Wondering how to close your Demat account? Here’s the step-by-step process

Closing of Demat account: Investors who want to trade in securities, like company stocks, exchange-traded funds (ETF), government securities, corporate bonds, and mutual funds, must open a Demat account to simplify the process of investing. Demat stands for dematerialisation. The accounts are helpful in keeping track of the shares that one has purchased in the stock market. Any time when an investor is buying or selling shares from the stock market, the number of shares is either debited or credited from the Demat account.  

In India, National Securities Depositories Ltd (NSDL) and Central Depositories Services (India) Ltd (CDSL) provide these depository services. Intermediaries, depository participants, or stock brokers facilitate these services to investors. 

An investor has to pay an annual maintenance fee for the maintenance of maintaining Demat accounts. These charges are nominal, which depend on the depository participants and the value of the transactions an investor makes in a year. 

But sometimes, when an investor decides to quit trading in stocks, bonds, and mutual funds, it is very important to close the accounts, or else investors will lose money in maintenance costs. If there are active balances, they can be consolidated into one account and the remaining redundant Demat accounts can be closed. 

There are two types of closures:

Basic Account Closure: Under this account holders can close their demat accounts when there are no holdings, pending payments, or charges. All they have to do is submit a request to the appropriate depository participant. 

Transfer and Account Closure: If you still have securities, or charges payable in your demat account, then before closing the particular account, the securities have to be transferred to another Demat account. 

Here’s a quick guide on how to close a Demat account 

Investors with inactive or zero balance demat account cannot close the account just through an online request via email. One has to submit an application in person, together with a physical copy of all required documents and proofs.  

Before closing the account, one must see whether there are any shares in the Demat account. Besides, the investor has to check if the account has a negative balance. 

1. To speed up the process, one can download the closure form online. 

2. The form should be accurately filled up and submitted along with the investor’s KYC documentation. 

3. If the Demat account has more than one account holder, then all must sign the closure form in the presence of a Depository Participant (DP) official. Here the DP can be a bank or a brokerage firm. 

4. The crucial documents one needs for the closure procedure are DP ID proof and client ID; name and address proof, which should match the records available with NSDL or CDSL. 

5. The investor should also mention the reason for closing the account. One may want to close the account voluntarily or due to unavoidable circumstances like the death of the account holder or insanity of the account holder, and so on. 

6. The entire procedure to close the demat account usually takes around 7 to 10 business days if all papers and proofs are in place. 

7. Investors don't have to pay any extra charge for the depository at the time of closing the account. 

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