Last Updated: Jul 12, 2024 Value Broking 3 Mins 2.6K
reactivate dormant demat account

A Demat account that remains inactive for a long period is called dormant. A simple procedure can be followed to reactivate a dormant demat account, enabling investors to resume trading stocks. Usually, investors must fill out the required paperwork and present documentation of their identification, address, and income. While some DPs offer online reactivation options, others may require a face-to-face visit to their office. Reactivating a dormant account requires immediate action in order to prevent account deletion or further fees.

Key Highlights

  • Contact your depository participant (DP) to initiate the reactivate dormant account.
  • Individuals need to provide proof of identity, address, income and other required information to complete the process.
  • Most DPs charge a nominal fee for reactivating dormant accounts, which you’ll need to pay.
  • The reactivation process can be done online or in person.

How to Reactivate Dormant Demat Account?

Here’s how you can reactivate your dormant demat account:

1. The first step in reactivating your account is to notify the DP via a letter or email sent to your registered email address or ID.

2. After notifying the DP of your desire to revive your account, you will need to complete new KYC requirements.

3. As is customary, an in-person verification will happen at the involved DP’s head or branch offices.

4. Your account will be revived for usage after these procedures are finished, and you can choose to close it or use it to resume trading.

Misused By Fraudsters

There have been a few reports of misuse of dormant Demat accounts in the past. However, it is generally necessary to monitor the accounts regularly to identify fraudulent transactions. If you ever find unauthorised access, report it immediately to your broker so that corrective measures can be taken. 

Let us look at how fraudsters may misuse your Demat account.

Scamsters can use dormant Demat accounts to carry out illegal trades. If they discover you have an inactive account, they try to gain unauthorised access to it. They will update personal data in KYC, like mobile numbers, bank account details, etc., and trade in the stock market. The owner may not know transactions are taking place through your account. 

Conclusion

Though the SEBI ensures 100% safety of your trading and Demat account transactions, it is also your responsibility to monitor your accounts. Therefore, always monitor your Demat account even if you are not using it. To reactivate a dormant Demat account, you have to follow the steps given in this article. In addition, it is wise to freeze your Demat account if you are resuming transactions for some time to avoid any fraudulent actions. Also, ask your DP for guidance in this matter since the document and steps required to reactivate an inactive Demat account may differ.

FAQs on Dormant Demat Account

Reactivating a dormant demat account can take time depending on the depository participant.

Demat accounts that are dormant are still open, they are inactive, and therefore no transactions take place. These accounts are expensive to maintain even when they are not used because annual maintenance costs may still apply. Furthermore, because they are not being monitored as frequently, they can be more open to fraud and unauthorised access. The account is dormant but retains its securities. It loses out on market opportunities and corporate actions.

No, an account that is inactive is not immediately terminated. If there are no transactions for a year, it is still open but is designated as inactive.

It's critical to keep an eye on inactive demat accounts as it prevents maintenance fees, and reduces the possibility of fraudulent transactions and illegal access. It provides investment protection and ensures compliance.

To reactivate a dormant demat account, you need to contact your broker or DP and request for reactivation. You also need to fill out a reactivation form, submit the required documents, complete the KYC requirements, sign an agreement, and settle any pending dues or negative balances in the account.

You may need to pay reactivation charges of Rs 500 to the DP. However, this fee could be waived if the value of the shares in your account is very high.

No, it is not mandatory to close a dormant account. However, it can be closed, and you should do so. Otherwise, account maintenance fees and security issues may arise.