In the previous decades, purchasing and selling equity would have been an irksome job. This was especially difficult without an electronic trading platform. In the absence of this feature, share certificated would have been held in physical form. This was expected to be preserved in a safe condition so that the owner can claim proof of ownership in a company.
But has the electronic trading platforms have replaced the traditional systems, holding physical shares have become a thing of the past. However, there is still the issue of handling these share certificates in the current trend. With the current Demat account, your shares will be dematerialized into electronic shares, and stored in this account.
While initially, certain individuals would open a Demat account with great enthusiasm, which falters after some time. This can occur when individuals have open this Demat account to sell off old shares held in physical form or to apply for the initial public offerings. For those who have held convertible debentures in the past would be in a generation of 60s or 70s. For whatever reason, these individuals may have sold off their shares and yet haven’t closed down the Demat account. Likewise, the individuals who have opened the account to subscribe to the IPO’s may have kept their accounts idle for long.
What happens when you your Demat account is idle for long?
In the event your account is not utilized for long, it is termed as inactive by the depository participant. It is then further classified as dormant. Although there is no fixed rule how long a Demat account needs to be inactive, you will need to reactive it in order to use it for any purchase or selling of equity. Alternatively, depository participants do not classify an inactive account as dormant if the account holder has paid the required annual maintenance fees. At times, the depository participants will follow up with the account holder and inform the client about the same. If the account is not utilized in the account within the given period, it is classified as dormant.
How to reactive a dormant Demat account?
Here are a few steps you can take to reactivate your Demat account:
- Call or email the customer service for the required reactivation instructions.
- Check out the required Demat maintenance dues and see if you fulfil it.
- Pay a separate reactivation charge
- Be aware of your known your customer requirements.
Once these steps have been undertaken, you must ensure that you satisfy the required requirements to keep your account active. If you have any investment in this account, keep monitoring your portfolio at regular intervals.