Last Updated: Mar 21, 2024 Value Broking 5 Mins 2.1K

There has been a sudden surge in people interested in investing and trading over the past few years. The world is transforming into digital, and all the facilities are available online. Online trading provides convenience and offers data security and production from data theft. To start investing in shares or any holdings, you need a Demat and trading account, without which you can not trade or invest in the Stock Market. The Demat account offers many benefits to its investors. Now investors are no longer required to carry all the physical certificates to trade in the Stock Market. 

Every investor knows that opening a Demat account is essential to trade or invest in the Stock Market. A Demat account is also known as a Dematerialized account that holds all your shares, stocks, funds, and bonds in Dematerialized or electronic form. For every transaction you make through the trading account, that is, selling or buying shares or stocks, your Demat account will be debited or credited with shares. In addition, to maintain your Demat account, you must pay a fee called Account maintenance charge (AMC) to your broker. 

Investors can choose a depository participant, discount, or full-service broker who aligns with their financial objectives and investment strategies. A full-service broker offers you investing guidance and assistance for a higher fee. A discount broker offers low fees, but you have to carry out all the transactions yourself without or less help from your broker. 

Investors can also open more than one Demat account with the same or different depositories. A Demat account also offers several benefits. For example, what happens if you stop trading or pay AMC further after trading? 

The online and offline methods are available if you are interested in opening a Demat or trading account to invest in or trade in the stock market. There are also free Demat and trading account openings opportunities. Choose a good DP to open your Demat account with a CDSL or NSDL. He will act as a connection between you and your depository. 

What is a Dormant Demat Account?

Dormant Demat account meaning: A dormant Demat account is an inactive Demat account without any transactions for a specific period, from 6 months to almost two years. Your Demat account goes dormant based on the broker’s policy. 

When Does a Demat Account Go Dormant?

Now your Demat account is being unused, or if it remains idle for quite a long time, there is a chance that your depository will mark your Demat account dormant. The exact time limit specified is not the same for all brokers. Your Demat account is declared inactive, so it is now an inactive Demat account. 

You can’t do any transactions from this account until you reactivate it again. SEBI, the market regulator, has given the freedom to the brokers to decide the timeline in which it can mark a Demat account as dormant. However, it is generally advised to look at your Demat account if you have not used your Demat account for some period.

Why Should You Monitor a Dormant Demat Account?

If your account doesn’t hold any securities, there is no problem leaving it. However, it is better to log into your account periodically to check and monitor your shares’ status if it does. It is essential to ensure no unauthorized access to your account because a few cases got reported where the fraudsters tried to carry out illegal trades. 

These people often use dormant Dematerialized accounts for front running. Front running, often known as tailgating, means someone in the brokerage firm is trading shares of the company using the information of either client traders or upcoming research reports. Suppose any evil entities have identified your account as a dormant account. 

They may try to update your existing data with some other information or steal your data such as mobile number, email address, and bank account details. Hence, it is essential to monitor a Dormant Demat account. You should promptly report to the concerned authorities if you find unauthorized access. Otherwise, the account owner will be held responsible for this and meet all the legal proceedings.

Any transactions in your Demat account will not be counted as dormant by the depository. You will have to reactivate it. Again, you will go through the entire “Know Your Customer” (KYC) process. You have to fill out new forms and submit documents as your broker requires. Some brokers may request you pay a small reactivation fee to reactivate the Demat account.

What are the Charges for a Dormant Demat Account?

The charges for a dormant demat account vary among depository participants. Generally, there may be annual maintenance charges levied on inactive accounts. It is advisable to check with your DP for the specific charges applicable.


Your Depository participant can declare your Demat account as a Dormant Demat account once they find out that no transactions have been held in your account. The period can be around six months or more, which may vary with brokers. If you want to keep your account idle for some time, it is better to request that your broker freeze your account. 

Your account will not be at risk of spam and other fraudulent transactions. It’s a safe and healthy process. The exact time limit specified is not the same for all brokers. Always remember to follow the suggestions and monitor the Dormant Demat account.

Frequently Asked Questions (FAQs)

If you don’t pay the account maintenance charges to your broker, the broker will initially send you an email to pay the AMC. If you still fail to pay the AMC, they will mark it dormant.

Yes, you can reactivate your dormant Demat account by requesting your broker to do so after filling out some forms, following the procedure, and paying the reactivation fee.

You can request your selected broker to freeze your Demat account.

A demat account is considered inactive if there are no transactions or holdings for a certain period. The specific duration of inactivity varies among depositories and can range from 6 months to 2 years.

To close a dormant demat account, you need to contact your Depository Participant (DP) and submit a written request for closure. The DP will guide you through the necessary steps and documentation required.

No, a dormant demat account does not directly impact your CIBIL (Credit Information Bureau Limited) score. CIBIL score is primarily based on your credit history and repayment behavior related to loans and credit cards, not on the status of your demat account.