How to Close Your Demat Account Online

The rise of discount brokerage services has left Indian investors spoilt for choice, with extensive deals, offers, and promotions aimed at attracting budding traders and investors.

With this, it is not uncommon for many retail traders and investors to create multiple Demat accounts to make the most of such promos and offers. However, most of them remain oblivious to the hidden charges and annual fees associated with these accounts, making them an effective money pit. In the long run, one of the best reasons for closing a Demat account is when no longer in use.

This also seems to result from the lack of awareness surrounding Demat account closures, in that most account holders remain completely unaware that they need to be closed.

Type of Demat Account Closure

There are two types of Demat account closures that you need to know about,

Basic Account Closure: A basic account closure applies when the Demat account has:

• No securities or other holdings
• No outstanding dues or pending payments
• No open trading positions
• No other obligations need to be settled

In such cases, the account holder can submit a closure request to the concerned DP, which may be a stockbroker, bank, or financial institution. Depending on the DP, the request may be initiated online or may require a physical form.

Transfer & Account Closure: If the Demat account still contains securities, funds, or outstanding obligations, the closure process involves additional steps.

Existing securities generally need to be transferred to another Demat account before the old account can be closed. Any outstanding charges or dues must also be settled. Investors should therefore review their account carefully before submitting the closure request.

How to Close a Demat Account Online?

Once your account is clear of holdings, open positions, and outstanding dues, you can begin the closure process. The exact procedure varies between DPs, so it is advisable to follow the instructions provided by your broker, bank, or financial institution.

Step 1: Obtain the Account Closure Form

Visit your DP's official website or contact its customer service team to obtain the Demat account closure form. Some DPs may offer an online closure facility, while others may require a physical form.

Step 2: Fill in the Required Details

Carefully enter the information requested in the closure form. This may include:

• Demat account number
• Client ID
• DP ID
• Trading or brokerage account details
• Name and contact details
• Reason for account closure Make sure the information matches the details registered with your DP.

Step 3: Submit the Required KYC Documents

Depending on the DP's requirements, you may need to submit KYC-related documents along with the closure form. Ensure that the name, address, and other details on the documents match the information associated with your account.

Step 4: Obtain All Required Signatures

For a jointly held Demat account, all account holders may need to sign the closure request. Follow your DP's instructions regarding signatures, document attestation, and submission.

Step 5: Submit the Closure Request

Submit the completed form and supporting documents through the channel specified by your DP. Some providers allow digital submission, while others may require the documents to be sent to or submitted at a designated office. The DP will process the request after verifying the submitted information and ensuring that there are no pending obligations.

Closing a Demat Account After Transferring Holdings

If you have securities in your Demat account that you want to retain, they must generally be transferred to another Demat account before the existing account is closed. The process may involve the following steps:

Open or Identify the New Demat Account

Ensure that you have an active Demat account where you want to transfer your securities.

Submit a Delivery Instruction Slip (DIS)

Depending on the transfer method supported by your DP, you may need to submit a Delivery Instruction Slip (DIS) containing details of the securities and the destination Demat account. For online transfers, your DP may provide an electronic transfer facility instead.

Provide the Target Account Details

You may need to provide the Client Master List (CML) or equivalent account details of the receiving Demat account. The CML contains information needed to identify the destination account and its depository participant.

Submit the Closure and Transfer Documents

Depending on the DP's process, the closure form, transfer instructions, CML, and required KYC documents may need to be submitted together or through separate channels. Once the securities have been successfully transferred and all outstanding dues are settled, the DP can process the closure of the old Demat account.

Frequently Asked Questions

Can I Close A Demat Account Online?

It isn't possible to close a Demat account online. It requires filling out a form and delivering it to a DP's office. While the form can be available, downloaded, and tracked online, most processes remain physical and manual.

The form has to be attested and posted to the DP's office physically, the status of which can then be tracked online.

Can Only A Demat Account Be Closed?

A Demat account must be closed along with the trading account due to their interdependence. As it is impossible to trade securities without a Demat account, a trading account is useless without the former.

So, to answer the question, no, only a Demat account cannot be closed, as they are intertwined with the trading account.

What Happens If I Do Not Close My Demat Account?

Dematerialized accounts will continue to exist in perpetuity. However, the lack of activity for six months can make it inactive. Investors will then have to again connect with the DP to reactivate it. Inactive Demat accounts might still accure fees, and fines, which owners must be aware of.

Often, Demat account owners receive an account summary with their balances and payables, along with any fees levied onto their accounts. Since such summaries are delivered via confusing emails or bland text messages, they are easy to be ignored.

How Do I Check If My Demat Account Is Closed?

After submitting the closure form to your depositary participant, you should receive a letter within 7 to 10 days as a confirmation of the same.

Once that's done, you can try logging in to your Demat account again to verify that the account number no longer exists.

With this, you no longer have ties to any such Demat account and aren't liable for any pending claims, fees, additional costs or fines that might be levied. Many people have reported challenges while effectively closing their Demat accounts because the process remains manual, physical, and riddled with extensive paperwork.