Demat Account is short for “Dematerialized Account“. It is an account that is needed if you want to do share trading. It is this account that holds all your investments and profit/loss from share trading. A Demat Account is opened when the investor registers it with an investment broker. But in this article, I will show you how you can close this Demat account.
How To Close Demat Account – Rules
1] Application Submission – Take the form for closing the Demat account or download it from the bank’s website in which you have your Demat account.
2] Form Details – You have to mention the details as your Client ID, DP ID, Name, and Address. This should be the same as it was when the Demat account was opened. If there is more than one holder of the same account, then all of them need to sign the Demat account closure form.
3] Fund Transfer – In case there is some amount left in this account then you need to give alternate account details in which this amount will be transferred when the Demat Account is closed. A DIS or delivery instruction slip needs to be filled for the same.
4] The process of closing the Demat account takes about 7-10 days after the form is being submitted to the bank. Also, no charges are required to be paid for this process.
Important Point to Remember – In case you have a negative balance in your Demat account, then you have to first settle that amount before you can close it. Negative balance can be caused when you don’t have any balance and you fail to pay the maintenance fee as well. You will not be allowed to close your Demat account till this is cleared.
Once you have cleared all the technicality, your Demat account will be closed.
Reasons that will cause you to close the Demat account
When you want to try doing share trading, you need 2 accounts that are trading and Demat accounts. Trading account is connected with the stockbroker while the Demat account is with the DP. It is possible that you can keep those 2 accounts with a different entity. But it is better if you keep both these accounts with the same entity which will avoid any settlement issues. If your current DP isn’t on time with the settlement of your gain or share trades, you can easily change that entity. This is possible by opening another depository account and close the existing one.
If you aren’t gonna use your Demat account in the near future, then you should consider closing it. This is because it has annual fees as well as maintenance charges. If you have more than one Demat accounts, then transfer all the funds to the account that is active and close the rest of them. The procedure for closure of these Demat accounts is the same.
Dead ISIN – ISIN is “International Securities Identification Number” that is a unique number which is different for all the share companies. Transferring live ISIN is very easy but it becomes difficult to transfer dead ISIN. In this case, you have to apply for dematerialization of it. This process simply converts all your electronic holdings into share certificates. The DP will do it before your account is closed. The depository in concern will get all those certificates which it will then issue to you. If there are any reasons due to which this isn’t happening then you must freeze your account immediately.
How to Freeze Your Demat Account
It is very easy to freeze your account. You need to open a new account and then put a request with your current DP to transfer the ISIN’s from your old account to this new account. Now, using the prescribed format, you can freeze this account and suspend it using Annexure P. You can later revive it by applying to the old DP in Annexure P.
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