You will need to do the KYC check again. Reactivation can take up to two days
“We allow demat accounts to remain inactive for up to three years before terming these dormant. There are some broking houses that may allow up to five years of no transaction before terming the account as dormant,” says Dhakan.
There is no fixed rule on how long a demat account will be allowed to remain inactive before classified as dormant. It varies on the agreement between the depository participant (DP), bank or broker, and the customer.
Usually, it would depend on the way maintenance fees are charged. If it is charged a life-time or one-time fee, then the account can remain inactive for a longer period even without being classified as dormant.
However, if the DP charges an annual maintenance fee, it could be classified as dormant even after one year.
In Bonanza's case, the annual maintenance fees are between Rs 350 and Rs 370 a year, while in the case of the life time fee it is Rs 1,500-1,600.
Most DPs categorise customers into speculative, short term and long term based on their profiles. Often, the fees, too, are fixed on the basis of the customer's profile, says R Sudhindra, head of equities at FundsIndia.com.
For instance, in case of a long-term customer, who might transact only once a year, the DP could charge a higher account opening fee and lower broker fee. Such customers may be allowed a longer time frame before their demat accounts become dormant.
However, for a speculative customer who trades daily, the account opening fee could be lower, but brokerage could be higher. In such a case, the demat account could be termed dormant if there is no trade for 12 months.
The account opening fee can range from Rs 500-1,000 depending on the customer profile.
Usually, it takes up to two working days to reactivate a demat account. To reactivate your demat account, you will have to fill a reactivation form and submit Know Your Customer (KYC) details such as address proof and identity proof. Your DP will also verify if your signatures match the original records.
Your DP might charge a fee to reactivate it. This varies from DP to DP. The reactivation fees are usually less than Rs 500.
“If there is some holding in the account, say, Rs 200,000 worth of shares, but there has been no trade, then it is possible that the DP might not charge any reactivation fees. But if there is no holding, then there could be a reactivation fees. The thought is that when the customer does carry out the transaction, the DP will earn brokerage fees and recover the cost,” says Sudhindra.
Of the fees charged by a DP, only brokerage is mandatory. Other charges such as maintenance, account opening and reactivation fees are not mandatory and each DP has its own rules.
“Ideally, you should check your account at least once in six months. You might have received dividends or you may have been levied charges for some transactions that you did not know about,” says Dhakan.
However, Sudhindra points out that merely logging into your demat account will not make it active. “Only if you carry out a transaction will it be considered active. This is because not all demat accounts are online. Many are offline and the customer carries out the transaction by visiting the bank or broker’s office,” he says.
So, before you open a demat account, check the rules with your DP about the period before it becomes dormant and the fees to revive it.
Illustration: Uttam Ghosh/Rediff.com