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What is Beneficial Owner Identification Number (BO ID) in the Share Market?

What is Beneficial Owner Identification Number (BO ID) in the Share Market?
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In the Indian financial system, BSE is one of the most important exchanges for trading shares and other securities. To participate in trading activities on the BSE, traders and investors need to have a BO ID. It is a unique identifier assigned to each account on the BSE.

If you are searching for what is BO ID in share market, how it works, and how to create one for yourself, then this blog is just for you. 

So, without any further ado, let’s dive in!

What is BO ID in CDSL?

BO ID full form is Beneficial Owner Identification. BO ID means in CDSL is a unique 16-digit identification number assigned to each account on the BSE. The purpose of BO ID is to identify the beneficial owner of the securities that trade on the exchange.

The Beneficial Owner Identification is assigned to each account by the Depository Participant (DP), registered with CDSL. CDSL(Central Depository Services Limited) holds the securities electronically. However, the DP is a financial institution that acts as an intermediary between the investor and the depository. However, the depository, i.e., CDSL is responsible for holding the securities in electronic form.

Why is a BOI ID Important?

Your BO ID is like your account number. You use it whenever you want to buy or sell securities using your demat account. Simply put, It’s just as important as your bank account number when you want to send or get money.

Knowing your BO ID also helps you keep track of your account better. This is important to protect your account from any unauthorized or fraudulent activities.

How does Beneficial Owner Identification Work?

BO ID is put to use by investors for various activities on the BSE. For trading on the exchange, the investor must provide the Beneficial Owner Identification Number to the broker. The stockbroker then uses the BO Identification to verify the investor’s identity and to place the trade on the BSE.

Additionally, individuals may use it for transferring securities between accounts. For instance, if you want to transfer securities from one account to another, you have to give the BO ID of the account that is receiving the securities. It will help ensure that the securities are transferred to the correct account.

Apart from this, it is also used for receiving dividends and other benefits from the securities held in the account. It is used to identify the beneficial owner of the securities and to credit the dividends or benefits to the correct account.

How to Create BO ID?

To create a BO ID, you need to follow these steps:

  • Choose a Depository Participant (DP): A DP acts as an intermediary between you and the depository. So, the first thing you need to do is to choose a DP to create a BO ID.
  • Fill out the Account Opening Form: The DP will provide you an account opening form. Fill out the form and share all the required documents. 
  • Submit your KYC Documents: After submitting the form, submit your KYC documents. These documents will include a copy of your PAN card, Aadhaar card, passport, or driver’s license, along with a photograph.
  • Sign the Agreements: Once you submit KYC documents, sign the agreements with the DP. 
  • Pay the Account Opening Fees: After signing the agreement, pay the account opening fees. The fees may vary depending on the DP you choose.
  • Receive the Beneficial Owner Identification: Once the DP verifies your documents and receives the account opening fees, they will assign a unique BO ID Number to your account. It is usually a 16-digit alphanumeric code. 

Note: Ensure to keep your BO ID safe, as you will use it for various activities on the BSE.

Where to Find BO ID?

There are three ways to find your Beneficial Owner Identification Number. You can follow any of the methods mentioned below to find it.

1. Check your Demat account statement: Your BO ID Number is usually mentioned on your Demat account statement issued by your Depository Participant (DP). The DP is responsible for maintaining your Demat account and providing you with regular statements that include your BO ID.

2. Check your Contract Note: If you have conducted any trades on the stock exchange, you would have received a contract note from your broker. Your BO ID is usually present on the contract note, along with other details such as trade date, settlement date, and brokerage charges.

3. Check your email or SMS: Your DP may send you regular updates and alerts related to your Demat account via email or SMS. Your BO ID may be present in such communications

However, in case you are unable to find it even by using these methods, then you can contact your Depository Participant (DP) and ask them to provide you with your BO ID. You can either call them or visit their office in person with your Demat account details and identity proof to obtain the information.

What is DP ID?

The agent of the depository is commonly known as a depository participant or simply a “DP.” A Depository Participant (DP) is like a middleman between investors and the stock exchanges. Usually, it’s financial institutions, brokerage firms, and banks that act as DPs. They follow guidelines from the Depositories Act of 1996, which outlines how depositories and DPs should work together.

How to Find DP ID & Demat Account Number? 

Now that we have understood BO ID meaning and how to get bo id in cdsl, here is your turn to find your DP ID. 

Your Demat account number is a unique 16-digit alphanumeric code given to you by your Depository Participant (DP). Once you successfully open a Demat account online, you’ll get a welcome letter from the depository (either CDSL or NSDL). This letter will have all your account details, including your Demat account number. If it’s with CDSL, your Demat account number is also called the Beneficiary Owner ID (BO ID). 

Remember, if your Depository Participant (DP) is National Securities Depository Limited (NSDL), your account number (ID) will begin with IN, followed by 14 digits. In the case of CDSL as your DP, the ID will consist of 16 digits.

How is a Demat A/C different from a Depository Participant (DP) Identification (ID)? 

Your DP ID and Demat Account number are not the same, and they don’t represent the person who owns the Demat account. A bank or brokerage company is an example of a depository participant, and they get assigned a DP ID by NSDL or CDSL. 

Therefore, your DP ID and customer ID are combined to create a Demat A/c no. Typically, the first eight characters of your Demat Account number are your DP ID, and the last eight characters are your customer ID.

How is a BO ID Different from a DP ID and a Client ID?

In simple words, your BO ID is like your demat account number, made up of your DP ID and your client ID. The DP ID is the first eight digits that tell if your account is with CDSL or NSDL. Both depositories use these numbers to identify participants. Your client ID is the unique last eight digits of your account number. The BO ID is the full 16-character account number. Thus, understanding this helps you handle your securities easily.

Benefits of BO ID

Some of the benefits of Beneficial Owner Identification (BO ID) are as follows:

  • Easy access to investments: With a BO ID, you can easily access your online investments and track your portfolio. Including details of your securities holdings, transaction history, and dividends received.
  • Quick and easy transfer of securities: It makes it easy to transfer securities between accounts. This will help you save time and reduce the chances of any errors or fraud.
  • Facilitates online trading: It is essential for online trading, as it identifies the investor in the electronic trading system. It helps to ensure that the trading is conducted only by authorized persons and helps to prevent fraud.
  • Eliminates risks associated with physical certificates: It eliminates the risks associated with physical certificates, such as theft, loss, or damage. It also reduces the chances of fraudulent activities.
  • Simplifies record-keeping: It will help you in simplifying record-keeping and maintaining accurate records of investments, including transaction history and dividend receipts.

Since we know that every coin has two aspects, in the same way, the BO ID has some limitations attached to it. They are –

Limitation of BO ID

The limitations of the Beneficial Owner Identification Number are as follows: 

  • Limited to depository systems: It is only used in depository systems such as CDSL and NSDL in India. It is not applicable to physical securities or investments held outside the depository system.
  • Dependence on depository participant: The Depository Participant (DP) assigns it. Hence, you will have to depend on the DP for updating your information, such as address or contact details. Any delays or errors in updating the information can cause inconvenience to you.
  • Possibility of hacking or data theft: It is put to use for online trading and accessing investment information, and this increases the risk of hacking or data theft. Hence, as an investor, you need to take necessary precautions to secure your BO ID and other sensitive information.
  • Limited use for offline transactions: It is not applicable for offline transactions or transactions that require physical documents. Hence, for offline transactions, you still need to provide physical documents such as a transfer deed, share certificate, or power of attorney.

To Wrap It Up…

A Beneficial Owner Identification Number is essential for trading, transferring securities, and receiving dividends on the exchange. Furthermore, it helps to increase transparency and accountability in the financial system and prevent fraud and other illegal activities. So, get your hands on your BO ID and get started with your smallcaseinvestment journey today!

FAQs

1. What is my BO ID?

Your Beneficial Owner Identification Number is a unique 8-digit number that identifies your demat account. You can locate your BO ID on your demat account statement or by reaching out to your depository participant (DP).

2. How many digits is a BO ID?

A Beneficial Owner Identification Number consists of 8 digits. The initial 6 digits represent your DP ID, while the remaining 2 digits represent your distinctive client ID.

3. What is the full form of CDSL?

CDSL stands for Central Depository Services (India) Limited. It is a depository that facilitates the secure holding and transfer of securities in electronic form. CDSL is one of the two depositories in India, the other being NSDL.

4. Can I hold multiple securities in one demat account?

Yes, multiple securities like stock, mutual funds, government securities, etc can be held in one demat account.

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