A Demat account is an essential tool for trading and investing in the capital markets. However, as our financial needs evolve, we may find ourselves with multiple Demat accounts, some of which might remain inactive. It is wise to consider closing an unused or zero-balance Demat account. In this article, learn how to close a Demat account, types of closures and points to check before closing one.
Types of Demat Account Closures
- Transfer and Account Closure: This is when you have pending securities on the account that need to be transferred to another account.
- Account Closure: This is a direct account closure procedure picked when the Demat account is inactive and has no pending holdings or transactions.
Points To Check Before Closing a Demat Account
Before closing the Demat account, be sure you tick the following checklist:
- No SIPs, mutual funds, bonds, etc., are linked to your Demat account.
- No debit balance in the account.
- No open positions in the account.
- No holdings in your Demat account and Trading account (Pool account).
In case you have any mutual funds, SIPs, bonds, debit balances, open positions, or holdings in your Demat account, follow the steps below:
- Mutual Funds and SIPs: Stop and close your mutual fund investments linked to the Demat account. If some units are lying in the pool, you can shift them to another Depository Participant (DP) account.
- Debit balance: Clear the debit balance and bring it down to zero.
- Open positions: Close or square off any positions to close your Demat account.
- Holdings or Stocks: Sell those shares or shift them to another Demat account.
Also, mark a fund payout (if applicable) online after the trade settlement. Once you mark a payout, you will receive this in the opted Bank account.
Steps To Close the Demat Account
1. In the case of account closure:
- Ensure your Demat account has a zero balance.
- Contact your Depository Participant for the account closure form. This form is available online on their website or at their office.
- Fill out the closure form with your account number, personal details, and reason for closure.
- Visit the DP’s office and submit the closure form along with the necessary documents like PAN card, address proof, etc.
- Clear any outstanding dues associated with the Demat account.
- Verify the submission of the form and documents with your DP.
- Wait for the closure process to be completed, which may take a few days to weeks.
- Once closed, request a closure confirmation letter for your records.
2. In the case of transfer and account closure:
- Get the Demat account closure form and the Delivery Instruction Slip (DIS) from your DP. The DIS is used to transfer your existing securities from one account to another.
- Also, get the target depository participant’s original Client Master List (CML) along with the signature, relevant stamp and logo.
- Submit these forms with other important identity proofs to your DP to proceed with the closure.