While demat accounts offer several valuable benefits, there may be times when you need to freeze or even close them. For example, you might want to exit the stock market, switch brokers, etc. 

You can easily close or freeze your demat account online by following a few simple steps. In this article, we take a comprehensive look at how you can close or freeze your demat account online and what precautions to take beforehand. 

Types of Demat Account Closures

Demat accounts often have several maintenance charges tied to them. If you’re not actively using the account, these charges can quickly add up.

Closing a demat account online is a relatively simple process. However, there are different types of demat account closures, and it is essential to understand their differences before proceeding: 

  • Complete Account Closure: If you have no outstanding balance in your demat accounts, you can follow the steps for full account closure. 
  • Transfer and Account Closure: Sometimes, you may need to close a demat account with a pending balance. In this situation, you can transfer your securities to another demat account and request an account closure. 
  • Freezing a Demat Account: In some cases, you may want to freeze your demat account instead of completely closing it. The “freeze” option allows account users to restrict certain activities for a temporary period. This can come in handy if you are not trading actively but want to protect your holdings from unauthorised transactions or misuse. Add why would anyone freeze the account temporarily 

Precautions to Take Before Closing Your Demat Account

Certain precautions need to be taken before closing a demat account. These include:

  • Ensure the demat account has zero balance. Any negative balances must be settled with the depository participant (DP). 
  • Transfer any pending balance to another demat or bank account. 
  • Apply to your DPs for dematerialisation if your account has a dead ISIN (International Securities Identification Numbers), who will then forward it to the registrar. 

Note: An ISIN is a unique 12-digit identification code for securities to standardise trading and settlement across global markets. A dead ISIN is an invalid ISIN that isn’t valid for trading.

Steps to Close a Demat Account Online

Here is a step-by-step guide for how to close a demat account online: 

  • Step 1: Download the account closure form. You can find it on the Depository Participant’s app or website. 
  • Step 2: For a joint demat account, make sure to obtain the signatures and consent of both partners to proceed with the closure. 
  • Step 3: If there is any pending balance in the account, fill out a Delivery Instruction Slip (DIS) to transfer the funds to another demat account. You will also need to submit a Client Master List(CML)  of the target DP along with a signature, logo, and stamp. 
  • Step 4: Make sure all documentation is in place and the demat account does not have any negative balance.
  • Step 5: Submitting the demat account closure form, KYC documents, DIS, and CML to your DP to initiate the account closure process. The CML is a document issued by the DP that contains all information about your demat account, including your name, address, contact information, DP ID, etc.

Account Closure for Joint Holders, Minors, HUF Account Holders

The steps and documents required for account closure may vary depending on the account holders. For instance: 

  • Joint Holders: For joint holders, a closure form with signatures from all holders is required. For transfers of securities, a copy of the CML from the DP from where the securities will be moved is needed. It must be signed and stamped by the receiving DP.
  • HUF (Hindu Undivided Family): For HUF holders, the account closure form must have the HUF’s official stamp and a signature from the Karta (the head of the HUF). A CML copy, signed and stamped by the receiving DP, is also required for any account in case of a transfer of securities. 
  • Minors: The guardian must sign the account closure form. In the case of existing securities, a CML copy of the account, where they will be transferred, signed, and stamped by the receiving DP, is needed. 

Closing or freezing a demat account might seem tedious, but understanding the different types of closures and taking necessary precautions it becomes a straightforward process.

FAQs

How can I close my demat account permanently?

To permanently close a demat account, you need to download and fill out the closure application form from the DP’s website or app. Once done, prepare documents like the demat account number, KYC proofs (like PAN cards), and a reason for closing the account. Submit the closure form along with the documents to the DP’s office online or in person.

Are there any charges for closing a demat account?

No, you don’t need to pay any charges to close a demat account. But make sure to check for any pending dues before closing the account.

What are the charges for closing a demat account?

In most cases, no charges are levied to close a demat account. However, any pending balances must be settled before applying for closure.