Learn How to Close A Demat Account
A dematerialized or DEMAT Account provides an investor or trader a facility to hold all their shares and other financial securities in an electronic form, and with the help of a DEMAT Account; you can also trade electronically through your mobile, tablet, or PC. A DEMAT account helps you to store shares and other financial securities such as Government Bonds, Exchange-Traded Funds (ETFs), mutual funds, corporate bonds, etc. In India, there are two depositories, i.e., National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) which provide DEMAT Account services through intermediaries, brokers, and Depository Participant (DPs) to an investor in India. There are more than 10 Crore Demat Account holders (As on 31st March 2022) in India and this number is going to increase as more & more people are looking to enter the world of stocks. Stock Investing has served as a great way for many people in generating extra income while doing their jobs or businesses.
As time passes, if an investor or trader does not want to do trading in the stock market, it will be a smart decision to close the DEMAT Account. It is because a DEMAT Account holder is charged an Annual Maintenance Charge (AMC) by his/her DP or broker every year. So, if you don’t want to use your DEMAT Account for stock market trading, it is better to get your DEMAT Account closed rather than paying AMC every year unnecessarily.
How to close a Demat Account
Two types of DEMAT Account closures:-
1:- Transfer & Demat Account closure
This type of DEMAT Account closure is required when there are pending securities in your DEMAT Account and these securities are need to be shifted or transferred to another DEMAT Account.
2:- Demat Account Closure
It is a straightforward method of DEMAT Account closure and this is used when there are no pending security holdings or dues over your DEMAT Account.
Case 1: – How to close a Demat Account online with PENDING SECURITIES :-
Step 1: – Download the Demat account closing form and fill it.
Step 2: – Fill out Delivery Instruction Slip (DIS) to transfer the account’s remaining securities to another DEMAT Account. Make sure that the DEMAT Account’s holder name and descriptions must be similar on both the current and old accounts.
Step 3: – Submit the Client Master List (CML) from the depository of new account where the transfer of securities will be done, along with the logo, signature and relevant stamp.
Step 4: – The final step is to submit the account closure form, CML, DIS and other necessary document which needs to be submitted at the nearest branch of DP or at DP’s Head Office.
Case 2: – How to close a Demat Account online with NO PENDING SECURITIES:-
Step 1: – Download a DEMAT Account closing form from your Depository Participant’s website. A Depository Participant can be a bank, stock broker or an investment agency.
Step 2: – Fill out the form with the correct details and submit it along with the valid KYC Details. The KYC Details and your bank account details should match, i.e., your name, residential address, date of birth, etc. so that this will not cause any problem in further process of closing a DEMAT Account . You need to physically submit the form with KYC Details to the nearest DPs office or mailing them to the concerned Head Office.
Step 3: – If the concerned DEMAT Account is registered in the name of more than one person, then both the persons need to sign the closure form in the presence of an official from the DP.
Step 4: – The official from DP can log in to your DEMAT Account and can check whether your account has any securities balance left in it or does it have a negative balance. So, do make sure that the DEMAT Account must not have any securities balance remaining and it must not be in negative balance.
After understanding the whole procedure of closing a DEMAT Account, it is very clear that all the formalities of DEMAT Account closure cannot be done online. There are a few steps involved which need to be done to complete the process offline. However, an investor or trader need not to pay any charges when it comes to close a DEMAT Account. Closing a DEMAT Account will only save you from Annual Maintenance Charge which lies between Rs.300 to Rs.900 per year. If you don’t want to practice stock market trading anymore, you can close your DEMAT Account very easily.