The Securities and Exchange Board of India has made Demat Accounts and Trading Account mandatory for investing in the stock market. A seamless and paperless facility offered by Demat account has opened the stock market door for everyone.
A Demat account facilitates trading by serving as a vault for documents of investments you make, making it obvious that you would want the account to be in secure hands in your absence. Read on as we discuss everything you need to know about nominations for your Demat account.
What is Nomination in Demat Accounts?
Nomination in the Demat account is a process of appointing a nominee- a person who will have the authority to manage the Demat account in case you are no longer around. The process is designed for a user-friendly experience to remove the hassle of appointing a nominee.
Additionally, nomination in the Demat account is a flexible feature that lets you appoint any person as a nominee and also change the nomination during your lifetime.
Demat Account Nomination: Why is it Important?
A Demat account nomination is an important step of the Demat account opening process that helps you safeguard your investment documents. Here’s how appointing a nominee helps you:
1. Security in Your Absence
A Demat account nomination provides a seamless transfer of all your investments to your loved ones without any hassle in case of your passing away.
2. Avoid Legal Conflicts
Failing to appoint a nominee subjects your Demat account to legal conflicts over its ownership which might even lead to a complete waste of all your investments.
3. Financial Safety to the Nominee
Investments in the stock market are often made to safeguard the future of your loved ones, as well. Appointing a nominee is a step to ensure that they get to enjoy financial stability even when you are not around.
Simple Steps for Demat Account Nomination
Demat Account nomination is a seamless process that can be done following these steps:
- Open Demat account
- Select the “Nomination Online” window and you will be taken to a page to fill in details like DP ID, PAN details and Client ID.
- Following this, you will receive an OTP for authentication.
- Once authenticated, you will be redirected to a page where you have to select the “I Wish to Nominate” option and fill in the details of the person whom you wish to nominate.
- The next step is a simple Aadhar e-signature for verification.
- You will receive an OTP for final verification and you have successfully appointed a nominee for your Demat Account.
Demat Account Nomination: The Eligibility Criteria
Before you proceed to select a nominee, take a look at this list of eligibility criteria:
- You can appoint any person as a nominee including friends, family or relatives.
- Only a natural person can be nominated. Legal persons like Company or ‘Karta’ can not be nominated.
- Minors can be appointed as nominees provided their guardian details are provided.
To Conclude
Adding a nominee for your Demat account is an important step to safeguard your hard-earned investment portfolio. Additionally, a nomination ensures that your loved ones are provided with a financial safety net in case you meet with an unfortunate accident.
Handling money can be tricky, as a beginner in the stock market the first important step is to choose a credible platform like Baja Online Trading for a straightforward Demat account opening process. Get access to personalised suggestions and a data library for better market assessment.