Opening online demat and online trading accounts is a very simple process. The onset of the pandemic last year has brought even traditional service providers online - streamlining tedious paperwork, and allowing users to complete formalities conveniently.
The stockbroking industry has benefited immensely from offering its services online, as an unprecedented number of users registered to start online stock trading through mobile apps and online trading accounts. The ease of setting up and operating an online trading account has also resulted in the creation of multiple accounts by investors. While some investors operate multiple accounts to hold different types of investments (mutual funds, equity, F&O, trading, etc.) for most, a single demat-cum-trading account is sufficient. SEBI - the market regulator places no restrictions on the number of demat accounts a single person can hold in India.
Holding multiple demat and trading accounts, even inactive ones, attract annual maintenance charges. These charges are small in theory, but add when we consider the same charge being made across 2 or more accounts. If you have demat accounts in your name that are not active and that you do not intend to use, you should consider closing them.
A checklist of things to do before you close and you initiate formal proceedings to close your demat cum trading account:
1. Ensure that you do not have any shares in your account. In case you do, submit the delivery instruction slip to the Depository Participant (DP) which will enable transfer of shares to another demat account prior to closure of that particular demat account.
2. All dues owed to the DP - maintenance charges, annual service fee, etc. should be cleared before you initiate closure.
3. Keep the Account Closure Form ready. The form can be downloaded from your DP’s website.
4. Keep full details ready, which includes DP and Client ID, name and address, reason for closing the account and any other information required.
5. The closure request, along with all other important documentation, will have to be submitted by the account holder at the DP’s office or branch in person.
1. If the demat account is registered in the name of two individuals, both parties will need to sign the Account Closure Form together.
2. The unused part of the delivery instruction slip booklet should be returned to the DP.
3. The account closure takes place 7-10 days after the form has been submitted.
4. There are no charges for closure of account. Nothing prevents you to open a demat account again with the same DP again.
5. Even though SEBI allows a single investor to operate multiple demat accounts, it is only wise to close inactive demat accounts to avoid unnecessary charges and costs for upkeep of the account.
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