Demat Account Rules: When can your demat account be closed, what are the rules regarding this?

A demat account is required to do any kind of trading in the stock market. Without this, you will not be able to buy or sell in the main indexes of the stock market such as BSE Sensex and NSE Nifty.

You can easily open a demat account with the help of any brokerage app.

At present, zeordha and Groww are quite popular among investors. Apart from these, many brokerage apps are available in the market.

Many times it also happens that due to some reason we are not able to use the demat account for a long time. Due to this, we do not do any kind of trading. In such a situation, the question comes to our mind whether our demat account has been closed.

Today we will know what rules SEBI has laid down regarding the demat account.

When can a demat account be closed?

According to the rule, if an investor does not trade in any sector (equity, mutual fund, ETF, currency etc.) for 12 months, then his demat account may be closed. Let us understand this rule with different examples.

For example, suppose

An investor named Ram started his account on 1 January 2024. But he has not done any kind of trading for the last 12 months. Nor has he started any SIP. In such a situation, his demat account will be closed on 1 January 2025.

An investor named Sham started his account on 2 February 2024. He has made purchases only twice so far. One of these was made on 1 May 2024. Apart from this, the second purchase was made on 5 August 2024. In this situation, his account may be closed on 5 August 2025. If he has not made any purchases between August 2024 and August 2025.

An investor named Akash has a demat account. But he is afraid of the volatility of the stock market. Therefore, he wants to invest mostly in debt and hybrid funds of mutual funds. Even in this situation, the demat account is not closed because Akash trades in debt and hybrid funds.

In simple words, to keep the demat account active, any kind of trading should take place within 12 months.

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