How To Close a Demat Account Online?

How To Close a Demat Account Online?

The rise of discount brokerage services has led to a surge in Demat accounts among Indian investors, offering numerous deals and promotions. However, many remain unaware of the hidden charges and annual fees associated with these accounts, making them a money pit. This lack of awareness about Demat account closures is a major reason for many account holders to close them when no longer in use. To close a Demat account, follow these steps and procedures to avoid additional fees imposed by brokerages. This article provides a checklist and instructions on how to deactivate Demat account, ensuring that you are aware of the process and avoid any additional fees.

There are Two Types of Demat Account Closures - H2 - Listicles

  • Account closure: When there are no pending payments or holdings in the investor's account, a request can be made to the concerned depository partner (DP) to close the Demat account online. 
  • Transfer and account closure: A slightly different procedure is followed if pending securities need to be transferred to another Demat account.

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Table of Content

  1. There are Two Types of Demat Account Closures - H2 - Listicles
  2. The Process to Close a Demat Account in Case Of Account Closure
  3. Closing Demat Account in Case of Transfer
  4. Other Details Required While Closing Your Demat Account
  5. Why You Should Not Close a Demat Account

The Process to Close a Demat Account in Case Of Account Closure

In the case of Demat account closure online, follow the below steps:

  • Step 1: Visit the website of your depository participant (bank or investment agency) and download the Demat account closure form.
  • Step 2: Fill out the form accurately and submit it with your KYC documents. Verify that all proofs are valid. In this step, you must physically submit the forms and documents to the nearest DP office or mail them to the relevant head office.
  • Step 3: An official from the DP must witness both individuals signing the closure form if more than one person holds the account.
  • Step 4: Make sure the account does not have shares or a negative balance. You can check this by logging into your account.

Closing Demat Account in Case of Transfer

Here are the steps to close a Demat account online in case of a transfer: 

  • Step 1: The NSDL and CDSL are India's national depositories. For intra-depository transfers, an Intra DIS slip is required, as is selecting the 'Off-Market Transfer Option' in the Demat account.
  • Step 2: Afterward, the original client master list (CML) must be acquired from the account with the logo, stamp, and signature.
  • Step 3: The completed form must be submitted along with the names and ISINs of the shares you wish to transfer. It is also necessary to specify the target client's ID, which is a 16-character number.
  • Step 4: Post this; the documents must be submitted to your DP's office or mailed to their headquarters.
  • Step 5: Additionally, a bank official must verify the self-attested Demat closure form before it can be closed.

Other Details Required While Closing Your Demat Account

Before starting the closure process or choosing the best course of action for the same, it is essential to review and examine your account and make sure it meets the following requirements: 

  • You must withdraw or transfer any debit balances from your account before proceeding.
  • There should be no active SIPs, mutual funds, or bonds associated with the aforementioned Demat account. In this case, a transfer and closure request would be more appropriate than a straightforward one-step closure request.
  • Verify that the account does not have a balance. Any negative balance resulting from settlements or broker fees must be paid before the Demat account can be deactivated.
  • At the scheduled closing time, all open positions, including stock holdings, option positions, and futures contracts, should be closed. If you want to keep such positions, you should either square them off or move them to another Demat account.
  • You should Dematerialize any inactive ISINs for shares that are no longer traded. If your account contains any of these shares, you should notify your depository partner right away so that they can be Dematerialized before the account is closed.

Why You Should Not Close a Demat Account

Here are some key reasons why you should not close a Demat account:

  • Opening a Demat account facilitates trading securities and ensures secure storage of assets.
  • Consider closing a Demat account if it holds no stocks to avoid incurring charges for dormant accounts.
  • Stay open to investment opportunities in the diverse investment landscape.
  • Think twice before closing a Demat account post-selling stocks, as markets can transition from bearish to bullish unpredictably.
  • Demat accounts are linked to trading accounts; closing one closes the other.
  • Demat accounts store various securities, including shares, ETFs, government securities, and bonds.
  • Keeping a Demat account active is wise, especially for long-term holdings, as securities appreciate over time.

Conclusion

Through a Demat account app, you can invest in the stock market and streamline the investment process significantly. Nonetheless, the best thing you could do with your Demat account is to close it if you are no longer investing or trading. Having multiple accounts and wanting to stick to one account can also necessitate closing a Demat account. It is not possible to completely close Demat accounts online, but you can complete the formalities online. Check the account for overdue charges, penalties, or pending shares, and confirm the details are correct. Also, whenever shares or accounts are transferred, the individual's details must be verified to avoid mistakes. You can download the BlinkX trading app to learn more about trading in the stock market.

FAQs on Demat Account Closure Online

In a few simple steps, you can close your Demat account in person. Visit the DP's office and submit the Demat account closure form along with all the required documents. In most cases, your account will be closed for good within seven to ten business days.

If you don't use your account and don't close it either, it will become dormant after a while. If you need to use it again, you will need to contact the DP to reactivate it. Moreover, you could become the victim of fraud, scams, and other forms of misuse if you don't close your dormant account when you're not using it. So, it may be better to close your Demat account permanently if you do not intend to use it.

You will receive a confirmation letter from your DP within 7 to 10 business days of submitting the account closure form. Try logging in once to make sure your account has been closed. Upon closing your account, your Demat account number will cease to exist, and you will not be able to access your account using your login details.

There are no charges for closing your Demat account. Before you can close your Demat account, all pending dues must be cleared.

You will receive a refund from the DP when you close your Demat account or shift it from one DP to another.

To permanently delete your demat account, submit a written request to your Depository Participant or brokerage firm, who will provide the necessary forms and instructions to initiate the account closure process.

Demat accounts can be closed at any time by submitting a closure request to your Demat Department or brokerage firm, but specific conditions and charges may apply, so consult with them.

Unclosed demat accounts can lead to maintenance fees, inactive accounts, and potential risks like unauthorised access or securities misuse. To avoid potential issues, it's crucial to follow the correct procedure to close these accounts.

Demat accounts can be closed online through a Depository Participant's or brokerage firm's portal, but specific requirements and procedures may vary, so consult with your DP for specific closure options.

To confirm if your Demat account is closed, check with your Depository Participant or brokerage firm, who will confirm the closure status and provide the necessary documentation. Review your account statements or contact customer support for further assistance.