How to Close Demat Account Online & Offline in India?
How to Close Demat Account online in India: Step-by-Step Guide
A Demat or dematerialisation account is meant for holding financial securities like stocks, currencies, and contracts. At some point, you might want to close Demat account. Individuals might close their accounts due to inactivity, poor customer service, relocation, consolidation, higher costs, and other reasons. Whatever the reason, there is a facility for closing your account.
To understand how to close Demat account online or offline, you must be familiar with the generic process, which is:
- Connect with your depository participant or broker and submit an official request for account closure.
- The broker will provide you with an account closure form. You can acquire the account closure form offline from the broker’s office or download it from the official website.
- Provide any additional documents required by the broker for account closure.
- Settle all the outstanding Demat account dues.
- Submit the account closure form to the respective broker or depository participant.
- Verify your identity and successfully close your account.
Why Do Investors Close a Demat Account?
Investors may decide to deactivate Demat account for various financial and practical reasons. Some of the most common reasons include:
- Maintaining multiple inactive Demat accounts
- Avoiding annual maintenance charges (AMC) on unused accounts
- Switching to another broker offering lower brokerage fees
- Moving to a platform with better trading features and tools
- Poor customer support or unsatisfactory services
- Consolidating investments into a single Demat account
- Stopping stock market investments temporarily or permanently
- Transferring shares to another broker or family account
- Simplifying portfolio and financial management
Before closing Demat account, investors should ensure that all holdings are transferred or sold and that there are no pending dues or negative balances linked to the account.
Demat Account Closure Type
Investors may close their Demat accounts for different reasons, and the closure process can vary depending on their requirements. Here are the common types of Demat account closure:
1. Closure Without Transferring Shares: This type of closure is suitable when there are no shares or securities left in the Demat account. Investors usually sell or transfer all holdings and clear any pending charges before submitting the closure request.
2. Closure With Transfer of Shares: Many investors close an old Demat account while shifting to another broker. In such cases, the shares and securities are transferred to the new Demat account before the old account is closed.
3. Closing Both Trading and Demat Accounts: Some investors prefer closing both their trading and Demat accounts together, especially if they no longer plan to invest or trade through that broker.
4. Closure of Inactive Demat Accounts: Investors often close inactive or unused Demat accounts to avoid paying annual maintenance charges (AMC) and to keep their financial accounts organised.
Rules and Regulations for Closing Demat Account
- You must submit an account closure request with the respective stockbroker or depository participant.
- The stockbroker or depository participant might ask you to fill out an account closure form online or offline.
- Investors are required to pay all outstanding charges to the depository participant or stockbroker before closing their accounts.
- The identity of the person applying for account closure is verified. Brokers have to ensure that an account holder is closing their account.
- Many investors have their accounts linked with bank accounts. In such a case, the broker might ask you to obtain a NOC from the bank to close it.
There are two procedures for closing a Demat account in India. The first one is the offline procedure, while the second one is online.
Recommended Read: How to open demat Account?
While Close Demat Account avoid these Mistakes
- Providing inaccurate information to the broker in the account closure form
- Not paying outstanding account dues
- Not communicating with the Demat account provider in advance for account closure
- Don’t forgot transferring your securities to another account
Impact of Closing This Account
Now that you have understood how to delete Demat accounts, here are the impacts of account closure:
1. Effects on Your Stocks and Securities
Before closing a Demat account, ensure all securities are transferred to another Demat account. Upon failing to do so, you might not reclaim securities after account closure. It is essential to safeguard your securities before submitting the account closure request with the broker. Often, investors incur financial losses while transferring securities. Investors might decide to sell securities before closing it. When the market rate of securities drops during the transaction, investors suffer a loss.
2. How Closing Demat Account Can Impact Your Credit Score
There is no direct relationship between Demat account transactions and your credit score. Some investors think that margin trading transactions impact your credit score. Usually, margin trading or brokerage transactions do not appear on credit reports. For the same rationale, there is no impact on your credit score after closing a Demat account.
- Recommended Read: What is Demat Account ?
Other Investment ideas after Close Demat account
You can still invest in financial instruments without a zero charges demat account. Besides trying the ones listed on stock exchanges, you can try these alternative investment options:
- Mutual funds
- ETFs (Exchange Traded Funds)
- Real Estate
- Gold & SIlver
- Commodities
Conclusion
Investors might close Demat accounts due to multiple reasons. To close your Demat account, you must submit a request without your stockbroker or depository participant. It is crucial to ensure that all securities are transferred to another account before closure. You can also try alternative investment options, like NFTs, cryptocurrencies, and real estate. Learn more about Demat account closure now!
FAQs on Demat Account Closure
Can You Close a Demat Account Online?
Yes, some brokers allow investors to close their Demat accounts online through their website or mobile app, while others may require a physical account closure form.
Can You Close a Demat Account with Shares?
No, a Demat account cannot be closed if it still holds shares or securities. Investors must first sell or transfer the holdings to another Demat account.
How to Transfer Shares Before Closing a Demat Account?
Shares can be transferred to another Demat account using a Delivery Instruction Slip (DIS) or through the broker’s online share transfer facility.
Is There Any Charge for Closing a Demat Account?
Many brokers do not charge a fee for Demat account closure. However, charges may apply for transferring shares to another Demat account.
What Documents Are Required for Demat Account Closure?
Investors generally need a signed account closure form, PAN card copy, identity proof, and Client Master List (CML) if shares are being transferred.
How Long Does Demat Account Closure Take?
The Demat account closure process usually takes around 7 to 15 working days after successful document verification.
What Happens if You Do Not Close an Unused Demat Account?
Unused Demat accounts may continue attracting annual maintenance charges (AMC), even if there are no transactions or holdings in the account.
Can I Close a Demat Account with a Negative Balance?
No, investors must clear all pending dues, negative balances, and charges before the Demat account can be closed successfully.
What Are the Common Reasons for Demat Account Closure Rejection?
Closure requests may get rejected due to incomplete forms, signature mismatch, pending dues, active holdings, or open trading positions.
What Is the Difference Between Trading Account Closure and Demat Account Closure?
A trading account is used to buy and sell securities, while a Demat account stores securities electronically. Both accounts can be closed separately if required.
Can You Open Another Demat Account After Closing One?
Yes, investors can open a new Demat account with the same or a different broker even after closing an existing account.
Can I Reopen a Closed Demat Account?
No, a closed Demat account usually cannot be reopened. Investors need to open a new Demat account if they wish to start investing again.
