NISM Certifications · NISM-Series-VI: Depository Operations

Functions of Depository Participant - Account Opening: formula sheet

Full chapter guide

Key formulas

BSDA eligibility: Individual only (single, or joint where the first holder meets the conditions); only one BSDA per individual as sole or first holder across depositories; no other demat account in his name as sole or first holder; Corporates, HUFs and other non-individuals cannot open a BSDA. A BSDA can be held jointly, but the eligibility conditions apply to the first holder. The rule is not extended to every joint holder. Confirm the exact wording in the latest workbook.
BSDA value cap and charges: If holdings exceed the BSDA cap, the DP may charge as for a regular account from the next billing cycle; The account is not closed. Check the current cap and charge slabs in the latest workbook. Do not rely on old figures.
Minor account: Minor = sole holder; operated by guardian; no joint holding with a minor as one of the holders; The guardian signs. On turning 18, the account is frozen for debits until the former minor submits fresh KYC and new account documents. After that, the account is changed to a normal individual account.
HUF account: Account in the name of the HUF, operated by the Karta; Account is in the HUF name, not in the Karta's personal name.
Holder categories: Individual (single/joint), HUF, corporate, NRI, minor, trust, FPI; Each category has its own documents and operating rules.
Core documents in account opening: Account opening form + KYC documents + rights and obligations document + tariff schedule; The investor signs the agreement after the DP provides the rights and obligations document and tariff schedule.
Who opens the account: Investor → DP → Depository; The investor deals only with a DP. The DP opens the BO account in the depository system.
In-person verification: DP (its authorised official) verifies the applicant and the original documents; Photocopies are compared with originals. The verifying official signs and records the verification.
BO ID structure: NSDL: DP ID (8 characters) + client ID (8 digits). CDSL: 16-digit ID, first 8 digits are the DP ID; Each BO account has a unique 16-character or 16-digit ID.
Multiple accounts: An investor may open more than one demat account, with the same or different DPs; There is no rule limiting an investor to a single DP or a single depository.
PAN rule: Demat account opening → PAN is mandatory for every holder (including each joint holder); Limited exemptions exist, such as the Sikkim resident exemption and certain government and institutional categories. Learn the list in your workbook.
Core KYC elements: KYC = PAN + POI + POA + IPV + photograph + completed account opening form; All must be in order before the account is activated.
Verification of documents: Copy of document must be verified with the original (or valid electronic equivalent); The verifying official records name, date and signature or authentication.
KRA vs CKYC: KRA = KYC records for securities market intermediaries; CKYC = central records across the financial sector; Do not treat them as the same system.
e-KYC: Aadhaar-based authentication → paperless verification of identity and address; The DP remains responsible for the KYC.
Joint holders: Maximum 3 holders; first holder + second + third; All joint holders must provide KYC and sign the form. Names are recorded in the order given on the account opening form. The holders choose the operating instruction on the form (all jointly, or 'either or survivor' / 'anyone or survivor'), and the DP acts on it for the account as a whole. If the form gives no operating instruction, the default is that all holders sign.
Minor account operation: Account in minor's name, operated by guardian; Guardian's proof of relationship and minor's age proof required. No joint holders with a minor account.
Minor turns major: On attaining 18 years, the holder applies to change the status to individual; The holder submits fresh KYC and the change-of-status documents required as per the DP's procedure and the NISM workbook. The guardian's authority ends.
Joint holder death: Survivors continue; deceased holder's name deleted through transmission on death certificate and request; Securities pass to the nominee or legal heirs only when no holder is left.
Non-individual holder: Constitutional documents + authority resolution + authorised signatory list; The signatories' KYC and specimen signatures are also needed.
Nominee vs POA: Nominee = rights after death of holder | POA holder = acts during life of holder; The most tested distinction. A nominee has no power to operate the account while the holder is alive.
Who can grant a POA: Only the BO (account holder) can grant a POA; The DP cannot create its own authority. It must be given in writing by the BO.
Change in BO details: Written request + supporting proof + DP verification → update in records; Applies to address, bank details and signatory changes. The DP does not update on a verbal request.
Closure of account: Closure request by BO → nil balance or balance transferred → DP closes; Balance must be dealt with before the account is closed.
Nomination can be changed: BO may add, change or cancel a nomination at any time while alive; A fresh nomination replaces the earlier one.

Quick revision

A DP is the depository's agent and opens demat accounts for investors.
An investor needs an account with a DP to hold securities in electronic form.
The account opening form and the DP-client agreement are both required to open an account.
Each account gets a unique client ID, and the DP ID plus client ID identify it.
PAN and KYC verification are required before the account is activated.
Know the difference between holders of an individual, joint, minor, corporate and NRI account.
A minor account is operated by a guardian; check the workbook for the exact conditions.
Corporate accounts need authorised signatories supported by a board resolution.
Nomination lets the holder name who receives the securities on death.
A power of attorney authorises another person to operate the account on the holder's behalf.
Changes to address, bank or signature need a request with supporting proof.
Check each rule's condition words before choosing an option.

Common mistakes

Thinking a HUF or company can open a BSDA. Fix: BSDA is for individuals only. Link BSDA with the word 'individual'.
Believing an investor can hold one BSDA with NSDL and another with CDSL. Fix: The limit is one BSDA per individual across depositories.
Thinking the investor can open a demat account directly with NSDL or CDSL. Fix: Remember that depositories work only through DPs. The investor's contract is with the DP.
Saying the investor provides the rights and obligations document and tariff schedule. Fix: The investor submits the form and KYC. The DP gives the rights and obligations document and the tariff schedule.
Thinking PAN is needed only for the first holder of a joint account. Fix: Remember that PAN is required for every holder, including joint holders.
Treating KRA and CKYC as the same thing. Fix: Link KRA with securities market intermediaries and CKYC with the whole financial sector.
Thinking the minor can sign instructions. Fix: The name is the minor's, but the guardian operates the account.
Allowing a joint holder in a minor's account. Fix: A guardian is not a holder. The minor is the sole holder.
Saying a nominee can operate the account during the holder's life. Fix: A nominee gets rights only after the holder's death. Use the alive or dead test.
Treating nomination as a replacement for a will. Fix: Nomination eases claiming of securities. It does not decide ownership against a valid will or legal heirs.

Exam tips

Link BSDA to three words: individual, one, small. Most BSDA questions test one of these.
When an option says a minor can be a joint holder, reject it.
Check the latest workbook for the BSDA cap and charge slabs. Learn the numbers, because options often differ only by number.
Read for the word 'sole' or 'first' in BSDA questions. It decides eligibility.
Negative marking applies. If two options both look right, find the one that fits the exact rule.
Questions often test who gives which document. Learn the investor list and the DP list separately.
Watch for options that place the depository in direct contact with the investor at account opening.
Be careful with 'only' and 'always'. Multiple accounts are allowed.