How to Close Your Demat Account Online?

Did you know that the total number of Demat accounts in India as of September 2024 has crossed an incredible 17 crore? To put that into perspective, this number is larger than the populations of Russia, Mexico, or even Japan! But here's the kicker: only 4.8 crore of these are active, which means over 70% of them are just sitting idle, collecting maintenance fees year after year.

If you're like the majority, you might have opened a Demat account with big plans to trade or invest but then found yourself not using it as much as you thought. Maybe you found a new broker you like better, or you've stepped away from trading altogether. Whatever the reason, keeping an inactive Demat account isn't just unnecessary—it could also be draining your wallet with annual charges.

The good news? Closing a Demat account doesn't have to be complicated or time-consuming. With the right guidance, it's a straightforward process that can help you save money and simplify your financial life. 

So, let's make sure that you know everything you need to know about closing your Demat account online.  

Table of Contents 

• Why Close Your Demat Account?
• Types of Demat Account Closures
• Points To Check Before Closing Your Demat Account
• Steps To Close the Demat Account
  • In Case of Transfer
  • In Case of Account Closure
• Additional Tips for Closing Your Demat Account

Why Close Your Demat Account?

Before we get into the details of the closure process, let's talk about the "Why" of it. Here are some reasons:

• Unnecessary Costs: Maintaining an unused Demat account can incur annual fees. If you're not using the account to trade/invest, why pay for it?
• Switching Brokers: If you've found a better broker with lower fees or better services, it makes sense to close your old account.
• Simplifying Finances: Having multiple accounts can complicate your financial management. Merging your investments into one account can make things easier.
• No Longer Trading: If you've decided to step away from trading altogether, closing your account is a smart move.

Understanding these reasons can help you decide if it's time to close your Demat account. 

Types of Demat Account Closures

When it comes to closing a Demat account, there are generally 2 types of closures:

1. Basic Account Closure: This is when you have no holdings or pending payments. You can simply submit a request to your Depository Participant (DP) to close the account.
2. Transfer and Account Closure: If you still have securities in your account, you need to transfer them to another Demat account before closing it. This involves additional steps to ensure your investments are safely moved.

So, depending on your situation, you can either quickly close your account or transfer your assets to another account.

Points To Check Before Closing Your Demat Account

Before starting the process for closing your Demat account, you should consider a few things, such as:

1. No Holdings: Make sure that you sell or transfer any shares or securities left in your Demat account before closing it. This is important because you cannot close an account with securities left in it. 
2. Clear Your Dues: Outstanding payments or negative balances can lead to delays in the closure process. So, clear it all beforehand.  
3. Active IPO Orders: If you have any pending IPO applications, they must be completed or cancelled before the account can be closed.
4. Pledged Holdings: You will need to un-pledge any securities as the account cannot be closed with pledged assets.
5. Frozen Accounts: If your account is frozen due to any reason, you must resolve those before initiating closure, as a frozen account cannot be closed until the restrictions are lifted.

Take the time to address each of these points before submitting your request to avoid unnecessary delays during the account closure process.

Steps To Close the Demat Account

Once all the boxes are checked, you can start the process. Here's a step-by-step guide to help you:

In Case of Transfer

Step 1: Transfer Your Securities: If your account holds any securities, you need to transfer them to another Demat account. This can be done through either intra-depository or inter-depository transfers:

• Intra-Depository Transfer: Use an Intra DIS slip and select the 'Off-Market transfer' option.
• Inter-Depository Transfer: Use an Inter DIS slip and provide details of the target client ID along with the ISINs of the securities being transferred.
  
  Not sure how to transfer shares? Here's a quick guide to help you do it easily.

Step 2: Obtain Required Documents: Acquire the Client Master List (CML) from your current Demat account, which should include the stamp and signature of your new DP.

Step 3: Get the Closure Form: Usually, brokers provide a closure form on their websites. In most cases, this form will be available in PDF format, and you will have to either print and scan it before uploading or edit it. 

Step 4: Fill Out the Form: The closure form will typically require the following: 

• Your personal information (name, address, contact details)
• Demat account number
• Reason for closure (this might be optional)

If there are multiple holders on the account, ensure that all parties sign the form.

Step 5: Submit the Form: You can usually submit the filled-out form online through your broker's website or app. However, you may have to visit the physical branch, depending on your broker. Here's how it generally works:

• Online Submission: Log in to your account and look for an option like "Close my trading and Demat account." Then, just follow the instructions and upload any required documents.
• Physical Submission: If required, print out the form and take it along with any necessary documents (like KYC) to your DP's office.

Step 4: Verification Process: This might involve confirming your identity through an OTP sent to your registered mobile number or e-mail.

Step 5: Wait for Confirmation: It generally takes about 7–10 working days for the closure process to complete. You should receive a confirmation via SMS or email once your Demat account is officially closed.

In Case of Account Closure

When you do not have any shares or securities in your Demat account, you don't need to transfer them. In such a situation, you can get the closure form directly and follow steps 3 to 5, as discussed above. 

Additional Tips for Closing Your Demat Account

Here are some things you might want to keep in mind during the closure process:

• Always keep copies of any forms submitted and correspondence regarding the closure.
• If you don't receive confirmation within 10 days, follow up with your DP to ensure everything is processed correctly.
• While most brokers do not charge for closing a Demat account, it's a good idea to confirm this beforehand.

Additionally, for joint Demat accounts, all account holders must sign the closure form. Meanwhile, for minor accounts, the guardian must initiate the closure with signed consent. In the case of HUF (Hindu Undivided Family) accounts, the Karta, or head of the family, is responsible for completing the closure process and providing any necessary documentation.

Conclusion

Closing a Demat account doesn't have to be complicated. By following these simple steps, you can easily close an unused or unwanted Demat account. Remember to check all the boxes to make sure that it's a seamless process. 

There may be any number of reasons why you may be closing your Demat account. But if you are doing so with the intent of switching to another broker, then Finology Select can help you choose the best fit.
Also, Compare the pros and cons, services, investment options offered and fees charged by the top 25 brokers here. This way, you can choose a new broker armed with all the right information!