In order to use any kind of financial services or products In India. It is mandatory to open a Demat account. Same is the procedure for the share market too. To be able to purchase, sell, track and analyse shares or a group of stock, one has to create a Demat account assigned by a Depository Participant (DP).
Once you open a Demat account, you will receive a Demat account number, which contains a BO (Beneficial Owner) ID or a client ID. The BO ID is a unique ID that identifies different clients, but it is not the same as a client ID. So, what is the client ID in a Demat account? Scroll below to get the answer to your question.
What Is Client ID in Demat Account?
A client ID is a unique combination of 8 numerical digits assigned by their DP at the time of account creation. An investor uses his/her client ID to perform all kinds of tasks in the stock market, from buying and selling to analysing. The number is designed by the DPs using their own formula, and it is not influenced by the depositories themselves.
A Demat account number is a combination of 16-digit numeric codes that every account holder has. This number is a combination of two IDs.
- Client ID
- DP ID
Difference between Client ID and DP ID
Both DP ID and Client ID in Demat account together form the Demat account number. Here are the key differences between Client ID and DP ID:
| Client ID | DP ID |
| This part of the account number identifies the account holder or the individual investor) | This part of the account number identifies the Depository Participant (bank, broker, etc.) through which the individual has created his/her account. |
| The Depository Participants (ie-bank, broker, etc.) assign the client ID. | The depositories (i.e., NSDL and CDSL) assign the DP ID. |
| It identifies the client itself. | It recognises the DP in the depository system. |
Hence, a Demat account number identifies the client and the DP together through whom the client has created a new account.
How do you Allocate Your Client ID in a Demat Account?
Here are a few steps to identify the client ID in a Demat account number. We will take a dummy account number for this example – “IN00634857324967”.
1. Recognise the DP ID
The first eight characters in a Demat account are the DP IDs. Here the DP ID is “IN006348”.
2. Identify the Client ID
The last eight characters of the 16-character account number are identified as client IDs. Here the client ID is “57324967”.
3. Identify your Depository
In a Demat account number, you can identify your specific Depository Participant (financial institution/broker) by analysing the format of your DP ID. If the DP ID is only numeric, it is approved by CDSL. However, if it is alphanumeric, it is approved by NSDL.
Above is an example of a Demat account number issued by NSDL.
Importance of Client ID in Stock Market Trading & Investments
Client ID in Demat Account number plays a vital role in making the account actually unique for the investors. It offers various important features that are crucial in trading and investments. Some of them are given here.
1. Verification of Identity and Security
A client ID ensures that the transaction is taking place in the right Demat account. This helps to prevent fraud and any unauthorised access.
2. System Regulatory Requirements and Compliance
The Securities and Exchange Board of India (SEBI) utilises client ID to develop trade reports periodically to maintain transparency in its actions. Stock brokers use client IDs of millions of people, which the regulator may use to investigate illicit activities in the market.
3. Trading
All transactional activities require client ID to process. This includes buy or sell orders, loan disbursement for existing shares and dematerialisation of material certificates. All of these activities require the client ID for processing.
Conclusion
Client ID in Demat account is a mandatory requirement by law and SEBI. DPs are required to provide this ID to every new Demat account holder. One must secure his/her client ID from unauthorised access as this might lead to theft and fraudulent activities.
