InvestorQ : When should I look at closing the demat account and what is the procedure for closing the demat account?
prachi Patwardhan made post

When should I look at closing the demat account and what is the procedure for closing the demat account?

3 years ago

Closing your demat account is quite simple and you just need to give an application in the prescribed format to your DP with the request. In case of joint holdings the letter must be signed by the joint holders in the same order as the holding. One of the important aspects of your demat account is ensuring its safety and security. After all, the demat account is all about your share holdings and your life long assets. You need to apply basic levels of security both when you deal physically and when you deal with shares electronically. We are all familiar with opening the account and also with operating the account. There is another aspect which is called closing the account. You can close the demat account under any of the below circumstances. But first what happens when your demat account is closed.

Here is what happens when you close your demat account with your DP. When your demat account is closed, your account ceases to exist. Your DP will provide you form for closure of the account. You need to fill up the form and sign to ensure the closure of the account. If there are no dues outstanding from your side, the DP will close your account. There are 3 things you need to know about closing the demat account.

Firstly, when there are no shares in your demat account and you do not intend to hold any shares in the demat account then you can choose to close the demat account. Even if your account does not have any balance, you are required to pay the annual maintenance charges (AMC) to the DP. Hence it does not add value continuing your demat account when it has zero balance. Also to prevent any misuse, it is better to close it in such cases. Of course, you need to pay any dues on your account to the DP.

There is a second case when you may be holding shares in your demat account and you may want to hold them in physical form. In that case you can submit an account closure form to your DP and select the option of Rematerializing your remaining shares in the demat account. You are also required to fill up a Remat Request Form (RRF) along with the account closure form. Once the registrar of the company is satisfied and issues fresh physical certificates to you, the demat account is automatically closed.

Finally, you may choose to close your demat account when you are holding multiple demat accounts and do not see the value in having so many demat accounts. In this case, you can close accounts as part of your account consolidation exercise. For example, you may be holding 5 demat accounts and may want to consolidate these into just 2 demat accounts. You can give an application for the closure of the other 3 accounts and simultaneously select the option for off-market transfer of shares in the 3 accounts to the other 2 accounts. This off-market transfer is normally done within 2 working days and the other 3 accounts are automatically closed.