Demat Accounts without PANs to be Suspended

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Aug. 3 – Demat account holders with no permanent account number (PAN) details will be suspended for credit and unable to buy shares starting August 16.

Demat accounts are dematerialized accounts needed to be able to buy and sell stocks in the country. According to the Securities and Exchange Board of India, a PAN must be validated by the depository participant. “It is clarified that other credits including credits from initial public offer/follow-on public offer/rights issue, off-market transactions, or any secondary market transactions shall not be allowed into such accounts.”

A demat account is a necessity for stock trading in India since it is used to cut brokerage charges and eases the overall stock trading process. Moreover, it reduces risks of counterfeiting and loss. In India, stocks are held in electronic form at the National Securities Depository Ltd. and the Central Depository Services Ltd. A depository participant is a branch that services to individual clients, similar to a bank.