Many students in India are interested in learning about the stock market and starting their investment journey early. A common misconception is that a steady salary or high income is a prerequisite to enter the market. In reality, any Indian citizen over the age of 18 can start investing, provided they have the necessary documentation.
If you are a student looking to participate in IPOs or the secondary market, here is how you can navigate the process without traditional income proof.
Is Income Proof Mandatory?
To open Demat account and a basic trading account for investing in equity (stocks) and IPOs, income proof is not mandatory. Income proof (such as salary slips, ITR, or 6-month bank statements) is only required by SEBI if you intend to trade in Futures and Options (F&O) or other derivative segments. For simple “Cash” or “Delivery” trading—where you buy shares today and hold them—you only need basic identity and address verification.
Requirements for Students
To begin, you must meet the following criteria and have these digital documents ready:
- Age: You must be 18 years or older to operate an individual account. (Minors can have accounts, but they are managed by a guardian and have certain restrictions).
- PAN Card: This is the primary requirement for all financial transactions in India.
- Aadhaar Card: Ensure your Aadhaar is linked to your current mobile number for the OTP-based e-KYC process.
- Bank Account: You need an active savings account in your name. This can be a zero-balance student account or a regular savings account.
Step-by-Step Application Process
1. Choose a Broker
Select a Depository Participant (DP) that offers a user-friendly interface and a transparent fee structure. Many students prefer discount brokers due to lower maintenance charges.
2. Digital Registration
Enter your mobile number and email on the broker’s platform. You will receive OTPs to verify these contact details.
3. Enter PAN and Bank Details
Provide your PAN card number and date of birth. You will also need to enter your bank account number and IFSC code. The broker may deposit a small amount (usually ₹1) to verify that the account is active and belongs to you.
4. Complete KYC without Income Proof
When prompted to select “Segments,” choose Equity/Cash. When the system asks for income proof, you can simply skip this step or leave it blank, as it is optional for the cash segment.
5. Verification (IPV)
You may need to complete an In-Person Verification. This usually involves holding your phone camera up and recording a 5-second video of your face or taking a live selfie to confirm you are the person applying.
6. E-Sign with Aadhaar
The final step is the e-sign. You will be redirected to the NSDL or CDSL electronic signature page. Enter your Aadhaar number and the OTP sent to your registered mobile phone to legally sign the application.
Points to Remember for Students
- Nomination: It is now mandatory to either add a nominee (like a parent) or explicitly opt out of nomination during the sign-up process.
- Funding: Since you have no salary, ensure the funds used for investing are from your own savings or legal gifts from family.
- Account Charges: Be aware of Annual Maintenance Charges (AMC). Some brokers waive this for the first year or for accounts with low holdings.
Conclusion
Starting early allows students to understand market dynamics and the power of compounding. By selecting the equity delivery segment, you can easily set up your accounts using just your PAN, Aadhaar, and bank details, bypassing the need for income documentation entirely.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
