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NISM Certifications · NISM-Series-VI: Depository Operations · Functions of Depository Participant - Account Opening

A client opened a demat account with a DP and later wants to close it. Which is the correct position?

A client can close a demat account by submitting a written closure request to the DP, with any securities balance first transferred to another account. Issuer approval is not needed, and inactivity alone does not close an account automatically.

  1. AThe client may close the account by submitting a closure request, after which any balance must be transferred to another accountCorrect
  2. BThe DP can close the account only after seeking the issuer's approval
  3. CThe account cannot be closed once opened
  4. DThe account closes automatically after one year of no transactions

Explanation

A beneficial owner may close the account by a written request to the DP, and any securities held must first be transferred to another demat account or dematerialised, as the DP requires. Issuer approval is not needed, and accounts do not close automatically on inactivity.

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