How to Close Demat Account Online?
- 5 min read
Having a Demat account is crucial to trading securities and investing in the securities market. However, people start using multiple Demat accounts as their financial needs evolve. It makes their old Demat account dormant. In this situation, many investors ask, ‘How can I close my Demat account?’
The good thing is that it can be closed online. Through this article, we will provide a step-by-step process on how to close a Demat account online and the information required to close a Demat account.
Types of Demat Account Closures
You can close your Demat account if you do not wish to use it. These are the two types of Demat account closure that you need to understand:
1. Basic Account Closure
The basic account closure is an easy process you can follow when there are no holdings, charges, or pending payments in the Demat account. You can complete the process online, making it quick and hassle-free.
2. Transfer and Account Closure
You should use this process when you have some pending securities that you need to transfer to another account.
Prerequisites Before Closing a Demat Account
Before going through the step-by-step procedure of how to close a Demat account online, you need to maintain the following prerequisites:
- Ensure your Demat account has zero holdings. Sell ETFs, stocks, and mutual funds or transfer them to another account.
- Withdraw all unutilised funds.
- Clear any outstanding brokerage, penalties, and annual maintenance charges (AMC).
- Download or save contract notes, transaction reports, and profit and loss statements for record-keeping and tax filing.
Steps to Close a Demat Account Online
To close your Demat account online, contact your depository participant (DP) or online broker. Follow these steps:
1. Finding Account Closure Option
Log in to your online broker app using client ID and OTP. Go to the ‘Profile’ section.
2. Close Demat Account
Scroll down and click the option labeled ‘Close my Demat and trading account’.
3. Select the Reason
Select a valid reason such as financial issues or excessive trading losses.
4. Read the Instructions
Read and follow the closure instructions, including withdrawing holdings and downloading statements. Click ‘Continue’ to proceed.
5. OTP Verification
Enter the OTP received to verify the closure.
6. E-Sign Process
After OTP verification, proceed to e-sign the closure request. Enter Aadhaar details and OTP from your Aadhaar-linked mobile number. The account closure is typically processed within 10 days.
Why Should You Close Dormant Demat Accounts?
Dormant Demat accounts attract AMC charges even if unused. Closing them avoids these charges and helps consolidate your holdings for easier management and asset transfer.
Information Required for Closing a Demat Account
Ensure you have the following before initiating the closure:
- KYC proofs like PAN card
- A valid reason for closure
- Your Demat account number and DP ID
- Closure form submitted to the DP’s head office
How Long Does it Take to Close a Demat Account?
Closure usually takes 7 to 10 working days, depending on:
- Accuracy of documents
- Unsettled balances or pending transactions
- Verification time by the DP
Reasons and Impact of Closing a Demat Account
Investors may close their accounts to avoid charges or switch brokers. Once closed, the same account cannot be reopened. AMC charges cease, and you lose access to IPOs or other investments via that account.
Demat Account Closure for Joint Holders, Minors, and HUF Accounts
See the table below for closure document requirements based on account type:
| Holders | With Holdings | With No Holdings |
| Joint holders | Account closure form signed by all holders | Duly signed account closure form |
| Minors | Closure form signed by the minor’s guardian | Closure request signed by guardian with minor’s PAN and birth certificate |
| HUF account holders | Transfer holdings to another account in the HUF’s name | Closure form on HUF letterhead, signed by Karta, with HUF PAN |
Final Words
Knowing how to close a Demat account is important if you’re facing losses or high brokerage fees. Once closed, you’ll need a new account for further investment. PL Capital Group – Prabhudas Lilladher offers free Demat account opening and no trading charges.
Frequently Asked Questions
1. What happens if I do not close my Demat account?
You’ll continue to incur annual maintenance charges.
2. Are there any charges for closing a Demat account?
No, closing a Demat account online is free, but submission of required documents is necessary.
3. Can I reopen my Demat account after closing?
No, you cannot reopen the same account. You will need to open a new one.
4. How long does it take to close a Demat account?
Typically, 7 to 10 working days, subject to proper documentation and no pending transactions.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
