It’s important to close inactive or dormant demat accounts to avoid annual maintenance charges, security risks, and to simplify your financial portfolio.
Closing a demat account can be confusing due to the steps and paperwork involved. However, with the latest rules and clear guidelines, the process has become simpler and more streamlined. Here’s a step-by-step guide to help you close your demat account without any hassle.
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India had 151 million demat accounts at the end of the financial year 2023-24, data analysed by brokerage Motilal Oswal shows.
“This trend seems to be continuing throughout the year, with an average of 3.1 million new accounts opened each month in the financial year 2024 (FY24),” Motilal Oswal said.
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Groww emerged as the largest broker, with a market share of 23.4 percent, handling an active client base of 9.5 million in FY24, Motilal Oswal said in another report, citing National Stock Exchange (NSE) data. It is followed by Zerodha with 7.3 million active users.
1. Why Close a Demat Account?
It’s important to close inactive or dormant demat accounts to avoid annual maintenance charges, security risks, and to simplify your financial portfolio. The charges apply even if the account is not in use, and keeping multiple accounts may lead to confusion or misuse.
2. Things to Check Before Closing Your Demat Account
Clear All Dues: Ensure that all dues are paid. Outstanding fees or penalties must be cleared before submitting a closure request.
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Transfer Holdings: If your demat account holds securities, transfer them to another account. Make sure the other account is active to avoid issues with stock transfer.
Redeem Mutual Fund Units: If you have mutual funds, consider redeeming or transferring them to another account.
3. Steps to Close Your Demat Account
Step 1: Obtain the Closure Form
Visit the depository participant’s (DP) office or website and download the demat account closure form. Each DP has its specific form, so ensure you have the correct one.
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Step 2: Fill in the Closure Form
Complete the form with accurate details, including your account number, client ID, and DP ID. Make sure all account holders sign the form if it’s a joint account.
Step 3: Attach Required Documents
Attach a copy of your PAN card, Aadhaar card, or any other identity proof. You may also need to attach a cancelled cheque from your bank account for verification.
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Step 4: Submit the Form to the DP
Visit the DP’s branch and submit the form along with the necessary documents. Some DPs also allow you to send the form via mail. Check with your DP for submission methods and any additional steps.
Step 5: Ensure Transfer of Holdings (if applicable)
If you’re transferring your holdings to another demat account, submit the transfer instruction form along with the closure form. Confirm the transfer with your DP to ensure all securities are moved successfully.
4. Important Points to Remember
No Transaction Charges: Ensure your DP does not impose transaction charges during the closure if you have no holdings.
Closure Confirmation: DPs are required to confirm the closure process within 7-10 working days. Make sure you receive a closure confirmation email or SMS from your DP.
Partial Account Closure: Some DPs allow you to close specific segments or sub-accounts (such as an equity or mutual fund segment) instead of the entire demat account. Consult your DP for options if you only wish to close a part of your holdings.
5. FAQs on Demat Account Closure
Q1. Can I close my demat account online?
While some DPs offer online closure, most require a physical form submission. Check your DP’s guidelines to confirm. However, there are discussion going on to ask brokerages to allow online closure of demat account just like how it is opened.
Q2. Are there any charges for closing a demat account?
Generally, there are no charges for closing a demat account with zero holdings. However, some DPs may have specific fees. Verify with your DP.
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Q3. How long does the closure process take?
The demat account closure process typically takes 7-10 working days after submitting all required documents.
Keeping your financial portfolio streamlined is essential, and closing inactive accounts can prevent unnecessary charges. Following these steps will make the demat account closure process easier. If you face any issues, contact your DP’s customer support for guidance.
