The Demat account simplifies trading and investing in the stock market by holding the securities in an electronic form.
However, the demat accounts are also subject to regulatory policies. Any non-compliance might freeze the account.
You can also voluntarily freeze your Demat account. If you have done so and are now looking to unfreeze it, we are here to help.
In this article, we will look at how to unfreeze the Demat account.
What Does Demat Account Freeze Mean?
A Demat account is mandatory to invest in the stock market. Freezing the Demat account means it has been temporarily closed, and no further transactions will be allowed until you unfreeze it.
It can happen because you are no longer using the demat account or can request to do it voluntarily too.
While you will still receive bonuses, dividends, and splits on time, you will no longer be allowed to make any transactions from the Demat account.
Account freezing is a measure to keep your account secure in case the guidelines are not followed or the account is inactive for a while.
Reasons Behind Demat Account Freeze
There are two bases on which the Demat account can be frozen, one is voluntary and the other is involuntary.
Let us look at each of them in detail to understand the reasons behind the demat account freeze.
Voluntary Reasons
Some reasons why individuals might temporarily freeze their demat account include foreign travel for a long duration, lack of interest in the stock market, a decision to stop trading in the securities market, and the opening of a new demat account.
Under these circumstances, people generally do not wish to unfreeze their demat account. However, it is still possible to unfreeze the demat account by following a procedure, which we will cover soon.
You can request to stop the debit transactions from the demat account or can also freeze both debit and credit transactions. This depends on individual preferences.
Involuntary Reasons
There can also be an involuntary freeze of the Demat account due to regulatory measures.
The Securities and Exchange Board of India (SEBI) lists out certain rules which must be followed thoroughly. If these are not followed, the account can be automatically frozen.
If your demat account is active but there is no dealing or financial transaction in it for 1 year then the Depository Participant (DP) reserves the right to freeze your account.
Additionally, if you do not complete the documentation process and provide the information such as the Aadhaar card, the account can be frozen.
It is integral to be aware of both the types of reasons that can lead to dreamt account freeze to ensure that you can avoid it.
While voluntary account freezing is a choice, you can avoid regulatory account freezing by ensuring that your account stays active and you follow the documentation process properly.
How to Unfreeze Demat Account?
Listed below is the process to unfreeze the Demat account for both voluntary and regulatory freezes.
The steps to follow include redoing the KYC on your account to once again activate it. The KYC procedure includes:
- Filling out the KYC form
- Attach the necessary documents for KYC
- You might also need to fill out the unfreezing account form.
The form will contain details such as the date of the unfreeze request, the reason for account freezing, the type of freeze, and the type of activation (present or future).
It also requires the signature of the individual or the joint holders. You can also e-sign the form and submit it online to your broker.
The documents required for KYC include:
- Identity Proof: Voter ID card, Passport, PAN card, Driving license, Aadhaar card
- Address Proof: Driving license, Aadhaar card, Passport, electricity bill, Ration card, bank passbook
- Income Proof: Bank statement, demat holding statement, Passport
- Bank Account Proof: Canceled Cheque, Bank passbook
You must submit a self-attested copy of these documents to execute the KYC procedure.
Once the depository participant receives the KYC documents, they will verify the documents, update the details, and inform the exchange about it.
After the DP confirms, they will activate the Demat account and grant all trading rights.
The procedure for account freeze and the number of days it takes can vary based on the broker you choose and the type of freeze.
Lastly, to ensure the safety of your account, keep your login details private, and change the password of your demat account frequently.
Steps to Reactive Dhan Account
If your Dhan account is frozen involuntarily, you can follow these steps to unfreeze it:
- Dormant For 1 Year: Simply log in with your user ID and password. A screen will pop up to reactivate your account. Click on ‘Confirm’, and we will activate your account within 24 working hours.
- Dormant For 2 Years: You need to complete three quick KYC steps along with an In Person Verification (IPV) recording. We will activate your account within 24 to 48 working hours.
These steps hardly take a few seconds to complete.
Conclusion
The demat account can be frozen for voluntary or involuntary reasons. Ensure that you follow all the regulatory compliances to eliminate the chances of the freeze by SEBI guidelines.
In case of a demat account freezing, connect with your broker at the earliest and fulfill all the Demat account unfreeze requirements.
