change of address alongwith other documents can be submitted through an authorised representative, whose identity the DP must verify.

(c) The Client or its authorised representative should sign the application once again in the presence of the officials of the DP.

(d) The DP should verify the signature of the Client on the application and the identity documents with the documents maintained with the DP. Further, the document pertaining to new address should be verified with the original. After due verification, an authorised official of the DP should put his/her signature on the application with remarks "verified with original" and thereafter record the change of address in the DPM System.

(e) However, in case DP could not verify the documents because the records of the documents submitted by the Client are kept at a different place, then the DP must verify the same within a period of seven working days and only then effect the change.

(f) After effecting the change of address in the DPM System, the DP should send a communication to the Client, confirming the change of address, to the old and the new addresses.

11.2) Change of Signature (NSDL/PI/2004/0045 dated January 7, 2004)

Procedure for effecting change of signature of Clients. DPs are advised as follows:

(i) The Client should make a request in writing specifying reasons for change in signature.

(ii) New signature should be duly attested by Client's banker.

(iii)Client should visit the DP's office personally and produce valid POI. (NSDL/POLICY/2007/0030 dated June 18, 2007)

(iv) In the presence of officials of DP, Client should affix his/her new signature.

(v) An authorised official of the DP shall, under his signature, verify the identity proof with the proof and photograph that were furnished at the time of opening of account and thereafter, if found satisfactory, make necessary changes in its records.

11.3) Change in status of Standing Instruction

If the Client requests for change in standing instruction, DP should carry out the changes in the DPM System based on proper authorisation received from the Client (signed by all the holders in case of joint holdings).

11.4) Change in bank details such as account type, account number, name, address and MICR

(i) DP should obtain written request signed by the Client. DP should ensure that the request submitted by the Client is completely filled, including the bank account particulars of the Client and properly signed (signed by all the holders in case of joint holdings) (NSDL/PI/97/119 dated July 22, 1997).

(ii) Obtain a specimen copy of cheque and capture the changes in the DPM System.

(iii) Update the MICR code while updating the bank account details of the demat account holder(s) (NSDL/POLICY/2007/0023 dated April 24, 2007).

11.5) Addition / Deletion / Modification of Power of Attorney holder(s)

In case the demat account is operated by Power of Attorney and there is an addition / deletion / modification of power of attorney holder(s) of such an account, DPs should carry out the changes in the DPM System after obtaining written request which is duly signed by the Client (signed by all the holders in case of joint holdings) and new Power of Attorney in case of addition / modification, In case of deletion, DPs should ensure to dislodge the signature of the Power of Attorney holder(s) from the DPM System.

11.6) Make a nomination / Cancel the Nomination

In case the Clients requests to make a nomination / cancel the nomination in their demat accounts, DPs should carry out the changes in the DPM System after obtaining written request alongwith Annexure JA, which is duly signed by the Client (signed by all the holders in case of joint holdings).

After effecting the changes in the DPM System for the abovementioned demographic details (11.3 to 11.6), the DP should send a communication (letter / email / Client Master Report generated from the DPM system or its back office or any other mode which the DP may deem fit) to such Client informing about the changes effected in the account of the Client.

 

(II) Guidelines in respect of account opening in case of Body-Corporate (NSDL/PI/2002/1319 dated August 8, 2002)

1) Procedure for opening account of a Body-Corporate

1.1) DPs shall obtain the following documents at the time of account opening

a) Memorandum & Articles of Association, board resolution for opening and operating demat account and the list of authorised signatories alongwith their specimen signatures and photographs, etc.

b) Introduction by an existing account holder or by the applicant's bank.

c) Proof of Address of the corporate evidenced by the document registered with Registrar of Companies (ROC) or an acknowledged copy of Income Tax Return or Bank Statement or Leave and License agreement/Agreement for sale or telephone bill (not more than two months old) or electricity bill (not more than two months old) in the name of body-corporate.

1.2) An authorised official of the DP should verify the proof of address with the original documents and put his/her signature on them with remarks "verified with original" before proceeding to open the account.

1.3) PAN, address and bank details of the body-corporates should be captured after due verification as mentioned in point no. (I) (2) 2.1, 2.2. 2.3 and (3) above.

(2) Additional requirement with respect to Foreign Corporate Bodies :

(a) DPs are advised to obtain photocopies of Proof of Address in respect of foreign address in case of FII, Foreign Corporate Bodies, Foreign Banks, Overseas Corporate Bodies etc. (referred as foreign entities) and verify the same with originals. In case these foreign entities also have an Indian address, DPs are advised to obtain the photocopies of Proof of Address of local address and verify the same with originals. Further, in case if these entities have submitted only Proof of Address as foreign address, in such a situation, DPs may capture the foreign address in both local and foreign address field given in the DPM System.

(b) If DPs find it infeasible to verify the original KYC documents (foreign address of these foreign entities) and PAN card, in such a situation it is clarified that :

(i) the KYC documents and PAN should be duly signed by the authorised signatories; and

(ii) attested by the Indian Embassy/Consulate General of the country where the registered office of the foreign entity is situated; and

(iii) the attestation is to the effect that it has been verified with the originals.

DPs should open the depository account or accept the PAN card only after it is satisfied with the authenticity of the documents (Proof of Address and PAN card).

(c) As regards proof of address of FIIs/sub-accounts, a copy of the Power of Attorney given by the FIIs/FII sub-accounts to the Custodians (which are duly notarized and/or apostiled or consularised) that gives the registered address of the FIIs/sub-accounts can be accepted as proof of address.

(d) U.N. entities/multilateral agencies which are exempt from paying taxes/filing tax returns in India are exempted from the mandatory requirement of PAN. The exemption, however, would be subject to the DPs collecting documentary evidence in support of claim of such entities/agencies. After the DPs are satisfied that such entities are exempt from paying taxes/filing tax returns in India, DPs are advised to capture the description "EXEMPTCATG" under the PAN field and enable the PAN flag in DPM System.

(e) DPs need not enter into an DP-Client agreement provided :

(i) FIIs registered with SEBI and who have entered into an agreement with the DP either directly or through their power of attorney holders in accordance with the provisions of sub-regulation (1) of regulation 16 of the SEBI (Foreign Institutional Investors) Regulations, 1995; and

(ii) Such agreement gives the DP an authority to act on behalf of the FIIs for availing the services of the Depository; and

(iii) Such agreement has been filed with the SEBI;

(iv) International Multilateral Agency, who has entered into an agreement with the DP under regulation 17 of the SEBI (Custodians of Securities) Regulations 1996, and such agreement states that the Custodian will also act as a DP and all provision pertaining to DP shall be applicable; then such DP need not enter into an agreement as per Annexure B of the Bye Laws.

(f) DPs shall ensure that in case of foreign entities, all transactions in the account are in compliance with FEMA Regulations. Accordingly, DPs are advised to obtain from such foreign entities necessary documents evidensing general/specific approvals as may be required under FEMA Regulations.

(g) Obtain a declaration from the foreign entity that it has complied and will continue to comply with FEMA Regulations.

3) Opening of an Escrow Account

DPs should accept the following documents for opening of an escrow account:

a) KYC documents of Corporate and Escrow Agent.

b) Copy of escrow agreement duly signed by all the parties.

c) The account should be opened in the name as mentioned in the Scheme, which is approved by a competent authority and is in accordance with SEBI regulations. Further, the operation of such account should be governed by the terms and conditions of escrow agreement.

d) Copy of PAN card of both parties involved in such an arrangement. However, PAN details of the Corporate should be captured in the account after the same has been verified in accordance with point above (I) 2 (2.1).

e) The account should be used only for holding securities, which are required to be transferred under the specific scheme and in accordance with the SEBI regulations.

f) As the account is opened for specific purpose, the same shall be closed immediately after the shares held in the account are transferred to the respective demat accounts or are extinguished as required under the said scheme.

4) Procedure for change in demographic details

4.1) Change of Address of body-corporate account:

(a) A written application for change of address of the corporate entity, signed by all the authorised signatories should be submitted to the DP.

(b) Atleast one of the authorised signatories should visit the office of the DP in person to submit its application for change of address alongwith necessary documents and sign the application once again in the presence of the officials of the DP.

(c) DP should collect Proof of new address (copies of the aforementioned documents (II) (1) (1.1) alongwith the original document of new address, for verification by the DP.

(d) An authorised official of the DP shall verify the application and the abovementioned documents with the original and put his/her signature on the application with remarks "verified with original" and thereafter record the change of address in the DPM System.

(e) The DP should write a letter to the Client (Body-Corporate) at the old address as well as the new address to confirm the change of address.

4.2) Change of authorised signatory

In case of change in authorised signatory, the Client should provide a fresh board resolution mentioning authorised signatories who shall operate the depository account alongwith the specimen signature and photograph of the new authorised signatory. DPs need not obtain the details of the existing authorised signatories if they remain unchanged. Thereafter, DPs are advised to capture the signature of the new authorised signatories in the DPM System. DPs should ensure that the signatures of the outgoing authorised signatories should be dislodged from the DPM system.

4.3) Change in status of Standing Instruction

If the Client requests for change in standing instruction, DP should carry out the changes in the DPM System based on proper authorisation signed by the authorised signatories of such an account.

4.4) Change in bank details such as account type, account number, name, address and MICR:

(i) DP should obtain written request signed by the authorised signatories. DP should ensure that the request submitted by the Client is completely filled, including the bank account particulars of the Body-Corporate and properly signed by authorised signatories (NSDL/PI/97/119 dated July 22, 1997).

(ii) Obtain a specimen copy of cheque and capture the changes in the DPM System.

(iii) Update the MICR code while updating the bank account details of the Client (NSDL/POLICY/2007/0023 dated April 24, 2007).

4.5) Addition / Deletion / Modification of Power of Attorney holder(s)

In case the demat account is operated by Power of Attorney and there is an addition / deletion / modification of Power of Attorney Holder(s) of such an account, DPs should carry out the changes in the DPM System after obtaining written request which is duly signed by the authorised signatories and new Power of Attorney in case of addition / modification. In case of deletion, DPs should ensure to dislodge the signature of the Power of Attorney holder(s) from the DPM System.

After effecting the changes in the DPM System for the abovementioned demographic details (point nos. 4.2 to 4.5), the DP should send a communication (letter / email / Client Master Report generated from the DPM System or its back office or any other mode which the DP may deem fit) to such Client informing about the changes effected in the account of the Client.

(III) Depository accounts opened in the capacity of Individual/Body Corporate as applicable

(1) Opening of promoter account (NSDL/POLICY/2007/0047 dated August 13, 2007)

New sub-types have been added to enable promoters to separately hold securities issued as "Promoter" of the company. While opening such accounts, DPs are advised to obtain an undertaking from the Client that said beneficiary account(s) are opened for the sole purpose of holding and transacting for the securities held as promoter and no other securities will be held/transacted in the said account.

2) Opening of DR account (NSDL/PI/2002/0846 dated May 29, 2002 and NSDL/PI/2002/1336 dated August 9, 2002):

A sub-type "DR" is present for the Client types viz.; 'Non Resident Indian', 'Foreign Institutional Investor', 'Corporate Bodies', 'Foreign National' and 'Mutual Fund'. This sub-type is for the purpose of enabling investors to separately hold equity shares issued upon cancellation of Depository Receipts (GDR/ADR) held by them. Further, the existing account holders under Client type 'Foreign National' have been categorised under the sub-type "FN".

In this context, DPs are advised as follows:

(a) In order to receive the securities issued upon cancellation of the Depository Receipts (DRs) held by the investors, they will have to open a separate account with sub-type "DR" under the relevant Client type/category and ensure that only such securities are credited in this account.

(b) The standing instruction indicator in the DPM System should not be enabled for accounts with sub-type "DR". The Clients will have to give specific receipt instructions to the DPs for receiving securities issued upon cancellation of DRs.

(c) In this regard, it is also clarified that since the Client has already been identified by the DP (the Client should be an existing account holder), a separate agreement may not be required. However, DPs must ensure that the Client gives a letter mentioning its intention to open a separate account for holding DR-cancelled securities and that it will be bound by the agreement it had earlier signed with the DP. (NSDL/PI/2002/0899 dated June 7, 2002).

(3) Opening of a Commodity Account (NSDL/PI/2003/1882 dated November 27, 2003 and NSDL/PI/2005/1441 dated August 9, 2005)

(i) Account opening procedure will be similar to depository account. All precautions and procedures for account opening, change in address, etc. as applicable to securities account shall be followed. For the purpose, DP should be empanelled with NCDEX or MCX for providing depository services relating to warehouse receipts.

(ii) Accounts opened under this agreement shall hold only electronic warehouse receipts of NCDEX and MCX and cannot be mixed up with other securities Further, Clients would be required to sign a separate agreement with the DP for NCDEX and MCX and DPs would be required to open a separate account for NCDEX and MCX.

(iii) DPs may make their own business/contractual agreement with the NCDEX / MCX / warehouse owners, as they deem fit, including terms and conditions related to collection of rent, etc. If DPs are required to collect any charges/tax/rent on behalf of NCDEX / MCX / Warehouse, DPs may have to ensure that such function has adequate legal basis.

(iv) NSDL will issue circular relating to activation of Commodities Identifier [ICIN] (equivalent to ISIN) as and when such ICINs are activated in the system. The transaction statement will contain ICIN-wise balances. Commodity descriptor will contain unit of measurement, for e.g.:- "(ICIN No.) Castor Seed Grade A , Ahmedabad ( in MTs)." MT = Metric Tonnes.

(v) Initial credit of electronic warehouse receipts into demat account will be effected by way of corporate action.

(vi) Procedure for transfer, pledge and freeze will be the same as is applicable to securities.

(vii) DPs are advised to note that for making a request for delivery of commodities/metals represented by warehouse receipts "Physical Delivery Request Form" (PDRF) in the prescribed format should be filled-up by the Clients and after processing the requests such instructions should be executed in the DPM System by the DPs using 'Remat/Repurchase Screen' under the type 'Remat'. The procedure for rematerialisation of warehouse receipts will be same as is applicable for securities. DP shall issue acknowledgment for receipt of the remat request by entering remat request (transaction) number on the acknowledgment portion and attest the signature of the Client on the copy of PDRF. Client will submit this acknowledgment and attested copy of PDRF to the warehouse at the time of taking delivery.

(4) Procedure regarding operation of account through Power of Attorney

(NSDL/PI/2000/982 dated June 23, 2000)

4.1 Sample Clause

A sample clause is given hereunder which if it forms a part of the Power of Attorney could suffice:

"To sell or otherwise deal with or dispose of and to purchase, subscribe or otherwise acquire in any manner from the market or under public or rights issues or otherwise and accept the transfers of any stocks, funds, shares, debentures, Government and other promissory notes, securities, bonds, debentures, annuities or other mercantile negotiable instruments which shall or may at any time belong to me or which hereafter be transferred to me, whether solely or jointly and whether in my own right or having any other interest of whatsoever nature and however arising and in any capacity whatsoever including those belonging to others with my name and for such purposes to sign, execute or endorse all instruments of transfer and other documents for any purpose what so ever by the virtue of these present."

4.2 General points regarding Power of Attorney

(i) A Power of Attorney executed prior to the promulgation of The Depositories Act is valid and enforceable.

(ii) It is the responsibility of the DP to verify whether the Power of Attorney is adequate and sufficiently authorising the holder of the Power of Attorney i.e., the donee to operate the account of the beneficial owner.

(iii) Power of Attorney should be notarized in case of photocopy.

(iv) Depository accounts can be operated both by the account holder(s) as well as by the Power of Attorney holder i.e. donee. For this purpose, DPs should ensure that the signatures of the account holder(s) and the Power of Attorney holder are captured in the DPM System (NSDL/POLICY/2007/0054 dated September 22, 2007).

(v) With respect to accounts that are operated through Power of Attorney, DP should ensure to enable the Power of Attorney flag of such accounts. (NSDL/PI/2005/1102 dated June 22, 2005)

4.3 DPs are advised to review the Power of Attorney document and if the Power of Attorney contains any clause similar to what has been stated below, the Power of Attorney should be modified suitably

(i) Power of Attorney Holder i.e. Donee has the sole authority to operate the account and the account holder(s) is/are restrained from operating the account;

(ii) DIS books are denied to the account holders who have executed a Power of Attorney;

(iii) DPs are authorised to merge the securities kept under various accounts of the Clients; and

(iv) DPs will have a lien on the securities of the Clients.

The above clauses are against the interests of investors and DPs are advised to desist from including such clauses in the Power of Attorney.

DPs are advised to provide DIS books to the Clients who have executed a Power of Attorney and allow the Clients to operate their accounts as well.

Further, DPs are advised to maintain separate accounts of the clients, in conformity with Regulation 42 of SEBI (Depositories and Participants) Regulations, 1996. Lien on the securities can be created only as per Regulation 58 of SEBI Regulations and as per the procedure laid down in the Bye Laws and Business Rules of NSDL. (NSDL/PI/2005/2329 dated November 25, 2005).

(IV) Procedure for opening and shifting of Clearing Member (CM) Account :

1) Opening of CM Account

(a) The CM should fill up the Account Opening Form as per the format given in Annexure K of the Business Rules of NSDL and submit the same to the DP alongwith the agreement (as per Annexure B in the Bye Laws) duly executed on a stamp paper of appropriate value. Further, the DP shall be responsible in deciding the value of the stamp paper. The schedule of fees to be charged by the DP to the CM should form a part of the Agreement.

(b) Following documents are required for opening a CM account:

(i) A copy of the letter from the Clearing Corporation/Stock Exchange intimating allotment of the CC-CM-ID to the CM.

(ii) A copy of the latest SEBI registration certificate (not applicable for CMs of NCDEX and MCX).

(iii)Board Resolution for authorised signatories.

(iv) Memorandum of Association and the Articles of Association (in case of Corporates).

(v) Specimen copy of the cheque for capturing the 9-digit MICR code.

(c) DP should verify the completeness of the account opening form and verify the copies submitted with the original documents.

(d) If the documents are in order, the DP should accept them and give an acknowledgement duly signed and stamped to the CM.

(e) The DP should forward the following documents to NSDL for allotment of CM BP ID

(i) Copy of Account opening form,

(ii)Copy of the letter from the Clearing Corporation/Stock Exchange intimating allotment of the CC-CM-ID and copy of the latest SEBI registration certificate (not applicable for CMs of NCDEX and MCX). These documents should be verified with the original document and stamped "Verified with Original" alongwith the stamp of the DP, signature of Compliance Officer, name, and designation.

(f) NSDL will allot the CM-BP-ID and intimate to the DP electronically.

(g) The DP should capture the signature(s) of the authorised signatories as given in the Account Opening Form on the DPM System.

(h) The DP should enter the Client account number generated on the DPM System in the Account Opening Form.

(i) The DP should print the Client Master Report and give it to the Client alongwith a copy of the Agreement.

1.1) Closure and shifting of CM Account (NSDL/PI/005 dated February 5, 1997)

The CM may close an existing clearing account and open a new clearing account with another DP. The CM will have to submit an application for closure of account to its DPs and an application for opening a CM account along with other documents for shifting of the CM account as explained below to the new DP. The existing CM account will be closed by the old DP after balances are moved out by the CM. The CM will be assigned a new CM-BP-Id by NSDL and a new CM account will be opened by the new DP. Further, the CM may also submit the closure application upon closure of business/suspension, DPs may close the account.

The procedure for closure and shifting of CM account is as follows:

(a) The CM will submit the application for closing the clearing account to the DP (old) in duplicate.

(b) The DP (old) will verify that the application for closing the clearing account is duly filled and if in order issue an acknowledgement to the CM on the duplicate copy.

(c) If the application is not in order the DP will return the application to the CM for rectification.

(d) The CM will submit the following documents to the DP (new):

(i) Application for opening a CM account (as mentioned in point no. IV. 1 )

(ii) Letter from Clearing Corporation/Stock Exchange regarding allotment of CM ID.

(iii) Application for shifting of clearing account. (as per the below given format)

(iv) Acknowledgement copy of the application for closure of the account from the previous DP.

(v) Copy of the latest SEBI registration certificate (not applicable for CMs of NCDEX and MCX).

DP should verify the completeness of the account opening form and verify the copies submitted with the original documents.

(a) If the application is not in order the DP will return the application to the CM for rectification.

(b) If the application is in order, the DP (new) will execute the agreement and give a copy of it to the CM.

(c) The DP (new) will forward the copy of the account opening form along with the above mentioned documents to NSDL. All the documents should be verified with the original document and a stamp "Verified with Original" should be put on the same alongwith the name, designation and signature of compliance officer. NSDL will allot the Clearing Member a new CM-BP Id.

(d) The DP (new) will open the clearing account after the new CM BP Id is downloaded to its DPM System and intimate NSDL about opening of the account and the date from which pay out is intended to be received in new CM account, however, not later than seven days from opening of Clearing member account by the DP (new).

(e) The new account will be marked to receive receipts-in due on pay-out after NSDL receives intimation from DP (new).

(f) NSDL will intimate the DP (old) to commence the procedure for closure of the account.

(g) On receipt of intimation from NSDL, the DP (old) will disable the standing instruction (if any). After the completion of one BOD/EOD cycle, the DP will verify the balances in the clearing account. If the balances happen to be zero and there are no outstanding instructions for the clearing account, the DP will change the status of the account to "To be closed" and intimate NSDL accordingly.

(h) On receipt of intimation from the DP (old), NSDL will revoke the old CM-BP Id of the CM.

(i) In case balances in its clearing account are not zero, the DP (old) will inform the CM to move its balances out of the CM Pool account in a reasonable time.

(j) The DP (old) will again verify the balances in the account. If the balances happen to be zero, the DP will follow the procedure mentioned in point no. (g) above.

(k) If the balance in the old clearing account has not been reduced to zero within one week of opening of the new account, the DP (old) shall inform NSDL forthwith that the balance has not been reduced to zero.

APPLICATION FOR SHIFTING OF CLEARING ACCOUNT

To be forwarded through Depository Participant (new)

Date:

National Securities Depository Limited
Trade World 4th Floor
Kamala Mills Compound
Senapati Bapat Marg Lower Parel
Mumbai - 400 013

Dear Sir,

Sub: Shifting of Clearing Member Account

This is to inform you that we wish to shift our Clearing Member Account as per the details mentioned below:

Name of Clearing Member (CM)  
Name of Clearing Corporation (CC)  
CC - CM -Id (Allotted by CC)  
CM- BP-Id (existing) (Allotted by NSDL)  
Name of Depository Participant ( Old)  
Name of Depository Participant (New)  

We request you to please allot a new CM BP Id to facilitate shifting of the Clearing Member Account.

Yours faithfully,

(Clearing Member)

1.2) Procedure for Name change of CM account

The following documents should be forwarded to NSDL for effecting change of name in the CM account.

(a) Copy of the latest SEBI registration certificate in the new name (not applicable for CMs of NCDEX and MCX).

(b) Letter from the Clearing Corporation/Stock Exchange effecting the change of name in its system.

(c) Copy of document/ certificate received from ROC notifying the name change.

(d) Copy of High Court Order in case of name changes due to mergers/amalgamations

These documents should be verified with the original document and a stamp "Verified with Original" should be affixed on the documents alongwith name, designation and signature of Compliance Officer.

2) Opening of Margin Account (NSDL/POLICY/2007/0029 dated June 15, 2007)

A new sub-type viz. "Margin Account" has been added to the Client types viz.; 'Resident' and 'Body Corporate' under Client Maintenance Module in DPM System.

The new sub-type "Margin Account" is added to enable CMs to open beneficiary accounts to hold securities for Client margin purposes. While opening such accounts, DPs are advised to obtain an undertaking from the CM/Brokers that the said beneficiary account(s) are opened for the sole purpose of holding and transacting for Client margin purposes and no other securities will be held/transacted in the said account.

(V) FAQs related to Account opening

1) What is the procedure for accepting telephone bills as Proof of address?

(NSDL/POLICY/2006/0026 dated July 17, 2006)

Telephone bills in respect of landline telephones provided by any service provider can be accepted as proof of address. It is hereby clarified that telephone bills (not more than two months old) pertaining to only Landline telephones (other than Fixed Wireless Phone) irrespective of the service provider can be accepted by DPs as proof of address. DP may ascertain the fact that such telephone number exists in the name of the entity, by making a call or by any other means.

2) In case of Corporate Client whether proof of address filed electronically can be accepted as proof of address?

As DPs are aware, as per the recent amendments in Income Tax Act, 1961 and Companies Act, 1956, Companies are required to file various documents, returns etc electronically. In this regard, it is hereby clarified that acknowledged copy of Income Tax Return, if filed electronically, will not be accepted as a valid proof of address in case of corporate clients. Further, in case of documents filed electronically with ROC, DPs can accept such documents as a valid proof of address provided they ensure the following:

a. obtains copies of challans of payments made to ROC.

b. verify the details viz. name of client, company identification number and address on the website of Ministry of Company Affairs viz. http://www.mca.gov.in and keep a copy of screen shot.

3) What is procedure for opening a beneficiary account in the name of a proprietorship firm?

DPs are advised to note that a demat account cannot be opened in the name of the propreitorship firm. The account has to be opened in the name of the proprietor by obtaining the documents mentioned in point no. (I) (1) 1.3 above and capturing the PAN details of the proprietor.

4) Can a commodity demat accounts be opened in the name of "Partnership firm" and "Proprietorship firm"?

Commodity demat accounts can be opened in the name of "Partnership firm" and "Proprietorship firm" under type/sub-type "Body Corporate/Others", as the structure and regulations governing transactions in commodities do not prohibit a partnership/proprietorship firm to hold commodities in the name of partnership/ proprietorship firm. For the purpose, DP should be empanelled with NCDEX or MCX for providing depository services relating to warehouse receipts.

5) What is the procedure to be followed if there are more than three holders ? (NSDL/PI/99/231 dated April 8, 1999)

In the account opening module of the DPM system, there is a provision for only three joint names as presently, allotments in the primary market and purchases in the secondary market are permitted only with a maximum of three joint names. However, there are very old cases of shareholdings where the number of joint holders are four or even more. The issue of dematerialisation of such holdings was discussed in the SEBI meeting held on February 12, 1999 and it was decided that Depositories shall formulate a system to incorporate more than three joint names for client accounts and DPs shall be advised accordingly. It was also decided that no credits, other than on account of dematerialisation of securities would be allowed to such accounts. In view of this, DPs are advised to follow the procedure given below for the same :

A separate account must be opened in the name of the joint holders with four or more names. The standing instructions to receive credits, receipt instructions, new issue applications and any other instruction which has the effect of crediting this account should not be accepted. Appropriate annexure should be attached to the account opening form in order to include various details viz; name, address, signatures, etc. of more than three holders. An undertaking should be obtained from the client on the lines that "the client shall not use this account for the purpose of allotments in the primary market or purchases from the secondary market and hence no instructions other than for dematerialisation, bonus, rights & preferential offer will be given by the client to any person which has the effect of crediting this account"

While opening the account, the DP shall capture the names of the four or more joint holders by numbering them in the DPM and entering the first holder's name in the first holder's field and accommodating the rest of the names in the fields for second and the third holder, eg. : - In case of joint holdings in four joint names of Mr. A, Mr. B, Mr. C & Mr. D, the account can be opened in the DPM as follows; First Holder's Name : 1. Mr. A; Second Holder's Name 2. Mr B; Third Holder's Name 3. Mr. C 4. Mr. D.

The DP shall process the dematerialisation request as per the usual procedure while ensuring that the pattern of holding as per the certificate tallies with the pattern of holding as per the account. After the balances in such joint account become nil, the aforesaid joint account should be closed.

DPs are further advised that in case of holdings of a "Trust" held in the joint names of four or more trustees, the procedure given above for opening the account can be adopted without any restrictions on receiving credits into that account.

6) Whether bank statement can be accepted as Proof of Address? (NSDL/POLICY/2007/0074 dated December 01, 2007)

As all DPs are aware, Bank passbook is one of the Proof of Address being submitted by applicant(s) to the DP at the time of opening depository account. In this regard, DPs have been seeking clarification with respect to accepting bank statement as Proof of Address at the time of opening depository account as many banks have been issuing/sending bank statement to its Clients instead of bank passbook. Further, DPs have also represented regarding practical difficulties faced by Clients in obtaining attestation or additional charges being levied for attestation on the bank statement. In this regard, DPs are advised as follows:

(i) Computer generated original bank statement:

DPs may accept the computer generated original bank statement as Proof of Address if neither obtaining the copy of bank passbook nor attestation (stamp and signature) of the authorised official of the bank on the original bank statement is feasible. Provided such original bank statement is printed on the stationery of the bank, carries logo & name of the bank, displays the name, address and bank transactions/holdings of the Client for the latest quarter ending.

(ii) Computer generated bank statement on plain paper:

DPs may accept the computer generated bank statement which is printed on a plain paper as Proof of Address provided it clearly mentions the name, address and bank transactions/holdings of the Client for the latest quarter ending. Provided such a bank statement is duly attested (signed and stamped) by the authorised official of the bank mentioning the name and designation of such authorised official.

In both the aforesaid circumstances, DPs are advised as follows:

(a) Obtain a cancelled cheque in original and signature of the applicant(s) (all the holders in case of joint holdings) on the bank statement.

(b) The bank statement should be of the latest quarter ending eg. depository accounts opened in the month of April, May and June should be supported by the bank statement of the quarter ending March 31.

 

Disclaimer : While every care has been exercised by NSDL in compiling the master circular out of the various circulars/guidelines issued by NSDL from time to time. NSDL does not warrant completeness or accuracy of information and disclaims all liabilities, losses and damages arising out of the use of this information. For any specific/latest information, DPs are requested to refer to the relevant circular(s)issued by NSDL from time to time.

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