A complete procedure on reactivating Trading Account

The benefits and advantages of investing in the stock market are gradually disseminating among the populace. Because of this, every day, there are new investors entering the stock market to make some good profits. To invest in the stock market, you may know that one requires a Demat and trading account. So as the number of investors increases, the number of Demat and trading accounts also increases. However, making a fortune in the stock market, especially trading stocks, is not easy. One has to learn to thoroughly analyze stocks from fundamental and well as technical perspectives to become a successful investor. That requires a lot of learning, and one can only get better if one stays consistent in the markets with time. 

On the flip side, as time moves ahead, many investors who opened Demat and trading accounts to trade and invest in the stock market tend to get frustrated. They cannot deal with unsuccessful trades and cannot digest losses, or they may have the time to track markets. This might lead them to believe that trading shares in the stock market is not everybody’s game as they could not keep up with the market and failed to remain consistent. This results in their trading and Demat accounts becoming dormant. In some cases, there are investors with the mentality of buying and forgetting when they enter the stock markets. They invest in shares and then forget about those shares for years. As a result, even in the above scenario, the trading accounts of such investors may become dormant. 

Here you will understand how to reactivate your trading account and the process of doing so. You can reactivate a trading account by writing a letter requesting the reactivation of your trading account and sending it to the headquarters of your broker. You will have to send that letter along with a copy of your address proof and your PAN card.

You also have the option to visit the official website or the trading app of your broker and submit your request from there. To reactivate your account, you must follow the steps to reactivate your trading account. So, now let’s begin with its differentiation. 

Difference Between Trading Account and Demat Account

The Demat account and the trading account are important parts of the stock market. If any of these accounts become dormant, you will have to follow the steps to reactivate your trading account and Demat account properly to regain access to them.

There are many distinctions between a trading account and a Demat account, one of which is that a Demat account is used to store the funds’ shares, debentures, and bonds, whereas a trading account is used to buy and sell those same securities.

You can open multiple Demat and trading accounts, but not with the same broker; some brokers may not allow you to link your trading account to your Demat account if you opened it with another broker.

Hence, although the functions of Demat and trading accounts are different from each other, they are both equally important and have different roles to play in the stock market.

The trading account plays the role of a bridge between the demand and the saving account of the investor. Some banks also provide 3 in one accounts to investors, consisting of a trading account, a Demat account, and a savings account. Some brokers allow the facility of 2 in one account, consisting of a trading and a Demat account for the investor.

Why does a trading account get deactivated?

So you now know the difference between a Demat account and a trading account so that we can move forward. However, before learning how to activate a dormant trading account, we need to know the conditions under which the trading account gets deactivated. You know that an investor’s trading account may become dormant if the investor has not maintained their trading account and has not performed any transactions from it. A dormant trading account will get deactivated. So now the question is how long an investor’s trading account can remain inactive before it gets classified as dormant. Will it get classified as dormant if it remains inactive for a month? And who deactivates a dormant trading account?

The DP of the investor will have full authority to deactivate the investor’s trading account. The DP or the depository participant is generally the stockbroker with whom the investor has opened their trading account. The broker acts as the investor’s link to the depositories and the stock exchanges. A dormant account is an account that has had no buy or sell transactions for a fixed period. 

In the past, the stockbroker or depository participant decided on that fixed period in accordance with their policies. To give you a rough idea of the time period, an account would typically get classified as dormant if there is no trading activity for more than six months.  So, the period before the DP deactivates your trading account would differ from stockbroker to stockbroker, according to their policies. However, according to SEBI’s latest guidelines, the fixed time period is to be one year across every brokerage firm. So, if the trading account is inactive for one year, the stockbroker considers it dormant and deactivates it. 

The Reasons Behind Investors Reactivating their Trading Account at First?

An investor may want to reactivate their dormant trading account for various different reasons. It may be the case that they were a buy and forget type of investor, which led to their account becoming dormant. However, they now want to sell the stocks they purchased, or they might have found new investment opportunities. Or, a trader, who got frustrated earlier and gave up on the stock market, has come back to try their luck. Investors have to reactivate their accounts to resume their trading and investment in the stock market to grow their wealth. However, if the investor’s trading account becomes dormant and they wish to reactivate the trading account, they must follow a set of steps.

Another major reason for an investor to reactivate their trading account is to monitor the shares they hold. Long-term investors with the buy and forget approach should take note of this point. Monitoring the shares in your Demat account from time to time is a healthy practice. By doing this, you are keeping an eye on your Demat account holdings, and this will help prevent unauthorized access to your account by malicious entities. Leaving accounts holding shares dormant has led to a major financial scam in the past. The scam is none other than the infamous Karvy Stock Broking Scam. However, one’s account is much more secure these days, but one should not ignore the possibility of similar fraud. 

What Happens to a Dormant Trading Account?

Your trading account that has become dormant will remain dormant, and you will not be able to perform any transactions from it as long as you do not reactivate the trading account. A dormant trading account only becomes an active trading account if you follow the proper steps to reactivate your trading account, and those steps may differ from depository participant to depository participant. However, the dormant trading account cannot perform any function if you do not reactivate it. Before you decide to reactivate your trading account, you will have to pay off all the dues, such as the account maintenance fees or the translation fees that you may have paid while your trading account was still active.

What are the Reactivation Charges of a Trading Account?

Every DP may charge different reactivation charges to their investors. It is not constant for every depository participant. Some depository participants may offer investors to reactivate their account and not impose any reactivation charges as well. You could learn more about the activation fee by contacting your stockbroker cum depository participant. This information regarding the reactivation charges is usually also available on their website.  

These are the steps that will help you to Revive Your Trading Account?

There is a systematic step invasive everywhere in the stock market, and those steps need to be followed to maintain the rules and regulations and make it a safer place for investors.

• The first and most initial step is the KYC process.
• An investor will also have to go through the in-person verification process.
• The process to reactivate your trading account may differ from DP to DP, but some rules and regulations will remain consistent.
• The next step is to send a letter requesting that you wish to reactivate your trading account to your DP.
• Make sure to include a copy of your Aadhaar card, PAN card, and proof of address.

Conclusion

Follow all the required steps if you wish to reactivate your trading and Demat accounts. The investor can reactivate their trading account with ease. They may also contact their DP regarding the same information. The dormant trading account will not perform any functions, so the investor must reactivate it. The transaction fees are not uniform for all DPs, so if you want to re-enter the stock market, make sure to reactivate your trading account. The Demat account and the trading account are both important for stock market trading, and they can become dormant if you do not perform any transactions in them. Both of them are required to keep your stock market trading afloat. 

It is not the best practice to let your trading account turn dormant. Trading and investing in the stock market is not a piece of cake. To become successful as a trader or investor, you need discipline, consistency, and patience. You need to work hard to understand and analyze the investment opportunities and scope of different businesses as an investor. In contrast, a trader needs to learn to analyze the price action and develop a trading strategy that follows a set of rules. Even if you are or plan on becoming a long-term investor with maintaining the buy-and-get approach, it is always a good practice to invest after regular intervals. However, for whatever reason, you were curious to know how to reactivate your trading account; you now do.

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