How to Close a Demat Account: Step-by-Step Guide For Online and Offline Methods

A Demat account allows investors to store securities electronically, making trading and investing more convenient. However, there are times when closing an account becomes necessary — whether due to high costs, inactivity, or switching brokers. Properly closing your Demat account is essential to prevent issues and maintain accurate financial records.

Key Highlights at a Glance:

• A Demat account holds securities like shares, bonds, and mutual funds in digital form.
  

• Investors may need to close accounts due to inactivity, duplicate accounts, or cost factors.
  

• The closure process can be completed through online or offline methods.
  

• Depository Participants (DPs) play a key role in verifying documents and processing closure requests.
  

• Ensuring holdings and dues are settled is essential before submitting a closure form.

A Demat account, short for dematerialised account, is an electronic account that allows investors to hold shares and other financial instruments digitally. In India, holding a Demat account is generally required for trading most listed securities, as it eliminates the risks of handling physical certificates.

Key Highlights of How a Demat Account Works:

• What is a Demat account: It is an account used to store securities such as shares, bonds, mutual funds, and government securities in electronic form.
  

• Demat account in India: All Demat accounts are maintained by one of two central depositories — Central Depository Services Limited (CDSL) or National Securities Depository Limited (NSDL).
  

• How does a Demat account work: Investors must register through a Depository Participant (DP), such as a bank, broker, or financial institution, to access dematerialisation services.
  

• Different features and charges: Each DP may have its own fee structure and service offerings, which can influence an investor’s decision to maintain or close their account.

Closing a Demat account may become necessary for different financial or practical reasons. In many cases, investors realise they are maintaining accounts that are no longer required, which can lead to unnecessary costs or complications. Understanding the common scenarios that call for Demat account closure helps investors make informed decisions.

Here are some of the most frequent reasons:

• Duplicate or Multiple Accounts

Multiple Demat accounts may be opened over time, which can create confusion and increase maintenance charges.

• Inactive or Dormant Accounts

Accounts unused for long periods with no activity are often categorised as dormant and may attract ongoing charges.

• High Maintenance Fees

Some brokers may charge annual maintenance fees even if the account is unused. Inactive accounts may still attract charges such as maintenance fees, depending on the Depository Participant’s policy.

• Changing Brokers

If you are switching to a different brokerage, you may choose to close your current account. You must do so after transferring or selling your securities.

• Consolidating Holdings

Consolidating securities under a single account provides unified statements, simplifying monitoring and maintaining transaction records.

Online demat account closure is convenient and is offered by most brokers. However, the option may be available only if the account is in a single holder’s name or there are no holdings or dues. To close your account online, here are the general steps you can follow: 

Steps to Close Online

• Step 1: Clear All Holdings
  The closure process requires that all securities in the Demat account are sold or transferred to another account.
  

• Step 2: Log In to Your DP’s Portal or App
  Visit the web portal or mobile application of your Depository Participant and navigate to the Demat account closure section.
  

• Step 3: Fill Out the Closure Form
  Download and complete the online Demat account closure form provided by your DP, entering details like DP ID, client ID, and personal information.
  

• Step 4: Upload the Required Documents
  Submit scanned copies of supporting documents, such as proof of identity and address, as specified by your DP.
  

• Step 5: Settle Pending Dues
  Check for any outstanding annual maintenance charges or other fees and ensure they are cleared.
  

• Step 6: Submit the Closure Request
  Once the form and documents are uploaded, confirm the request. Your DP will verify the information and initiate closure.
  

• Step 7: Confirmation of Closure
  After verification, the DP will process your request, and you will receive confirmation once the account is officially closed.

Offline closure is a standard method, especially for joint accounts or those with residual holdings. Here is how to close a demat account offline. 

Steps to Close Offline

• Step 1: Visit Your DP’s Branch
  Go to the nearest branch of your Depository Participant to confirm requirements and obtain the official Demat account closure form.
  

• Step 2: Fill Out the Closure Form
  Complete the form by providing details such as your DP ID, Client ID, account type (individual, joint, or corporate), and reason for closure.
  

• Step 3: Attach Supporting Documents
  Submit the filled form along with proof of identity, proof of address, and any other documents requested by your DP.
  

• Step 4: Ensure All Holdings Are Nil
  Confirm that you have either sold or transferred all securities. Accounts with remaining holdings cannot be closed directly.
  

• Step 5: Clear Outstanding Dues
  Outstanding annual maintenance charges or transaction fees must be cleared, otherwise the closure request may not be accepted.
  

• Step 6: Submit the Form and Request Letter
  Hand over the closure form along with a signed Demat account closing letter to your DP. This written confirmation acts as official proof of your intent.
  

• Step 7: Verification and Closure
  The DP will verify the details, process the request, and provide you with confirmation once the account has been closed.

You must also attach a written demat account closing letter with your signature to your DP. This acts as a valid proof of your intent to close the account.

To close a Demat account, you must submit a duly filled closure form along with essential documents. The required details typically include:

• Demat Account Number and DP ID

These unique numbers identify your Demat account and the Depository Participant (CDSL or NSDL) through which it is maintained.

• PAN Card

A self-attested copy of your PAN card must be submitted for verification.

• Address Proof

A valid proof of address, such as Aadhaar card, passport, voter ID, or a recent utility bill, is required.

• Client Master Report (CMR)

If you are transferring holdings to another Demat account, you need to submit the Client Master Report of the new account.

• Signatures of All Account Holders

In the case of joint accounts, signatures from all account holders are mandatory on the closure form.

• Reason for Closure

A brief mention of the reason, such as account duplication, high charges, or broker change, must be included in the form.

A Demat account closure is an irreversible process, subject to verification and due diligence by the Depository Participant. Many closure requests get delayed or rejected because of pending dues, untransferred holdings, or incomplete paperwork. These preparatory steps reduce the likelihood of delays or rejection, supporting timely processing of the closure request:

• Ensure Your Holdings are Nil

All shares or holdings must be sold or transferred to another Demat account, as accounts with holdings cannot be closed directly.

• Check and Clear Dues

Pending charges such as Annual Maintenance Charges (AMC) or penalties must be cleared, and negative balances addressed before closure.

• Download Transaction Statements

Keep copies of transactions and holding statements from your DP for future reference.

• Close Linked Trading Accounts 

Where trading and Demat accounts are linked, closure of the trading account may also be required to prevent additional charges. If your shares are in a frozen pool account or belong to a delisted company, your account can only be closed after the pool account is unfrozen or the company’s ISIN becomes active.  

• Keep the Delivery Instruction Slip (DIS) Handy

For transferring securities, you will need to fill out a DIS, which is available from your DP.

• Ensure There are No Active SIPs or Mutual Funds

Check twice for any unsettled mutual funds or SIPs linked to your account.

A demat account closure form is mandatory, required by DPs to formally close your demat account. The form typically contains:

• Personal details of the account holder(s)

• DP ID and Client ID

• Account type (individual/joint/corporate)

• Reason for closure

• Transfer instruction (closure or transfer cum closure)

• Signature(s) of all account holders

The form is easily accessible. You can either download it directly from your DP’s website or collect a physical copy from the nearest branch, depending on what is more convenient for you.

Before closing a Demat account, it is essential to transfer any existing holdings to another active account. This step ensures investments are transferred and accessible, while also preventing rejection of the Demat account closure request. Transfers can be carried out within the same depository or across different ones. The two types of transfers are as follows:

• Intra-depository Transfer: Moving shares within the same depository (CDSL to CDSL or NSDL to NSDL)

• Inter-depository Transfer: Moving shares across depositories (e.g., CDSL to NSDL)

Required Documents

• DIS (Debit Instruction Slip)

• Copy of the client master report of the receiving account or 16-digit client ID 

• Signed DIS slip

Once the transfer is processed and holdings become nil, you can proceed with the closure request.

Closing a demat account involves a few careful steps, whether done online or offline. It is important to ensure all dues are cleared, holdings are transferred, and documentation is submitted correctly. This helps ensure that your account is closed in line with DP requirements, reducing the risk of future complications.

To understand the exact process and requirements, you must refer to the official websites of CDSL, NSDL, and your DP. If you are unsure about any step, reach out to your depository participant for assistance. This will enable you to carry out the closure process seamlessly.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.