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The full form of DP ID is Depository Participant Identification. It is a unique code allotted to a Depository Participant (DP) by an authorised depositor. DP in the demat account plays a significant role in the entire trading process.
Anyone buying and selling securities must know the 16-digit demat account number. DP ID forms the first eight digits of this account number, while the remaining digits denote the customer ID. It helps to identify the DP in the demat account. Investors must know their DP and customer ID to use their demat account for trading securities.
The DP ID means great importance in security trading. The ID helps to track the movement of the securities held by the demat account holder. It ensures the authentic trading of securities.
This blog explains what is DP in a demat account, its applications, and its importance in securities trading.
What is a Depository Participant?
DP in a demat account is a financial institution that serves as an agent to provide dematerialisation services. It is a trusted link between a depository and an investor. The Securities and Exchange Board of India (SEBI) governs, controls, and supervises all DPs across India.
The government eliminated paper-based share certificates to promote a safe trading ecosystem, making demat accounts a prerequisite for securities trading. Investors can electronically hold/trade all the investments, including shares, bonds, etc., in one place.
Understanding DP ID and its applications
The DP ID defines the correct route for securities trading. Though a demat account ensures that your e-transactions occur safely, security risks can still hamper your experience. This is where DP ID comes into play.
The 8-digit code adds an identification tag to the depository participant involved. Through this code, the sender DP ensures the transaction moves to the correct DP for processing. Let’s further understand what is DP ID in the demat account.
1. Accuracy in trading: The DP ID allows the safe and instant transfer of securities from one demat account to another.
2. Faster settlement: DP ID is a component of the demat account number. All the transactions carried out via a demat account occur electronically. This way, it facilitates faster settlement of transactions.
3. Access to services: Your depository will provide you easy access to various services like e-voting, pledges, etc., after seeking your DP ID.
4. Tracking transactions: Tracking a transaction is easy with DP ID. It induces complete transparency within the trading system.
5. Safety: The DP ID helps to avoid third-party intrusion or access to your demat account.
Example of DP ID in Demat Account
Let’s understand DP ID in the demat account with a simple example.
Consider investor A’s demat account with a DP named XYZ Securities Limited. The DP ID assigned to XYZ Securities Limited by the depository is 24681012. Therefore, A’s DP ID with XYZ Securities Limited would be 24681012.
If A purchases shares, it would be via the DP ID linked to the demat account with XYZ Securities Limited. Similarly, when A sells his investments, his DP ID will help process transactions.
What is a DP ID in a demat account, and how is it different from a Demat account number?
Depository Participant Identification is the eight-digit code the depository assigns to a depository participant. When you open a demat account with a DP, the ID associated with the DP gets linked to your demat account. Further, buying or selling securities via your demat account routes the transactions to the authentic receiver DP for successful processing.
On the other hand, a demat account number is a 16-digit code allotted to you by the DP at the time of demat account opening. This code is interlinked with the DP ID and helps identify your investments in your demat account. When you buy or sell shares, the demat account number facilitates the necessary debits or credits in the securities count.
Differences between a DP ID and a demat account number
● In the case of a DP ID, the depository is the assigning authority. Contrarily, it is the DP who assigns the demat account number.
● The DP ID ensures the correct routing of the electronic transactions between the sender and the receiver DP. On the other hand, the demat account number helps to identify your holdings held in the demat account.
Understanding CDSL and NSDL
The two SEBI-regulated depositories in India are the Central Depository Services Limited (CDSL) and National Securities Depository Limited (NDSL). The Bombay Stock Exchange, Bank of India, Bank of Baroda, State Bank of India, and HDFC Bank run the CDSL. On the other hand, the Unit Trust of India, IDBI, and the National Stock Exchange promote the NDSL.
You cannot trade securities by opening a demat account with a registered depository. Depository participants, such as banks, are essential to this chain as they connect you with the depository. When you open a demat account, you receive a welcome letter from NSDL or CDSL. The letter contains all your account details, including the 16-digit demat account number. This demat account number is referred to as Beneficiary Owner ID or BO ID in the case of the CDSL.
In the case of CDSL, the demat account number is a 16-digit numeric combination, whereas, in NSDL, the number starts with IN followed by 14 digits.
What is the client ID in the demat account?
The Client ID in a demat account is a unique identification code allotted by the Depository Participant. It is generally an alphanumeric combination unique for each demat account holder. The first eight digits constitute the DP ID, while the remaining digits denote the identification number assigned to the investor. The ID represents the total holdings in the demat account.
For example, there is an investor ABC. He has a demat account with a DP ID of 12131415. The DP assigns him a unique identification code of 67891011. Therefore, the Client ID for ABC is 12131415-67891011.
How to find out the client ID in the demat account?
You can find the client ID in the demat account in the following ways.
● You can reach out to NSDL or CDSL, and provide your PAN card details to find the demat account number.
● Call the DP helpline and provide them with the PAN details.
● Visit the official website of CDSL EASI or IDeAS-NSDL to get the required information.