How to Close a Demat Account Easily and Avoid Unnecessary Charges

It is common for investors and traders to own multiple demat accounts over time. However, many of these accounts may remain unused. Since these accounts come with annual fees and maintenance charges, it is financially wise to close the accounts that are not in use. So, whether you are simplifying your investment portfolio or reassessing your trading strategy, closing a dormant or redundant demat account can help you save on costs and clear the clutter.

No matter what 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 and involves taking into consideration a lot of different aspects.

When Should You Close Your Demat Account?

While having a demat account can have multiple benefits, it is always prudent to consider closing your account under the following circumstances:

• When you no longer have any holdings in the account and no outstanding debit or credit charges in the ledger.
• If you have multiple demat accounts and want to avoid paying annual maintenance charges on unused or inactive accounts, closing the ones you don't use can save considerable costs.
• When your residency status changes, for example, if you become an NRI, you need to close your resident demat account and open an NRI demat account to comply with regulations.
• If you want to consolidate your investments into a single account for easier management and tracking.
• If you are planning to switch to a broker who is offering better terms like no AMC (Annual Maintenance Charges), etc.

What Is the Process to Close a Demat Account?

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.

What Details Do You Need to Mention While Closing a Demat Account?

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.

How to close a demat account with remaining balance or holdings?

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.

How long does it take to close a demat account?

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

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 do hold, 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.

• Check if there are any pending dividends, bonus issues, etc., linked to the account. If there are, it is advisable to either wait until those are credited or resolved to avoid any future complications.

What Is the Process of Transferring Shares from One Demat Account to Another?

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.

Are There Any Penalties or Charges to Close Your Demat Account?

There are no penalties or closure fees for closing a demat account with the depository participants. The account closure process itself is free of cost, making it accessible for investors like you who no longer wish to maintain the account. However, before initiating the closure request, it is important to ensure that there are no pending dues, negative balances or unsettled charges in the account.

If the account has any outstanding annual maintenance charges, transaction charges or penalties due to non-compliance or overdue settlements, these must be cleared in full. DPs generally do not process closure requests until all financial obligations are settled.

You should also obtain a final transaction statement and confirm that the account is free of holdings or securities. Inactive or dormant accounts with zero balance and no holdings for a specified period may be closed more easily; however, formal closure ensures that you are not billed annual maintenance charges in future cycles and that no misuse of the account occurs.

Summing Up

Do not let unnecessary charges on inactive demat accounts quietly drain your finances. Annual fees and other hidden costs can add up over time if left unchecked. Rather, take control of your portfolio and let your money work for you by opening and maintaining only those demat accounts that serve a clear investment purpose. If you are ready to begin your investment journey in the stock market, you could open a demat account with Kotak Securities.

Read More:

How to Convert Physical Shares into Demat Form?
How to Transfer Shares from One Demat Account to Another?