Freezing and Unfreezing of Demat Account

Keeping your demat account safe and secure is one of the most important aspects. After all, your demat account is for your stock holdings and long-term assets. When dealing with shares, both physically and electronically, you must comply to basic security standards. We're all familiar with the process of opening and operating a demat account.

Another aspect of demat accounts which is known as the account's freezing or unfreezing.

What does demat account freezing means?

Your demat account can be frozen in two ways. There is a regulatory freeze on your demat account as well as a voluntary freeze. Here's how these two options work out.

Your demat account might face a regulatory freeze for a variety of reasons. For example, your account could have been inactive for more than three years with no transactions. In such instances, the DP will freeze your demat account in accordance with SEBI regulations. 

Alternatively, statutory authorities such as SEBI, RBI, Government of India, CBI, ED, and others might order the demat account to be frozen. Your demat account may also be frozen if you fail to provide statutory information, such as your Aadhar card, which is now necessary. These are all examples of regulatory freeze. When your demat account is frozen, you won't be able to make any credit or debit transactions.

More significantly, there is something known as voluntary demat account freezing. Let's imagine you're going to abroad for a while and won't be able to access your demat account. In that case, you might ask your broker to put your demat account on freeze mode until further notice.

During the freeze, all corporate activities such as dividends, bonuses, and splits will be delivered to you on time. However, no transactions are permitted in the demat account. You can also place several types of freezes on your demat account. You can place a general freeze on the demat account, which stops any credits or debits. You can also just stop debits from your demat account, which is the most common strategy used by most demat account holders. Finally, you can freeze specific ISIN numbers so that the block only applies to those shares and the others are available for trade.

If you are willing to get rid of the freeze, you can look up for a process called unfreezing.

What is unfreezing of demat account?