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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

Mr. Iyer wants to open a demat account with a Depository Participant (DP). Which statement about the account opening process under the depository framework is correct?

A DP must execute the prescribed standard agreement with the client before opening a demat account. No physical holding is needed, a client may hold several accounts, and PAN verification is compulsory, so only the agreement requirement is correct.

  1. AA DP can open an account only if the applicant already holds securities in physical form
  2. BA DP must enter into an agreement with the client in the prescribed standard form before opening the accountCorrect
  3. CA client may hold only one demat account across all depositories
  4. DA DP may open an account without verifying the PAN of the applicant if the applicant is an existing bank customer

Explanation

Before opening a beneficial owner (BO) account, the DP and client must sign the standard account opening form and rights and obligations document. Holding physical shares is not a precondition, a client can hold multiple accounts, and PAN verification is mandatory regardless of banking relationship.

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