The two-factor authentication deadline for demat account holders ends today; here’s how to apply

Earlier in June, the National Stock Exchange (NSE) issued a circular stating that customers must enable 2-factor authentication (2FA) using knowledge/possession factor and biometric authentication.

What is a Demat account?

Anyone who wants to invest in the stock market, i.e. buy or sell stocks, in India needs a demat account. It is a platform for investors to hold their stocks and securities such as mutual funds, bonds, etc. in digital form in an electronic format. Demat is short for “dematerialized” which in this sense means “converted from physical to electronic form”. Demat accounts are revolutionary in that they have eliminated the need for physical certificates and the associated risks.

An individual’s demat account is linked to their trading account. This facilitates the process of online trading and allows easy access and monitoring.

In India, demat account services are mainly provided by two depository organizations known as NSDL and CDSL. These services are further facilitated by numerous “custodian participants” such as banks, which act as intermediaries.

Read also : Today is the deadline for debit and credit card tokenization by RBI: what does it mean?

Knowledge factor authentication is done with something that only the user knows, like a password, while possession factor includes something that only the user has access to, like a one-time password (OTP) or a token generated on an authenticator application. Biometric authentication, as the name suggests, uses fingerprint reading, facial recognition, or voice recognition.

Read also : Demat Account Login for New Credit/Debit Card Rules Starting October: 5 Things to Know

Here’s how to enable two-factor authentication?

NSE in its circular said that users should preferably use biometric authentication as one of the authentication factors along with knowledge factor or possession factor. In cases where biometric authentication is not possible, users must use both knowledge and possession factors in addition to user ID for 2FA. “In case of OTP, the same should be sent to customers via email and SMS on their registered email ID and mobile number,” the circular reads.

Informing its users, Zerodha on its website said, “According to the new Foreign Exchange Regulations (PDF), it is mandatory to activate the 2Factor TOTP (Time-based OTP) connection on your account before September 30, 2022, at default, you will not be able to connect to Kite.” Kite is Zerodha’s trading platform

The TOTP is generated for a short period of 20-30 seconds on an authenticator application, such as Google Authenticator, Authy, Microsoft Authenticator.