NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening
Account Opening Procedure and Account Opening Form for a Demat Account
Updated 11 October 2026 · Fact-checked
To open a demat account, the investor submits a completed account opening form with KYC documents to a Depository Participant (DP). The DP verifies the details, does in-person verification, gives the rights and obligations document and tariff schedule, signs the agreement and then opens the account and issues a client ID.
Understand Account Opening Procedure and Account Opening Form
A demat account (called a beneficial owner or BO account) holds securities in electronic form. You cannot open it directly with NSDL or CDSL. You open it through a Depository Participant (DP), which acts as the agent of the depository.
The process is a contract between the investor and the DP. The investor fills in an account opening form. The form captures identity, address, PAN, bank details, nomination choice and other details. The investor attaches KYC documents. The DP checks them against originals and carries out in-person verification of the applicant.
Two more documents go with the form. The rights and obligations document sets out what the investor and the DP owe each other. The tariff schedule lists the charges, such as account opening, annual maintenance and transaction charges. The DP must give both to the investor, and the investor signs the agreement after receiving them.
The DP must not make the investor sign a blank form. It must also not make the account opening depend on terms that are not in the standard agreement. Once the DP is satisfied, it opens the account in the depository system and allots a unique BO ID. The BO ID is a 16-digit number: for NSDL it is the DP ID (8 characters, starting with IN) plus an 8-digit client ID; for CDSL it is a 16-digit number whose first 8 digits are the DP ID.
For exams, think in order: form, KYC, verification, documents given, agreement, account opened. Most questions test who does what and which document must be handed over.
Key formulas to remember
- 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.
How to solve Account Opening Procedure and Account Opening Form questions
Use this order for any question on the account opening procedure, whether it asks for a step, a document or a responsibility.
- 1Identify who is acting in the question: investor, DP or depository.
- 2Place the question in the sequence: form, KYC, verification, documents given, agreement, account opened.
- 3If the question is about documents, separate what the investor submits (form, KYC) from what the DP gives (rights and obligations document, tariff schedule).
- 4Check whether the question is about checking originals or in-person verification. Both are DP duties.
- 5Look for words such as 'must', 'only' and 'always'. Rules with exact conditions usually fail under 'always' or 'never' traps.
- 6Eliminate options that give the depository a direct role in dealing with the investor at the opening stage.
- 7Choose the option that fits the sequence and the DP's duty.
Quickest way: Sequence and ownership check
When to use it: Use when you have under a minute and the options look alike.
- Recall the chain: investor fills form, DP verifies, DP gives documents, agreement signed, account opened.
- Ask: does this option make the DP do something before the step it depends on? Reject it.
- Ask: does this option make the investor give the rights and obligations document? Reject it, since the DP gives it.
- Pick the option consistent with the chain.
Common mistakes in Account Opening Procedure and Account Opening Form
Thinking the investor can open a demat account directly with NSDL or CDSL.
Students link the account name with the depository name.
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.
Students assume all documents in the pack come from the applicant.
Fix: The investor submits the form and KYC. The DP gives the rights and obligations document and the tariff schedule.
Ignoring in-person verification.
Students focus on documents and forget that the applicant must also be verified.
Fix: Add in-person verification by the DP's authorised official to the checklist, along with checking originals.
Believing an investor can hold only one demat account.
Confusion with the rule of one PAN per person.
Fix: An investor may open multiple demat accounts, with the same or different DPs, and across both depositories.
Mixing up the BO ID format of NSDL and CDSL.
Both IDs are 16 characters long.
Fix: NSDL: DP ID starts with IN, then an 8-digit client ID. CDSL: all 16 digits are numeric.
Worked examples
Example 1
Which of the following is given by the Depository Participant to the investor at the time of opening a demat account? (a) KYC documents (b) Rights and obligations document and tariff schedule (c) Proof of address (d) Completed account opening form
Show the solution
- Identify the actor: the question asks what the DP gives.
- The form, KYC documents and proof of address are all submitted by the investor.
- The DP is the one who provides the rights and obligations document and the tariff schedule.
- Only option (b) matches.
Answer: (b) Rights and obligations document and tariff schedule
Example 2
Which of the following is correct about opening a demat account? (a) The investor applies directly to the depository (b) The DP verifies the applicant and the original documents before opening the account (c) An investor can open only one account in India (d) The DP can ask the investor to sign a blank form
Show the solution
- Option (a) is wrong: the investor applies through a DP, not directly to the depository.
- Option (c) is wrong: an investor may open more than one demat account.
- Option (d) is wrong: a DP must not get the investor to sign a blank form.
- Option (b) is the DP's duty: in-person verification and comparison with originals.
Answer: (b) The DP verifies the applicant and the original documents before opening the account
Exam tips
- 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.
- Check the negative marking of your paper before guessing. NISM-Series-VI has 25% negative marking, so skip if you are unsure of two options.
- Link this topic with KYC and types of accounts, as questions often combine them.
Practice questions from Functions of Depository Participant - Account Opening
- Sunita Traders, a partnership firm, applies to open a demat account in the firm's name. Which statement is correct as per the account openin…
- A DP is opening a joint demat account for Mr. Nair, Mrs. Nair and their son. Which of the following is correct regarding the account?
- Which of the following is true about the charges and the intimation to a client after a demat account is opened by a DP?
- A client opens a demat account and does not wish to give a nomination. What must the DP do?
- A DP receives an account opening form for a minor, Aarav, aged 10, from his father. Which treatment is correct?
Account Opening Procedure and Account Opening Form in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Account Opening Procedure and Account Opening Form: frequently asked questions
What documents does a DP give when opening a demat account?
The DP gives the investor the rights and obligations document and the tariff schedule. The investor signs the agreement after receiving them. Keep these two apart from the documents the investor submits.
Can I open a demat account directly with NSDL or CDSL?
No. You open it through a Depository Participant. The DP is the intermediary that links you with the depository.
Is in-person verification required for opening a demat account?
Yes, the DP carries out in-person verification of the applicant and verifies the documents against the originals. The exam may test this as a DP responsibility.
Can one person have more than one demat account?
Yes. An investor may open more than one demat account, with the same or different DPs. Each account gets its own BO ID.