A demat account is a digital account that contains shares and securities. It is comparable to a bank account in that it holds financial products such as stocks, bonds, mutual funds, exchange-traded funds, and government securities rather than money.
Depository participants hold demat accounts (DP). The DP is in charge of maintaining the account, conducting transactions, and ensuring regulatory compliance.
Nevertheless, as an investor, are you debating whether or not to cancel your idle DTC account?
You’ve come to the correct location!
With the growth of internet trading, demat accounts have become a must-have for investors. However, it is equally important to recognise the need to terminate inactive accounts. In this post, we’ll go over why it’s vital to cancel an inactive DEMAT account, how to do it, and other relevant considerations.
Why should you close an inactive D&B account?
It is critical to cancel dormant DEMAT accounts as soon as possible since they might have a variety of undesirable effects. To begin with, an inactive demat account might result in a decrease in the value of your money. Because your account is inactive, any changes or updates in the market will not be reflected in it.
Second, your depository participant (DP) may charge you for not making any transactions. Furthermore, keeping an inactive D&O account might cause security problems because it is open to cyberattacks and other fraudulent activity.
How do I close the DEMAT account?
When there are no balances or other items to transfer, closing an account with a depository participant is a simple operation. The following are the steps to take for a successful closure:
Step 1: Obtain the closure paperwork from the website of your depository participant and carefully read the instructions and fine print. This form typically outlines all criteria as well as the manner in which they must be completed and submitted.
Step 2: Upload photocopies of the necessary KYC papers, as well as an attested signature, to demonstrate legitimacy. Moreover, enter information about your account, customer ID, and brokerage. Check that the customer ID for the brokerage account and the depository participant’s identification number match the other data on the form and those linked with the account.
Step 3: If the account has several users or owners, all owners must sign the closure form. This is likewise true for their relevant KYC papers. Call your broker to find out how to attach, certify, and submit the document correctly.
Step 4: After everything is in order, send the closure forms together with any necessary documentation. Your depository participant will then complete the closure, and you will be able to successfully close your account.
Step 5: You should get a letter from your depositary participant as confirmation of the closure form within 7 to 10 days of submitting it. Following that, you can reconnect to your demat account to ensure that the account number is no longer valid.
Eliminating an inactive DEMAT account is an important step in protecting your savings and avoiding unnecessary expenses. It is critical to thoroughly follow the closure procedure and comprehend all of the prerequisites for a good closure. Closing an inactive DEMAT account is advantageous in terms of safety, cost savings, and preventing any possible losses caused by the account’s inactivity.