How to Close a Demat Account

A demat account is used by a shareholder to electronically hold securities in which investments are made. Depository participants (DP), who sustain this account for the shareholder, charge a yearly maintenance charge from the shareholder. This implies a charge for the shareholder and, hence, such an account must be ended if it doesn’t have any securities or if the shareholder doesn’t mean to hold them in this account any more. The account holder should ensure that all the securities that have been held are sold off, transferred to another account or rematerialised (the process of transferring the securities in an electronic form back into the physical form).

Application

The account owner should propose the application in the agreed format as specified by the depository. The application form could be downloaded from the website of the depository or DP. It could also be ended on the foundation of an appeal letter submitted by the customer to the DP on a plain paper giving information of the account.

Formalities

A properly filled Rematerialisation Request Form (RRF) should be submitted for securities that are to be rematerialised. If you wish to transfer the securities to a fresh account, a delivery instruction slip (DIS) has to be known in an off market transaction.

Negative cash balance

A downbeat cash balance is on account of fees linked to the account, such as the yearly maintenance charge. This should be sophisticated before submitting the request for its end.

Unused DIS

The unused DIS should be submitted along with the end form or a statement must be known that all unused slips have been smashed.

Points to note

An account can’t be stopped if there is a lien marked on any of the securities held in it or if the securities are frozen. A demat account closing form from a POA holder wouldn’t be entertained by the DP. An acknowledgement could be taken from a DP on a duplicate copy of the form at the time of submission of appeal. [Economic times]