Demat Account is a basic requirement to trade in the stock exchange. A lot of people use this as a second source of income to their main source of income. Demat accounts provide various advantages, including real-time visibility of the account holder’s investment portfolio and accessibility from any web-enabled device.
It’s important to remember that Demat accounts include some regular charges. The majority of charges do not apply to dormant, inactive, or zero balance accounts. Charges such as account maintenance and custodian fees would still be levied. This is an entirely unnecessary expense, and you must close your Demat account to avoid it.
The steps for closing a are outlined below:
Nature of Demat Account to Be Closed
The first scenario could be a simple closing of the Demat account with no pending transactions. That is, there are no payments due and no holdings in the account, making it a zero-balance account. This is a very simple & common procedure.
The second situation is that there are pending securities that must be liquidated or delisted shares that must be transferred to another account before the closure of the current one. This time, the procedure is a little different from the first one.
So here is the process to closeDemat accounts in both cases:
Closure Of Account in Case of Simple Closure:
Step 1 – Download the Demat account closure form from the website of your depository participant.
Step 2 – Fill in the form and submit it with your KYC documents along with valid proofs.
Step 3 – Ensure that there are no shares in the account and it does not have a negative balance. Please clear all the dues before closure.
Step 4 –Submit the application, the depository takes about 4-6 working days to complete the process.
Closure Of Account in Case of Presence of Holdings or Delisted Shares:
Step 1 – Download the Demat account closure form from the website of your DP.
Step 2 – Fill the delivery instruction slip (DIS) to transfer the remaining securities from the old account to the new one.
Step 3 – Get the target DP’s original client master list (CML) along with the relevant stamp, signature, and logo.
Step 4 – Submit the closure form along with the DIS, CML, and other necessary documents to the DP’s Head Office or nearest branch.
Procedure To Be Followed To Transfer Shares From One Demat Account To Another
In India, there are two national depositories:
- National Securities Depositories Limited (NSDL)
- Central Depository Services Limited (CDSL)
- Intra-depository transfers: Transfers between NSDL or CDSL accounts. For this, you’ll require Intra Depository Instruction Slips (Intra DIS).
- Inter-depository transfers: Transfers between NSDL and CDSL accounts. For this, you’ll need Inter Depository Instruction Slips (Inter DIS).
- Depending on the type of transfer, fill in the appropriate DIS. The names of the shares you want to transfer, as well as their ISINs, must be mentioned. You’ll also need to include the target client’s ID. The target client ID is a 16-character code that carries both, client ID and the DP ID.
- Choose the ‘Off Market Transfer’ option if it is an intra-depository transfer and for an inter-depository transfer, you must choose the ‘Inter-Depository’ option.
We hope that you now have sufficient knowledge of how to close a Demat account. Before requesting account closure, make sure that all outstanding debts have been paid. In addition, all unused delivery instruction slips should be returned to the DP.