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Should You Monitor Dormant Demat Accounts?

13 Sep 2023

Okay, so you’ve gone through all the demat account opening formalities and have gotten yourself a new account. After making a few buy and sell transactions on the stock market, you stopped trading for quite a long time. This unfortunately led your depository to mark your demat account dormant.

Now, although you have a dormant demat account, you’re not sure if you should still go ahead and check and monitor your account at periodic intervals. If this accurately describes your current situation, then read on to find out if you should monitor it or not.

  • When does the depository categorize a demat account dormant?

1. If a demat account has no debit or credit transactions for more than 6 months at a stretch, the said account is first categorized as inactive by the depository participant.

2. If you still don’t continue to make any debit or credit transactions even after being declared as inactive, only then your account becomes dormant.

The time taken for your demat account to move from inactive status to dormant status is usually mentioned in the agreement that you sign with the depository participant.

Once the depository marks your demat account dormant, you cannot make any debit or credit transactions whatsoever without reactivating the account first. And to do so, you would first need to go through the entire Know Your Customer (KYC) process once again. Where you would need to know which Documents are Required for Opening a Demat Account. That’s not all. Your depository participant might even ask you to pay a certain fee towards reactivation of the account as well.

  • Should you monitor your dormant demat account?

If your account doesn’t hold any shares or other securities in it, then there’s absolutely no need for you to be constantly monitoring your dormant demat account.

On the other hand, if you have shares or other securities in your demat account, then it is a good idea to log into your account periodically to check and monitor the status of your shares. This way, you can ensure that there has been no unauthorized access to your account by other unscrupulous entities.

And even if there had been any unauthorized share transfers without your consent or knowledge, you would be in a much better position to report the same in a timely manner to the concerned authorities.

Not keeping an eye on dormant demat accounts with shares and other securities is what ultimately led to the recent Karvy Stock Broking scam. In this case, the stock broker cum depository participant, Karvy Stock Broking, gained unauthorized access to dormant demat accounts and made unauthorized share transfers from those dormant accounts to its own demat accounts. This incident could have come to light long before it actually did, if only the holders of dormant accounts kept a periodic check on their accounts.


Now that you know how important it is to monitor a demat account that’s dormant, a better course of action would be to not let the account go dormant in the first place. Try to make at least a small debit or credit transaction in your demat account every once in a while. That should help keep your account active.

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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