How to Close Demat Account of HDFC, ICICI, Axis or any other bank?
At first let us understand what a Demat Account is before we can talk about how to close a Demat Account! Well, the shares and the securities in India are held electronically. It happens in a dematerialized account (Demat Account). Moreover, it is done so that the investors does not take the physical possession of the certificates. The account is opened by the principal investor while it is registered with the investment broker.
Furthermore, the shares are kept in two depositories – the National Securities Depository Limited and the Central Depository Services Limited. Moreover, the depositories get the shares through the depository’s participants, also known as the DP and not from the investors directly. These DPs are registered with the SEBI, also called the Securities Exchange Board of India. They act as the agents for the depositories.
Steps to Close a Demat Account –
Without wasting much more time, let us more forward and talk about how you can close your Demat account. So, the following points would help you on how to close a Demat account easily –
Submit an Application
This is the first and a very well-known method to close a Demat Account. It includes:
- Form –
- You can find the application form on website of the DP.
- Details –
- You should mention the following details: The client ID and the DP ID, the details like the name and address that match the records and the reason for closing the account where all the holders have to sign the closure request form as well.
- A POA holder cannot sign the form if there is any.
- Transfer –
- If there is any fund in the account, you would need to give the details of the account.
- The funds would transferred into that account then. Moreover, the transfer can take place by filling the delivery instruction slip (DIS) that would be before closing the account.
- Process –
- After submitting the form, it will take about 7 to 10 days to close the account.
- Charges –
- No charge is there to close the account.
- In case the account has any negative balance, you have to clear it before submitting the closure for Demat account. If the account is empty and you did not pay the maintenance fees. That is when the account has a negative balance. Moreover, if you apply without settling the negative balance, the DP can reject the request to close the account or even accept it with a disclaimer of charges.
- *You should submit the unused delivery Instruction booklet slip of the DP back there.
What would make you want to close a Demat Account?
Now moving to the main point, if you want to trade anything in shares, all you would need is – two accounts! One is a trading account that would be connected with a stock broker, and the other is a Demat account that would be with a DP. A person can even have the two account with a different entity. But instead, it is advisable to have the depository and the trading accounts with the same entity so that you avoid any settlement issues. Moreover, you can easily change your DP that is only if your current one is not punctual with the settlement of the shares you sell or buy. You can do this by opening another depository account and closing the current one.
Another reason why you should close a Demat Account!
To make it easier, you would need to close the Demat account if it is not in use since it attracts annual fees and even maintenance charges. So, it is a very good idea to make it inactive or keep a zero balance Demat account. If you have any active one, transfer all the fund into one account. Then close the rest of the Demat accounts easily. To do this, you would have to visit the DP office or any branch of the Demat account holders. Then you would have to submit some documents and fill forms to close a Demat account.
You have to take care of one more thing. If the account has ISINs, you cannot close this account. ISIN is the International Securities Identification Number, which is an ID number which is different for all the share companies. It is easy to transfer the live ISINs, but what to do about the dead ones? For this, you would have to apply for the dematerialization of it. That is the conversion of the electronic holdings into the share certificates. Your DP does this before closing the account. The concerned depository gets it then, which issues the share certificates to you. If this does not take place due to any reason, you need to freeze your account.
Freezing Your Account – How to close a Demat Account?
It is not tough to freeze an account, so you do not have to worry about it. At first, open a new account, and then request your current DP to transfer the ISINs from the old account to the new one. You can now freeze this account with the prescribed format & suspend it with the annexure P. You can even revive it again by applying to the old DP in the Annexure P.
If you have any queries, you can study more about the Demat account here! Or even feel free to comment your queries in the comments section below!