If your Demat Account has become dormant, and you do not intend to activate it soon, you can deactivate it by following the steps given in this guide. When you wish to return to trading, you can open a free demat account with any reputed broker. Terminating a dormant account is important because certain charges are still applicable. Any outstanding charges that remain at the time of closure will have to be paid before your termination request can be processed.
Let’s dive deeper and look at the steps to disable a Demat Account.
Steps To Terminate a Demat Account
- To begin the termination process, download and fill out our application form for closing your Demat Account. You can download the application from the official website of your broker.
- Fill out your client ID and the other details required on the form. Ensure that the details provided on the form match the information you provided when setting up the Demat Account.
Please note: Any holdings that are present must be transferred to another Demat Account. To transfer holdings, fill out the delivery instruction slip and attach it along with the application form. The signature of all account holders must be present on the delivery instruction slip. You can also request a delivery instruction slip to fill out when you go to submit your application.
- Once you fill out all the details in the form, submit it along with the required documents. If there are any outstanding charges, you can clear them in person by visiting the broker’s branch or you can have it deducted from your linked bank account.
- It takes 7 to 10 business days for your request to be processed and for your account to be closed.
Factors to consider while terminating your Demat Account
When considering the termination of a Account, there are several factors to consider:
- Transaction history: Review your transaction history and ensure that all pending transactions are completed or canceled.
- Investments and holdings: Sell or transfer all securities held in the account and ensure that there are no outstanding positions.
- Account maintenance fees: Check for any outstanding account maintenance fees or charges and settle them before closing the account.
- Linked services: Consider any linked services like online trading platforms or investment advisory services and determine their impact on the termination process.
- Legal and regulatory obligations: Familiarise yourself with any legal or regulatory requirements associated with closing the Demat Account.
- Alternate investment options: Evaluate alternative investment avenues and determine if closing the demat account aligns with your financial goals and strategies.
- Future needs: Assess your future investment plans and determine if you may need a Demat Account in the future. If so, consider the potential hassle and costs of opening a new account.
- Tax implications: Consult with a tax advisor to understand any tax implications of closing the Account, such as capital gains taxes.
It is advisable to seek professional advice and thoroughly evaluate these factors before making a decision to terminate a account.
Delaying termination of a dormant Demat Account can limit some additional expenses like annual maintenance. If you do not plan to re-activate your account, it is better to terminate your account and open a free Demat Account later on.