Findoc Blog

How to Close a Demat Account: Step-by-Step Guide

How to Close a Demat Account: Step-by-Step Guide

A demat account is compulsory for every person investing in shares, mutual fund units, bonds, or ETFs since these securities are kept electronically in the account. Gradually, however, most investors find themselves holding several accounts, sometimes even with different brokers or banks. Although it is permissible to maintain more than one demat account, keeping some of them dormant can prove expensive, as each account has annual maintenance costs and other charges.

If you have accounts that are no longer in use, it’s a good idea to close them. It not only saves you unnecessary expenses but also helps keep your investments organised in one place.

What is a Demat Account?

A demat account, short for “dematerialised account,” is a digital locker where your shares are kept. Rather than having physical certificates of shares, everything is held in electronic format. This speeds up trading, keeps it safe, and makes it convenient.

When you purchase shares, the shares get credited to your demat account. When you sell, the shares get deducted from it. Your demat account stays tightly connected with your trading account  (for selling and buying) and your bank account (used for payments). These three accounts, when put together, finish every investment transaction.

 

Why Should You Close a Demat Account?

There are several situations where closing a demat account is the smart choice:

  • No Holdings Left: If you have sold or transferred all your shares, there’s no need to keep the account active.
  • Avoid Extra Costs: Unused accounts still charge Annual Maintenance Charges (AMC). Closing them saves money.
  • Multiple Accounts: If you opened multiple demat accounts with different brokers, consolidating them into one reduces confusion.
  • Residency Changes: If you become an NRI, you must close your resident demat account and open an NRI demat account.
  • Switching Brokers: If you find a broker offering lower fees or better services, you may close the old account.
  • Simplifying Investments: Fewer accounts make it easier to track and manage your portfolio.

Documents Required to Close a Demat Account

Before closing your demat account, gather the necessary documents to avoid rejection or delays:

  • Demat Account Closure Form: Download it from your Depository Participant’s (DP) website.
  • DP ID and Client ID: These numbers uniquely identify your account.
  • PAN Card Copy: Mandatory for verification.
  • Address Proof: Aadhaar card, passport, driving licence, or utility bill.
  • Photograph: A recent passport-size photograph may be required by some DPs.
  • Delivery Instruction Slip (DIS): If securities need to be transferred to another account.
  • Signatures: If it is a joint account, all holders are required to sign the closure form.

How to Close a Demat Account Online

For individual account holders, many DPs offer an online closure facility. The steps usually include:

  1. Log in to your DP’s website or mobile app.
  2. Select the option “Close My Demat Account.”
  3. Fill in details such as your DP ID, Client ID, and reason for closure.
  4. Ensure all dues are cleared and there are no securities left in the account.
  5. If securities remain, transfer them to another demat account before closure.
  6. E-sign the form using Aadhaar OTP or a digital signature.
  7. Submit the request online.

After these steps, the DP verifies your request. If everything is correct, your demat account will be closed within 7–10 working days. A confirmation is sent via email and SMS.

Things to Remember Before Closing Your Demat Account

Closing a demat account is simple, but you must prepare carefully:

  • Zero Holdings: Ensure the account does not hold any shares, bonds, or mutual funds.
  • Clear Dues: Pay all AMC fees, penalties, or brokerage charges.
  • Return DIS Booklets: If you were given Delivery Instruction Slips, return unused pages to your DP.
  • Pending Dividends/Bonuses: Wait for pending dividends or corporate benefits to be credited before closure.
  • Check Pledged Securities: If you pledged shares for a loan, release them before requesting closure.
  • Save Records: Download past transaction statements and profit-loss reports for tax purposes.

How to Transfer Shares Before Closing a Demat Account

If your demat account has shares or securities, you must transfer them before closing it. The following is the process for the same:

  1. Fill out a Delivery Instruction Slip (DIS) mentioning the shares you want to transfer.
  2. Get a Client Master Report (CMR) of the new demat account from your target DP.
  3. For transfers within the same depository (NSDL to NSDL or CDSL to CDSL), use Intra DIS.
  4. For transfers between NSDL and CDSL, use Inter DIS.
  5. Submit DIS, CMR, and close the form to your DP.

Once the transfer is complete, your securities will appear in the new demat account, and you can proceed with closure.

How Long Does It Take to Close a Demat Account?

The closure process usually takes 7 to 10 working days from the time you submit the closure form with all documents. Delays can occur if:

  • Your documents are incomplete.
  • There are unsettled balances or charges.
  • Securities are still held in the account.

After processing, you will be issued an official confirmation of closure by your DP.

Read More Blogs

 

Conclusion

Closing a demat account is a safe and cost-effective decision if the account is no longer in use. By ensuring that dues are cleared, securities are transferred, and forms are submitted properly, the process becomes simple. For those seeking guidance or looking to open or close accounts with ease, Findoc manages your investment journey smoothly.

Frequently Asked Questions

No, a demat account will not close automatically. Even if it is inactive, annual maintenance charges (AMC) will still apply. You must submit a closure request to your Depository Participant (DP).

Once a demat account is closed, it cannot be reopened. If you want to trade or invest again, you will need to open a new demat account with your chosen Depository Participant.

If you don’t close an unused demat account, annual charges keep adding up. Over time, this may lead to a negative balance, and you will still be responsible for paying these dues.

Yes, many Depository Participants allow online closure for individual accounts. You can log in to the DP portal, submit a closure request, pay dues, transfer holdings, and e-sign to finalise the process.

It is not legally required, but it is strongly recommended. It saves money to close them, as keeping inactive accounts open incurs unnecessary fees. It also keeps your account safe from being misused.