How To Deactivate a Demat Account?
Blog by Aliceblue News Desk
09 November 2024
10 minutes
Want to stop using a Demat account you no longer need?
You can close a Demat account after clearing any dues and ensuring there are no holdings or pending requests. If you still hold securities, you can transfer them to another Demat account instead of selling them. This process is commonly called closure-cum-transfer.
In this guide, we explain how to close a Demat account, what documents you may need, how closure-cum-transfer works, and whether you have to pay any closure charges.
Quick Definition
Deactivating a Demat account generally means closing the account with your Depository Participant (DP). Before closure, you usually need to clear dues, resolve pending requests and either have zero holdings or transfer the securities to another Demat account.
If you only want to stop transactions temporarily while keeping your holdings, freezing the account may be more appropriate than closing it.
What Is a Demat Account?
A Demat account holds securities such as shares, bonds and ETFs in electronic form.
You open a Demat account through a Depository Participant (DP), which provides access to one of India’s two depositories, CDSL or NSDL.
When you buy securities, they are credited to your Demat account. When you sell or transfer them, they are debited according to the applicable process.
If you want to understand how a Demat account works, you can read What Is a Demat Account?.
Deactivate vs Close a Demat Account
The terms are often used interchangeably, but they are not exactly the same.
Term | What it means |
Close | The Demat account is permanently closed after the closure request is processed. |
Freeze | Transactions or certain account activities are restricted while the account remains open. |
Inactive/Dormant | The account remains open but is not actively used. The treatment of charges depends on the DP and account type. |
So, if you no longer need the account, you generally need to request account closure, not just deactivation.
When Should You Close a Demat Account?
You may consider closing a Demat account when:
- You are moving to another DP
- You have multiple Demat accounts and want to consolidate them
- You no longer need the account
- You want to stop applicable account maintenance charges
If you want to stop trading but still want to keep your shares, you do not necessarily need to close the Demat account. You can check whether closing only the trading account is suitable for your situation.
Checklist Before Closing Your Demat Account
Before submitting the closure request, check these points:
- No holdings: Sell your securities or transfer them to another Demat account.
- No pending requests: Check for pending demat, remat, pledge or other requests.
- Clear dues: Settle any outstanding AMC or other applicable charges.
- Save your records: Download your holding, transaction and other important statements.
- Check account details: Keep your DP ID, Client ID and other account details ready.
If you are transferring all your holdings to another DP, the closure process may be handled as a closure-cum-transfer.
How to Close a Demat Account Offline?
The exact process depends on your DP, but the usual steps are:
Step 1: Get the Account Closure Form
Obtain the Demat account closure form from your DP’s website or branch.
CDSL’s current Account Closure Request Form includes options for account closure and shifting of the account.
Step 2: Choose the Closure Option
You will generally need to specify what you want to do with the securities in the account.
Regular closure: Use this when your Demat account has no securities.
Closure-cum-transfer: Use this when you want to move your securities to another Demat account and close the existing account.
Step 3: Fill in the Details
Enter the required information carefully, including:
- Account holder name
- DP ID and Client ID
- Reason for closure
- Target Demat account details, if securities are being transferred
For joint accounts, the required account holders must sign the closure request.
Step 4: Provide the Required Documents
The documents required depend on your DP and the method used for closure.
Depending on the process, you may need:
- Account closure form
- PAN or other KYC information
- Signature or e-sign authentication
- Target Demat account details for closure-cum-transfer
- CMR, where required
A CMR may not always be necessary if the DP can verify the target account details electronically.
Step 5: Submit the Request
Submit the completed request through the method provided by your DP, such as an online portal, branch or other permitted channel.
Keep the acknowledgement or reference number for your records.
Step 6: Wait for Confirmation
The DP will verify the request and process the closure. You should receive confirmation once the account is closed.
How to Close a Demat Account Online?
Some DPs provide an online account closure facility.
The process generally involves:
- Log in to your DP’s website or app.
- Open the Account Closure section.
- Select the appropriate closure option.
- Enter the required details.
- Upload documents, if requested.
- Complete OTP or e-sign verification, where applicable.
- Submit the request.
- Save the acknowledgement or reference number.
SEBI’s framework provides for online closure processes, including OTP and e-sign-based authentication in applicable cases.
For example, Alice Blue provides an online account closure process through its account portal.
How Does Closure-cum-Transfer Work?
Suppose you have shares in your existing Demat account but want to move to another DP.
Instead of selling your shares, you can request closure-cum-transfer.
The process generally involves:
- Open the target Demat account.
- Get the target DP ID and Client ID.
- Provide the target account details to your existing DP.
- Submit the closure-cum-transfer request.
- Provide a CMR if required by the DP.
- Complete the required authentication.
- The securities are transferred to the target account.
- The old Demat account is closed after the applicable checks are completed.
CDSL’s account closure instructions specifically provide for shifting an account and transferring securities to another account.
If the source and target accounts have identical ownership details, SEBI’s rules also provide for transfer of all securities without charges from the depository/DP under the specified conditions.
Can You Close a Demat Account Without Selling Your Shares?
Yes.
If you still hold securities, you do not necessarily have to sell them. You can transfer them to another Demat account through the applicable closure-cum-transfer process.
If the securities are not being transferred, they generally need to be removed from the account through the applicable process before the account can be closed.
NSDL states that a Demat account can be closed only when there is no balance, with transfer or rematerialisation being possible where securities remain in the account.
Are There Any Charges for Closing a Demat Account?
No account closure charge should be levied on a Beneficial Owner (BO) account. SEBI introduced this requirement effective November 1, 2002, and its later master circular continues to state that no account closure charges should be levied.
However, you may still have to settle:
- Outstanding AMC or other dues
- Applicable transaction charges
- Other charges related to specific transfer instructions, where applicable
So, closing the Demat account itself is not chargeable, but clearing pending dues or certain transactions may still involve charges.
How Long Does Demat Account Closure Take?
The processing time depends on the DP, the closure method and whether securities have to be transferred.
A zero-holding account may have a simpler process, while closure-cum-transfer requires verification and transfer of securities.
For example, Alice Blue’s current Investor Charter lists 30 days as the expected timeline for processing demat account closure after receipt of proper documents.
Common Mistakes That Can Delay Demat Account Closure
Avoid these mistakes:
- Applying while securities are still held in the account
- Entering incorrect DP ID or Client ID
- Providing incorrect target account details
- Missing required signatures
- Name or ownership mismatch between source and target accounts
- Ignoring pending demat, remat, pledge or freeze-related matters
- Not clearing outstanding dues
- Providing an incorrect or outdated CMR when one is required
These issues can result in rejection or delay.
Which Demat Closure Option Should You Choose?
Situation | Suitable option |
No securities are held | Regular account closure |
You hold securities and are moving to another DP | Closure-cum-transfer |
You want to stop trading but keep your shares | Consider keeping the Demat account |
Joint Demat account | Follow the DP’s joint-holder signing requirements |
Example
Riya has a Demat account with Broker A and holds:
- 10 shares of Company X
- 5 shares of Company Y
She wants to move to Broker B without selling her shares.
She can:
- Open a Demat account with Broker B.
- Get the target DP ID and Client ID.
- Obtain the CMR if required.
- Submit a closure-cum-transfer request to Broker A.
- Complete the required authentication.
- Wait for the securities to be transferred and the old account to be closed.
If Riya had already sold or transferred all her securities and her Demat account had zero holdings, she could request regular account closure instead.
How to Close a Demat Account with Alice Blue?
Alice Blue provides an online account closure process. You can access the Alice Blue Account Closure support page for the current process.
For closure-cum-shifting, Alice Blue currently asks users to select the destination depository, enter the destination DP ID and Client ID, and upload the destination CMR as part of its online process.
If you are an Alice Blue customer, check the current process before submitting your request because online steps can change.
Conclusion
Closing a Demat account is usually straightforward if you prepare everything before submitting the request.
If the account has zero holdings, you can request regular closure after clearing pending dues and requests. If you still hold securities and are moving to another DP, closure-cum-transfer lets you move those securities instead of selling them.
Before submitting the request, check your holdings, pending transactions, account details and any outstanding dues. Keep the acknowledgement and closure confirmation for your records.
Frequently Asked Questions
Blog by Aliceblue News Desk
The Alice Blue Team is a passionate group of analysts delivering expert market insights, comprehensive coverage of stocks, economy, commodities, and personal finance through clear, actionable research.
