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Demat, trading accounts with pending KYC to be deactivated. What you need to do

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Investors with demat accounts or trading accounts have been advised by depositories to complete their know-your-customer details by July 31. Failure to do so would result in deactivation of their accounts.

Circulars issued by depositories – National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) – on April 7, 2021 and April 5, 2021, respectively laid down that six KYC elements are mandatory for accountholders.

These six elements include: name, address, Permanent Account Number (PAN), valid mobile number, valid email ID, and income range.

All six KYC attributes have been made mandatory for new accounts opened from June 1, 2021. For all existing accounts, depositories had been asked by market regulator SEBI to verify that all six KYC attributes are updated and, wherever required, necessary communication is sent to their clients to update the same on or before May 31, 2021.

For PAN, the circulars noted that the requirement of mandatory submission of PAN by clients for transactions in the securities market shall continue to apply, with permitted exemptions. Investors have asked to verify their PAN online via the Income Tax website.

In case PAN is not seeded with Aadhaar before the date specified by the government, it will not be considered as a valid PAN, the circulars noted.

Separate mobile numbers and email addresses have to be provided for all Beneficial Owner (BO) account holders. However, after submitting a written declaration, BO can update mobile number and email address of its family members. Family for this purpose has been defined as self, spouse, dependent parents and dependent children.

If same mobile number or email ID is captured in more than one demat account and family flag is also not updated, participants shall be required to send 15 days notice to such demat account holder for submitting mobile number/email ID modification form or request letter for updating the same or family flag declaration.

Failure to comply will result in classification of such accounts as non-compliant accounts.

Accountholders will have to inform the depositories about their income range, with separate ranges being classified for individuals and non-individuals.

For individuals, the income ranges are:

– Below 1 lakh

1 lakh to 5 lakh

5 lakh to 10 lakh

10 lakh to 25 lakh

– More than 25 lakh

For non-individuals, the income ranges are:

– Below 1 lakh

1 lakh to 5 lakh

5 lakh to 10 lakh

10 lakh to 25 lakh

25 lakh to 1 crore

– More than 1 crore

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