Demat Account Closure Form

If you are not using your Demat account for an extended period of time but continue to be charged yearly fees. It is preferable to close any inactive or zero-balance Demat accounts. It is subject to annual fees and maintenance charges. As a result, if there are any active balances, they can be consolidated into a single account, and the remaining redundant accounts can be closed.

The process of opening a Demat account is now entirely online. However, closing a Demat account is a difficult task. It entails going to the broker's office and filling out forms and documents. Let's take a closer look at how to close a Demat account.

Type of Demat Account to Be Closed

One possibility is to simply close the Demat account that has no pending transactions. This means that no payments are due and there are no holdings in the account. It is also known as a zero-balance account. This is a typical straightforward process, and we will explain how to close this Demat account in the following section.

The second scenario is that there are pending securities that need to be liquidated or transferred to another account before the current one is closed. This is a slightly different process, which will also be explained in this blog.

Closing a Demat Account Requires Specific Information

When submitting your demat account closure form, you must include the following information:

• KYC information for the DP and client ID, such as name and address should correspond to the records.
• The exact reasons for closing the Demat account.
• Is the Demat account held by more than one person? The Demat account closing form must then be signed by all holders.

How to Close a Demat Account?

Method 1:

The following are the steps for closing a Demat account:

Step 1 - Download the Demat account closure form from your depository participant's (DP) website. The DP could be a bank, broker, or any authorised government agency where you opened the account.

Step 2 - Fill out the form completely and accurately, and attach your current and valid KYC documents. This step, which requires physically submitting the forms and documents to the DP's branch or office, cannot be completed offline. If physical presence is not possible, you may request an exception and mail the documents to the appropriate office.

Step 3 - In the case of joint account ownership, all Demat account holders must sign the closure form in the presence of an official at their DP's office.

Method 2:

Step 1 - For intra-depository transfers (between NSDL and CSDL) of shares and holdings between accounts, an intra-delivery instruction slip (DIS) is required, and the 'Off-Market' transfer option in the Demat account must be selected. The names and contact information of Demat account holders, both new and old, must be identical.

Step 2 - The original client master list (CML) must then be obtained from the account, including all relevant details such as the logo, stamp, and signatures, among others.

Step 3 - Following this, the detailed form must be filled out with the names and relevant details of the shares to be transferred. For the transfer to be successful, the target client/account information must also be provided.

Step 4 - Once all of this is completed, the completed form, along with KYC and other relevant documents, must be delivered in person to your DP's office or mailed to their headquarters.

Step 5 - It is important to note that for closure, a bank official must verify the self-attested Demat closure form.

De-activate or Freeze A Demat Account

While we have discussed how to permanently close a Demat account, there is another option for those who want to temporarily halt trading with the intention of resuming it later. By deactivating or freezing your Demat account rather than closing it, you avoid having to create a new account from scratch when you want to resume trading. Account reactivation is a much faster and less complicated process than opening a new Demat account.

Deactivation means that your account will be frozen for the time period you specify, and no transactions will be permitted in the meantime. As before, you will most likely receive periodic notifications such as account balance statements, holding statements, and so on. As a result, AMC and other similar charges will continue to be levied as needed.

As a result, freezing your account makes sense only if you intend to resume activity in the near future. Otherwise, there is no need to incur these costs.

What You Should Know About Closing Your Demat Account

When there are no shares in your Demat account and you do not intend to hold any shares in the Demat account, you can close it. Even if your account has no balance, you must pay the annual maintenance charges (AMC) to the DP.

If you have shares in your Demat account and want to hold them in physical form, you must submit an account closure form to your DP and select the rematerialize your remaining shares in the Demat account option. However, in addition to the account closure form, you must complete a REMAT Request Form.

When the company's registrar is satisfied and receives new physical certificates, the Demat account will automatically close.

Finally, as part of your account consolidation exercise, you can close accounts.

Wrapping Up!

Though Demat accounts cannot be completely closed online, they can be simplified by completing the necessary paperwork online. It is critical to ensure that there are no outstanding charges, penalties, or shares in the account and that all of the information is correct. To avoid mistakes or lapses, the individual's details must be checked before transferring any shares or accounts. To close your account, only a few steps are required, and there are no additional fees. Closing an inactive account as soon as possible can help you save money because your annual maintenance fee will be eliminated.