How To Close A Demat Account?

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  • 01 Nov 2023
How To Close A Demat Account?

Find out what steps you need to take to close your demat account and any fees or rules that may apply. To learn more, read the article below.

It is common for investors and traders to own multiple demat accounts. However, they may only end up using some of them. Since these accounts come with annual fees and maintenance charges, it is only wise to close the accounts that are not in use. Other reasons why you may feel the need to close a demat account include the brokerage on the current one is high, you are considering a new broker, you incurred a loss and want to go for less volatile mutual funds for better long term returns, you want to change DP, you are moving abroad, or you don’t want to invest in securities anymore.

No matter what is your reason, we are here to help you learn how to close your demat account. While you can easily open a demat account online, closing one is a different process altogether.

You need to take the following steps to close a demat account:

  • Download a closure form from the depository participant’s (DP’s) website.
  • Fill out the form and submit it with your Know Your Customer KYC documents. These include identification and address proofs. Submit the form and documents to the nearest DP’s branch. You could also send them to the DP’s Head Office.

You must mention the following details while submitting your closure form:

  • DP ID and client ID
  • KYC details like name and address. These should be in line with the records.
  • Reason for closing the demat account.

Do note that if more than one person holds the demat account, all holders must sign the closure form.

You must ensure that you have settled all payments before closing your demat account. Make sure that the account does not hold any securities. In case there are securities still held in the account, you can take the following steps to close it:

  • Download the closure form from the DP’s website and fill it out.
  • Fill the delivery instruction slip (DIS) to transfer the remaining securities to another demat account.
  • Get the target DP’s original client master list (CML). Also, get the relevant stamp, signature and logo.
  • Submit the closure form with the DIS, CML and other necessary documents. You can submit them to the DP’s Head Office or nearest branch.

It takes 7–10 working days to close a demat account after you submit the closure form and the necessary documents.

What are the closing process charges? You do not have to pay any charges to close your demat account.

Things to note for closing a demat account Remember the following points before closing your demat account:

  • The account should be empty. You should not be holding any shares in it. If you are, you need to transfer them to your another demat account or you could sell the shares.
  • The balance should be zero. If the account has a negative balance, settle it before closing.
  • Return the unused DIS booklet to the DP along with a closure letter.
  • International securities identification numbers (ISINs) are specific to company shares. Dead ISINs belong to companies whose shares are no longer traded in the stock market. If the Demat account you wish to close holds dead ISINs, then you must apply to your DP for their dematerialisation. Your DP will forward the request to the concerned depository, who will inform the registrar. The registrar will then take steps to dematerialise the shares.

India has two national depositories:

  • National Securities Depositories Limited (NSDL)
  • Central Depository Services Limited (CDSL)

Transfers within NDSL or CDSL accounts are intra-depository transfers. You will need to use Intra Depository Instruction Slips (Intra DIS) for these.

Transfers between NDSL and CDSL accounts are inter-depository transfers. You will need to use Inter Depository Instruction Slips (Inter DIS) for these.

Fill in the relevant DIS depending on the type of transfer. You must mention the names of the shares you wish to transfer along with their ISINs. You will also have to mention the target client ID. The target client ID consists of a 16-character code comprising the DP ID and the client ID.

If it is an intra-depository transfer, choose the ‘Off Market Transfer’ option. For an inter-depository transfer, you must choose the ‘Inter-Depository’ option.

Summing up

Do not let unnecessary charges on inactive demat accounts drain your finances. Let your money work for you by opening and maintaining proper demat accounts. If you wish to start investing in shares, you could open a demat account with Kotak Securities.

Read More: Informative report on demat account

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