YOU need a depository or demat account if you want to buy or sell shares. When you buy shares, a stock broker transfers the shares to your depository account. And when you sell them, your shares are transferred to the broker's account. Investors keep shares in the electronic form in two depositories: the Central Depository Services Limited (CDSL) or National Depository Services Limited (NSDL). Depositories receive shares from depository participants who could be brokers like Religare, Geojit BNP Paribas, India Infoline or banks like HDFC Bank, ICICI Bank and so on. Many a times we open multiple depository account, without realising that there are annual maintenance charges levied for every account that we hold. So here is how you could close or transfer your demat account.
The Process:
If you have no shares lying in your depository account (because you sold them off) or if you are unhappy with the services of your depository participant you can consider closing your account. However, to close your depository account first and foremost there should be no shares lying in it. If there are shares lying in the account, you need to transfer them to some other account or remat them (get them back in physical form). Besides this, you also need to ensure there is no negative cash balance in your account. Negative cash balances may arise due to non-payment of annual maintenance charges or past transfer charges not paid up. If you request for an account closure without settling the negative balance, the depository can reject your application.
To transfer your depository account to another depository of your choice you need to submit an application in the prescribed format, along with annexure Q to your depository participant. The details of the new depository account have to be mentioned in the application form. Along with that you also have to submit all the unused delivery instruction slips issued by the depository participant. Once this request is received the depository will transfer all the shares to the new depository account within 3-5 working days.
If your current depository account is in the name of Mr A and Mrs B and if the new account is also in the same order i.e. Mr A and Mrs B, then there are no charges which will be levied by the depository for the transfer. However if the new account order is not the same but in a different order say Mr A and Mr C, then the depository participant could levy a charge for transferring each stock to that account, based on the rate that he charges.
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