How to Close Demat Account? A Demat account—short for Dematerialized account—has emerged as a crucial financial tool. It’s a practical and safe way to store and exchange electronic securities. However, there might be situations in which you choose to terminate your Demat account. It’s simple to close Demat account if you want to get out of the trading business, want to consolidate your investments, or want to move to a different provider. We’ll provide a thorough explanation of how to close Demat account in this article.
What is a Demat Account?
It’s critical to understand the Demat account itself before learning how to close it. The term “demat” describes the process of converting physical securities into an electronic format, also known as dematerialization. Thus, instead of having to deal with the inconveniences of handling physical securities, a trader can hold, transfer, and transact securities using a Demat app. These accounts are specifically designed to transfer share certificates from a physical to an electronic format, giving account holders more accessibility.
Things to Consider Before to Close Demat Account
- Find out if there are any shares in the account.
- Any open F&O positions should be closed.
- Nothing should be in your Demat account in terms of assets.
- If any, just sell them and take the money out.
- Check to see if there is a negative balance on their account.
- To verify your account details, log in to your account or get in touch with the branch you registered with.
- The stock broker’s website offers a download for the account closure form.
How to Close Demat Account?
Different Types of Demat Account:
Full Account Closure: If there are no holdings in your Demat account and you have paid all outstanding payments to the DP, you can completely close the Demat account online. You can request the closure of your Demat account from your DP once you’ve confirmed it’s completely dormant.
Steps For Full Demat Account Closure:
- From the website of your depository participants, like a bank or stockbroking company, download the Demat Account Closure Form.
- Complete the Demat Account Closure form completely, then send it in with the necessary supporting documentation. You have two options for physically submitting the form: mail it to the registered head office of your DP, or visit the branch that is closest to you.
- In the presence of a DP representative, sign the Demat Account Closure Form. The signatures of both holders of the Demat account are required by the DP if there are multiple holders.
- Before submitting the closure form, the Demat account must have no shares or negative balances.
Transfer and Account Closure: You must first move the holdings and the outstanding payments to another Demat account if your Demat account still contains some holdings or if you haven’t paid the full amount owed for the outstanding charges. After the charges and holdings have been transferred, you can ask the DP to close the Demat account.
Steps For Transfer and Account Closure:
- You must select the “Off-Market transfer option” in the current Demat account and obtain an Intra DIS slip if you are transferring shares between the two depositories, NSDL and CDSL.
- The original Client Master List (CML) bearing the logo, signatures, and stamp must be obtained from the Demat account.
- The shares’ names, ISINs, and other pertinent information must then be mentioned along with the shares you want to transfer. In addition, the target client’s 16-character code ID must be stated.
- After filling out the form, deliver the supporting documentation to your DP’s office in person or via mail to their registered head office.
- The Demat Closure form needs to be self-attested by a legitimate bank representative. Your Demat account will be closed or deleted by the DP after the form has been successfully submitted.
Details Required to Close Demat Account
- Both your DP ID and the ID of your Demat account.
- Your name and address, among other KYC details, must correspond with the information on file for your account.
- Your justification for terminating your account at this time.
- A copy of an authenticated and self-attested identity document, such as a passport, Aadhaar, or PAN. Depending on the broking firms, this could change.
Why You Should Not Close Demat Account?
After opening an online demat account, you should ideally be able to trade securities and store your assets in an electronic format safely. However, if you stop holding any stock in the account, you might consider completely closing your demat account.
Direct equity investments are just one of the various ways one can invest in the stock markets. Consider twice before closing your demat account if you have sold your stock for a profit and there are no securities remaining. After you close your account, the markets might be bearish, but they might later turn bullish. Events beyond your control can affect market upswings. Investors lament the closure of their demat accounts at these pivotal moments because it prevents them from taking full advantage of share market opportunities when prices are high and prompt action is required.
Just as the outlook on the stock market can shift, so too can your thoughts. Additionally, since demat accounts and trading accounts are connected, terminating one account also ends another significant account. Furthermore, other assets like bonds, government securities, exchange-traded funds (ETFs), and other assets are kept in your demat account in addition to your shares. It’s advisable to keep the account open if any of these are held in a demat account and you want to keep them safe. When held over time, the value of many securities increases. Demat accounts ought to be kept open and active as a result.
How much time does it take to close Demat account?
For certain people, trading can be thrilling, while it can be depressing. It comes down to personal experiences in the end. Your Demat account can be canceled at any moment. It is now up to you to decide what to do. On the other hand, if you carefully follow the instructions, close Demat account is easy. It typically takes 15–30 working days for processing and verification when you want to close Demat account.
FAQ of How to Close Demat Account
Q1. Is there any charges for closing demat account?
A. Charges may apply when yout close Demat account; these charges may differ based on the provider and the terms of the account. Before beginning the closure procedure, it is imperative that you inquire about the fee schedule from the provider of your particular Demat account.
Q2. Will my demat account close automatically?
A. No, demat accounts don’t end on their own. They stay open as long as there are no requests for closure or regulatory issues. If you want to close your account, you must notify your depository participant and keep an eye on it.
Q3. Should I close my unused demat account?
A. Depending on your unique situation, you may need to close an unused demat account. It’s advisable to close it to avoid maintenance fees if you have no intention of trading or investing in securities. To save time and effort, keep it if you anticipate making additional transactions.