A Demat Account, also known as a Dematerialised Account, allows you to keep shares and assets electronically. You may purchase and keep shares or other assets in a Demat Account while trading online. In this method, you may easily assist trading. A Demat Account consolidates all of your stock, exchange-traded funds (ETF), corporate bonds, government securities and mutual fund assets into one location.
The depository services are provided by NSDL and CDSL in India. These services are provided to you as an investor by intermediaries, depository participants, or stockbrokers.
Have you ever pondered what you'd do if you had many Demat accounts and wanted to shut one or all of them because you weren't interested in investing in the securities market any longer?
If you wish to shut your Demat account, you must go to the Depository Participant's office and submit a Demat account closure form together with the required papers. This form is also available to obtain on the Depository Participant's website.
- Why should inactive Demat accounts with delisted shares be closed?
- While you are conscious that the Depository Participant is responsible for safeguarding the assets in your Demat account, you may have heard stories in the past about some brokerage organizations illegally diverting securities. These kinds of incidents may cause you to be concerned about the protection of your assets in your Demat accounts.
- Keeping a watch on your Demat account and keeping it active is one of the most effective strategies to avoid such exploitation. The reason for this is because if you leave your Demat account idle, it becomes a target for unscrupulous stockbrokers.
- It is thus recommended to terminate the Demat Account if you believe you will no longer desire to engage in the securities market in the near future and do not own any Demat stocks.
- The National Stock Exchange (NSE) has standardized the term for classifying an account as "inactive" in its circular dated 10 February 2020. If there is no trading activity over a period of 12 months, your account will be considered inactive, according to the circular.
- Remember that these inactivity or dormancy requirements only apply to your trading accounts, not your Demat account opening.
- Because a Trading account is used to purchase and sell stocks and other assets, this is the reason. A Demat account, like a bank account, is where you keep your stocks and assets. There is no such thing as an 'inactive' Demat account.
- A 'freeze' of a Demat account is the sole option accessible in the depository system. A Demat account holder may request that his account be held in 'frozen mode,' which prevents any debit transactions. This is often done by an investor who does not plan to conduct any Demat transactions in his account for an extended length of time and so wants to protect the account from potential abuse.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account
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