How To Close Demat Account - Complete Guide

A Demat account allows investors to hold shares and other securities in electronic form. However, if you no longer need an account, you can request your Depository Participant (DP) to close it.

The process is not the same for every investor. If your account has no securities, you can generally submit a closure request after clearing pending dues. If you still hold shares or other securities, you must first transfer them to another Demat account or complete the applicable process for removing them.

Here is a step-by-step guide to closing a Demat account, including the documents required, online closure options and important things to check before submitting your request.

Things to Check Before Closing a Demat Account

Before starting the closure process, review your account carefully to avoid delays.

• Check your holdings: Make sure you know whether your Demat account contains shares, mutual fund units, bonds or other securities.
• Transfer your securities: If you want to keep your investments, arrange to transfer them to another Demat account before requesting closure.
• Clear pending dues: Check for unpaid account maintenance charges (AMC), transaction charges or any other outstanding amount payable to your DP.
• Check your linked trading account: A Demat account and a trading account are separate. If both are linked, confirm whether you need to submit separate closure requests.
• Review open positions: Close or settle any open trading positions, including F&O positions, through your broker before closing the linked trading account.
• Download important statements: Keep copies of your account statement, transaction records and other documents you may need later.

How to Close a Demat Account

The steps to close a Demat account depend on whether you have any securities in it. Follow the process that applies to your account.

1. Closing a Demat Account With No Holdings

If your account does not hold any securities, you can generally request closure after settling pending dues and completing the DP's requirements.

1. Contact your DP: Visit your DP's website or contact its customer support to understand the closure process.
2. Download the closure form: Get the prescribed Demat Account Closure Request Form from your DP.
3. Fill in the details: Enter your name, DP ID, Client ID, account details and reason for closure.
4. Sign the form: The account holder must sign the form. For a joint account, all account holders generally need to sign.
5. Submit the form: Submit the completed form through the method accepted by your DP, such as an online facility, branch or prescribed postal process.
6. Complete verification: The DP will check the request and process the closure after confirming that the account meets the necessary conditions.

2. Closing a Demat Account With Securities

If your Demat account still holds shares or other securities, you cannot simply submit a closure request and leave those holdings in the account. You must decide what to do with them before the account can be closed.

You generally have two options:

• Transfer securities to another Demat account: If you want to continue holding your investments, transfer them to another eligible Demat account. You may need to provide the target account details and a Client Master Report (CMR) or Client Master List (CML), as required by your DP.
• Rematerialise securities: If you want to convert eligible dematerialised securities into physical certificates, submit a Rematerialisation Request Form (RRF) through your DP. This option depends on the security and the applicable process.

After the securities have been transferred or rematerialised and the account has no remaining balance, the DP can process the closure request. NSDL provides for both transfer to another Demat account and rematerialisation of securities before closure.

Documents Required to Close a Demat Account

The documents required may vary depending on your DP and the type of closure request. In general, you may need:

• Demat Account Closure Request Form: The prescribed form with your account details, reason for closure and required signatures.
• Delivery Instruction Slip (DIS): If you are transferring securities through the applicable offline process, your DP may ask for a DIS.
• Client Master Report (CMR) or Client Master List (CML): If you are transferring your holdings to another Demat account, the DP may require the details of the target account.
• Rematerialisation Request Form (RRF): If you want to convert eligible securities into physical form.
• Identity or address proof: Your DP may request supporting KYC documents if needed for verification.

For joint Demat accounts, all account holders generally need to sign the closure request. Check the form and instructions provided by your DP before submitting the documents.

Can You Close a Demat Account Online?

Yes. Online Demat account closure is available, but the process depends on the depository, DP and account eligibility.

For example, NSDL provides an online closure-cum-transfer facility for eligible accounts. Its online process has specific conditions, including account type, registered mobile number or email, and the absence of certain restrictions or pending requests.

If your account is not eligible for online closure, you may need to submit the closure form through your DP's prescribed offline process. Therefore, check your DP's website or contact its support team to confirm the available method.

How Long Does It Take to Close a Demat Account?

The time required to close a Demat account depends on the completeness of your documents, the status of your holdings and the DP's verification process.

According to the SEBI Investor Charter, the expected timeline for a DP to process a Demat account closure is 30 days after receiving the proper documents. If you need to transfer or rematerialise securities first, the overall process may take longer.

Does Closing a Demat Account Also Close the Trading Account?

No. A Demat account and a trading account serve different purposes.

• A Demat account holds shares and other securities in electronic form.
• A trading account allows you to buy and sell securities in the stock market.

If both accounts are linked, closing your Demat account does not necessarily close your trading account. You may need to submit a separate closure request to your broker.

Before closing either account, check for pending dues, unsettled transactions and open trading positions. Contact your broker to understand whether both accounts need to be closed separately.

Reasons to Close a Demat Account

Investors may decide to close a Demat account for different reasons. Some common situations include:

1. Having multiple Demat accounts: An investor may want to keep only one account and close the others.
2. Changing the Depository Participant: An investor may want to move their holdings to another DP that offers services better suited to their needs.
3. Moving abroad: An investor relocating to another country may review their existing account arrangements and decide whether closure is appropriate.
4. No longer investing: Someone who does not plan to hold or trade securities may no longer need the account.
5. Changing brokers: An investor may decide to move to another broker and close the old account after transferring their holdings.

The reason for closure should be mentioned accurately in the closure form.

Conclusion

Closing a Demat account is straightforward when you understand the requirements and complete the necessary steps. Before submitting your request, check your holdings, settle outstanding dues and confirm whether your linked trading account also needs to be closed.

If you want to keep your investments, arrange to transfer your securities to another eligible Demat account. If you no longer need them in electronic form, check whether rematerialisation is available. Finally, follow your DP's closure instructions and keep the acknowledgement of your request for future reference.