How to Close a Demat Account?

Introduction

To properly monetize all the financial tools of the country it is imperative to note the significance of the securities market. The stock market in all its gory has made many a millionaire. But to be able to properly understand its instruments and profit is a matter of great devotion. A Demat account is the most important tool in this regard because it gives the investor the ability to enter into this world of numbers. The Demat account of each investor is unique from its identification number all the way to the Dematerialized stocks it holds. It is an instrument of immense importance.

Features of a Demat account

The Demat account provides an investor with an invaluable list of benefits. To mention them:

Lower Risks -

Physical securities are risky because they can be stolen, lost, or damaged. Furthermore, bad deliveries or counterfeit securities pose additional risks. These risks are completely eliminated by opening a Demat account, which allows holders to hold all of their investments in electronic form.

Easy Holding -

Maintaining stock certificates and other paperwork is a tedious job and keeping a paper track of market fluctuations is difficult and thus the Demat account makes this job easier. Demat account holders can make it easier to hold and track all of their investments by consolidating them into a single account.

Odd Lots -

Buying and selling physical certificates were only possible in the specified quantities. There was also no option for dealing with odd lots or single security. This is no longer an issue with Demat accounts.  The Demat account allows the purchase and sale of any amount of share that fits the investor's wishes.

Reduced Cost –

The additional costs like stamp duty and handling charges are involved when dealing in physical certificates, but in the case of the Demat account, all these charges are waived.

Reduced Time -

The elimination of paperwork reduces the time required to complete a transaction. Because of the reduced time requirement, the account holder can make more purchases and sales of security holdings in less time and with greater efficiency.

Different Types of Demat Account Closure

Account Closure

If there are no holdings in the Demat account and all payments have been made, the investor can easily file a closure request with the depository participant.

To close the account, investors must do the following:

• Take advantage of the closure form.
• Fill and sign the closure form and return it to the nearest branch.
• Alternatively, send a completed and signed form to the HO.

Transfer and Account Closure

However, if all payments have been made and the Demat account contains securities that must be transferred to another Demat account, the investor must do the following:

• Take advantage of the closure form.
• Fill out the Delivery Instruction Slip (DIS) properly to transfer the securities to another Account.
• Obtain a copy of the original (CML) Client Master List (Target DP) with the logo, stamp, and signature.
• Submit all documents to the branch closest to you.
• Alternatively, send completed and signed documents to the headquarters.

The account will be closed in the next five working days after all required documents have been submitted.

Please ensure the following when submitting the documents:

• All debts have been paid in full.
• All forms have been fully completed along with signed.
• In the case of the existence of joint accounts, all holders have signed.

Things to Consider Before Closing a Demat Account

Before looking into How to Close a Demat Account Online, make sure you check and do the following:

• Check to see if the account contains any shares.
• Close any F&O positions that are still open.
• There should be no assets in your Demat account.
• If any exist, simply sell them and withdraw the proceeds.
• Examine their account to see if it has a negative balance.
• Sign in to your account or contact your registered branch to confirm your account information.
• The account closure form is available for download on the stock broker's website.

How to Close a Demat Account?

The process of closing a Demat account is completely different from closing a trading account. Now that we have maintained the usefulness of a Demat account there still can be certain scenarios where an investor may no longer want to use it but the charges that are levied as AMC makes it difficult for the investor to just let that account sit. Thus the investor wants to close the account.

Reasons to Close a Demat Account:

1. Investor may no longer be interested to invest in the securities market
2. Investor is shifting abroad
3. Investor is opening a new account
4. Investor wants to change DP
5. Investor has been banned by the SEBI

There can be many other possibilities and reasons as to why an investor would close his account but that’s not the topic of discussion here.

The Process Involved in Closing a Demat:

1. If you want to close or terminate your Demat account, you must go to the Depository Participant's office and submit a Demat account closure form along with the necessary documents
2. This closure form is also available for download from the Depository Participant's website.
3. Along with the Demat account closure form, you must include the DP ID and Client ID.
4. Details like your name and address – keep in mind that the information you provide on the Demat account closure form must match the records available with NSDL or CDSL, depending on the case
5. The reason for the account closure (You may want to close the account either voluntarily or due to unavoidable circumstances such as death or insanity of the account holder, and so on).
6. The form must be signed in the appropriate places.
7. If you have a joint account, keep in mind that all account holders must sign the closure request form.
8. The Power of Attorney holder (POA) cannot, however, sign the closure request form.
9. After submitting the account closure form, the entire process of closing the account takes about 7-10 business days
10. You do not have to pay or incur any fees to the depository when you close the account.
11. However, it would be great if you kept in mind that the Demat account closure is subject to the terms and condition that there should be no dues pending for the account from your side.

Note that a Demat account cannot be closed online alone, just by making an online request for account closure via email.

In the case of BSDA (Basic Services Demat Account) the closing balance in the account must be zero and all dues to the broker paid, the closure of the account will be facilitated by submitting the closure form.

How much time does it take to close a Demat account?

Trading can be exhilarating for some and depressing for others. It all boils down to individual experiences. You have the option to cancel your Demat account at any time. All that remains is for you to make a choice. Closing a Demat account, on the other hand, is simple if you follow the instructions carefully.

To close your Demat account, it usually takes 15–30 working days for verification and processing.

Conclusion

While you are aware or conscious that the Depository Participant DP is concerned about the security of the holdings in your account, you may have heard about the illegal diversion of securities by some broking firms that have recently come to light.

These types of incidents may cause you to be concerned about the safety of your holdings in your Demat accounts. One effective way to prevent such misuse is to keep an eye on your Demat account and keep it active.

The reason for this is that if you leave the account dormant, such Demat accounts are frequently targeted by rogue stockbrokers. Therefore, if you believe you will no longer want to participate in the securities market in the near future and do not own Demat securities, it is best to close the account.