What are the KYC norms for opening a demat account? MintGenie explains

livemint.com:

demat account is a crucial step for investors looking to invest directly in the stock market. However, before diving into the world of trading and investments, individuals must adhere to certain KYC (Know Your Customer) norms mandated by regulatory authorities. These norms serve to verify the identity and credentials of account holders, ensuring transparency and security in financial transactions.

In 2002, the Reserve Bank of India (RBI) introduced KYC guidelines for banks to prevent their misuse for illicit activities like money laundering or terrorist financing. Also Read: Demat Account: How to choose between full-service and discount brokers? The primary objective is to enable banks to thoroughly understand their customers and their financial activities, thereby allowing them to manage associated risks more effectively. Following the RBI's lead, market regulator Securities and Exchange Board of India (SEBI) also implemented KYC norms for clients in the securities market.

KYC is an acronym for “Know Your Client" in market terms. KYC is the mandatory process of identifying and verifying the client's identity when opening an account and periodically over time. In other words, banks and other financial institutions must ensure that their clients are genuinely who they claim to be.

Also Read: Can I convert my single demat account into a joint account? KYC encompasses various steps aimed at ensuring financial institutions have a comprehensive understanding of their clients. These steps include establishing the identity of customers, comprehending the nature of their financial activities, and validating the legitimacy of the source of funds. Additionally, KYC protocols involve assessing the risks of money laundering