CDSL’s New Guidelines on Account Closure & Shifting

Introduction

If you’re a shareholder or investor holding securities in a demat account and are considering switching brokers, closing an unused account, or shifting holdings between accounts, it’s essential to know the latest norms from CDSL. Effective July 14, 2025, CDSL’s new guidelines for account closure and shifting bring sharper timelines, clearer rules and better investor protection.

In this guide, we walk you through:

• Why the update matters
• What exactly has changed
• Definitions and when to opt for closure vs. shifting
• Step-by-step process (within CDSL / inter-depository)
• Timelines, dues, documents, and charges
• Pro tips from a CA’s desk
• FAQs & key compliance pointers

Investors: Read carefully, as applying before you initiate the move can save you time, cost and avoid hassles.

Why This Update Matters

Historically, demat account closure/transfer requests often faced delays due to ambiguous processes, lingering dues, frozen/pledged securities or mismatched holding patterns.
With this update, CDSL intends to:

• Set a 2 working days timeline (if no dues) for DP processing.
• Give the beneficial owner (BO) a 30-day window if there are dues, to clear them, before the request is rejected.
• Clarify handling of frozen, locked-in or pledged securities during transfer/closure.
• Strengthen audit trail, logs and transparency.

For investors, this means better clarity, faster execution and fewer surprises when you switch brokers or close redundant accounts.

What Exactly Has Changed

Here’s a comparison of Old Practice vs New Guidelines:

Feature	Old Practice	New Guidelines (from July 14, 2025)
Timeline when no dues	Varies widely; sometimes several days/weeks	DP must complete closure + transfer within 2 working days if no dues.
If dues exist	No standard timeline; sometimes indefinite	BO must be notified within 2 days; given 30 calendar days to clear dues. If cleared, process within 2 days.
Handling frozen/locked-in/pledged securities	Ambiguous; often delays	Transfer/closure allowed only once specific conditions are met; “frozen balances” may be transferred within same depository if holding pattern matches & status remains same.
Holding pattern match requirement	Sometimes lax checks	For inter-depository and intra shifts, holding pattern (names, order) must match; DP must ensure before transfer.
Audit trails & logs	Varied implementation	DPs must maintain logs, timelines, status codes for requests.

Thus, from the investor’s standpoint: faster processing, clearer responsibility and built-in timelines.

Key Definitions You Should Know

Before proceeding, let’s define a few terms:

• BO (Beneficial Owner): The demat account holder whose name appears as the beneficial owner.
• DP (Depository Participant): The brokerage/bank through which you hold your demat account registered with CDSL.
• ACRF (Account Closure Request Form): The form you submit to initiate closure/shifting.
• Holding Pattern: The sequence/names of account holders in the demat account (e.g., “A & B”, or “A”, etc.). Must match for target account in case of shifting.
• Frozen/Locked-in/Pledged Securities: Balances which have restrictions on transfer. These affect closure/shifting.
• Intra-Depository Transfer: Transfer within CDSL from one DP to another DP under the same depository.
• Inter-Depository Transfer: Transfer from CDSL to the other national depository (National Securities Depository Limited - NSDL) or vice-versa.

Understanding these will help you avoid confusion when filling forms or speaking with your DP.

When Should You Choose “Closure” vs “Shifting”?

Closure

• Best when you want to permanently terminate your demat account with one DP and you have no holdings or you will transfer all holdings to another account and want to close old one.
• Useful when you’re switching brokers and want to consolidate.

Shifting

• You retain one account but move holdings from current DP to another DP (within same depository or to different depository).
• Choose shifting when you still may want the old account for some reason (e.g., trading legacy holdings) or you have multiple accounts and just want to move part of the holdings.

Situations requiring attention

• If your account has pledged/locked-in securities, you may not be able to close/shifting until the pledge/lock is released.
• If you have outstanding dues (maintenance charges, debit balance) - you must pay or be ready for the 30-day clearance window.
• Holding pattern mismatches between source & target account will delay.
• If you’re doing an inter-depository transfer, there are extra steps and checks.

Step-by-Step Process: Closure-Cum-Shifting

Here is a simplified process you can follow as an investor:

Step A - Instruct Your Current DP

Download and fill the ACRF from your DP or from CDSL’s site. Ensure you tick: “Closure due to shifting” (if you’re moving to new DP) or just “Closure” (if you’re terminating).

• Provide the target DP ID + Client ID (16-digit) if shifting.
• Sign the form. In case of joint account, all holders must sign.
• Attach latest statements, KYC updates if your DP requires them.
• Submit to your DP (physically or as per your DP’s process).

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Step B - Ensure Pre-conditions

• Transfer or sell any holdings (if you want zero balance) or give instruction for free balances to shift.
• Clear any dues or identify if you’ll use the 30-day window.
• If there are frozen or pledged securities, check with DP on status and what needs to be done.

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Step C - DP Processing

• If no dues - DP must complete transfer & closure within 2 working days.
• If dues exist - DP sends notice to BO (within 2 days), then BO has up to 30 calendar days to clear. Once cleared, transfer in 2 days.
• DP must mark the account as “To Be Closed” if pending and maintain logs.
• DP sends closure/transfer confirmation to the BO.

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Step D - Target DP (if shifting)

• The target DP receives holdings, verifies holding pattern, KYC & then you are good to manage your holdings.
• Old DP will then generate closure confirmation.

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Visual Flow

Source DP - (ACRF + Documents) - Dues cleared? - Yes - Transfer + Closure in 2 days - Target DP
No - BO given up to 30 days - Once cleared - Transfer + Closure.

Inter-Depository Shifting (CDSL ↔ NSDL)

If you are moving from CDSL to NSDL or vice-versa, additional steps apply:

• An Inter-Depository Delivery Instruction Slip must be filled (for off-market transfer).
• The target depository must verify holding pattern & matching details. DP may also ask for CML (Client Master List) or other proofs.
• Timeline norms still apply (2 working days if no dues).

Always check with your DP for exact inter-depository procedure & charges.

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Timelines, Dues & Exceptional Situations

Timelines

• 2 working days: For complete requests with zero dues.
• 30 calendar days: BO can clear dues if any; once cleared, DP should process in 2 days.
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Dues & Outstanding Balances

• Outstanding negative balances, AMC dues, or other charges must be cleared (or BO should be ready to clear).
• Until dues are cleared, DP may reject or hold the request.
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Frozen / Locked / Pledged Securities

• Transfer or closure might be delayed if securities are locked-in or under lien/pledge.
• “Frozen balance” may be transferrable only under certain conditions within the same depository.
• Advice: Release pledges/freezes before submitting closure/shifting request.
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Holding Pattern Mismatch

• If source & target accounts differ in sequence of holders or names, DP/Depository will raise error.
• Always ensure target account has identical holder names (order, spelling) and PANs.
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Documents & Forms Checklist

Here’s a checklist you should follow:

• Completed ACRF (Account Closure Request Form) - print, sign.
• Reason for closure/shifting clearly mentioned (“Shifting to DP ID XXXX” or “Closure - no holdings”).
• Target DP ID + Client ID (in case of shifting).
• Latest Client Master List (CML) of target account (if asked).
• All signatures (joint account or minors/guardian as applicable).
• KYC (PAN, Aadhaar, address proof) if DP requires.
• Statement of holdings - ensure holdings zero (or transfer instruction given).
• Proof of dues cleared (if any) or acknowledgement of 30-day window.
• If inter-depository: Inter-Depository Instruction Slip, off-market transfer form.
• For frozen/inactive/dormant account: letter to RTA/issuer if required (for long pending dematerialisation) as per operating instructions.

Always ask your DP for any additional internal forms/charges.

Fees, Charges & Practical Considerations

• Usually, no separate charge for closure per se, but DPs may levy transfer charges (especially off-market/inter-depository).
• If holdings moved, there may be off-market transfer fee (check DP tariff sheet).
• If you delay clearing dues, you might incur more charges (late fees etc).
• Consolidating and closing redundant demat accounts can save Annual Maintenance Fees (AMC) - good housekeeping.
• Documentation, delays or missing signatures are often root causes of hold-up-pre-empt them.

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Investor Pro Tips

• Check for hidden costs: Before shifting, compare target DP’s AMC/transaction charges.
• Clean your source account: Transfer all holdings, clear dues, release pledges before filing ACRF.
• Match holding pattern and KYC: Having mismatches is one of the top causes of rejection.
• Take screenshots of holdings: Save your latest statement as proof; ensures clarity in case of dispute.
• Submit during business week: If you submit late on Friday, 2 working days may stretch due to weekend/holiday.
• Keep confirmation emails/SMS: Once account closed or shifted, retain the final confirmation.
• Avoid switching too often: Frequent shifting may look suspicious to DP/regulator and could cause extra verification.
• For NRIs / HUFs / Joint accounts: Check extra steps (guardian consent, Karta sign, etc).
• Nomination and tax records: When closing an account, ensure your dividend history, tax statements (Form 16, 26AS) are retained for future.

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Troubleshooting & Escalation

If the process doesn’t complete as promised:

• Step 1: Reach out to your source DP, provide ACRF copy + acknowledgement, request status update.
• Step 2: If timeline of 2 working days passed and no action - ask for written reason for delay.
• Step 3: Contact CDSL Helpdesk / DP compliance quoting Communiqué CDSL/IS/DP/POLCY/2025/451.
• Step 4: If unresolved, lodge complaint on **Securities and Exchange Board of India (SEBI) SCORES portal with all documents (ACRF, mail trail, status).
• Step 5: Keep your evidence (screenshots, stamps, forms) as this may be needed for audit or tax record.

Compliance & Source Box

Reference

Communiqué No. CDSL/IS/DP/POLCY/2025/451 - Closure-cum-Shifting of Demat Accounts (effective July 14, 2025)

CDSL DP Operating Instructions (March/June 2025) - Process, forms, definitions

Investor FAQ - “Demat Account Closure” by CDSL

Select / Finology article summarising the guidelines

 

Conclusion

Closing or shifting your demat account is no longer a grey area-it’s now defined with clear timelines, rules and investor protections thanks to CDSL’s July 2025 update. Whether you are switching brokers to save costs, consolidating, or just cleaning up unused accounts, following the process correctly ensures a smooth transition.
Remember:

• Clear out holdings & dues before initiating.
• Submit a properly filled ACRF with correct target account details.
• Ensure holding pattern matches, and release pledges/frozen securities if any.
• Submit early in the week and keep confirmations.
• Consult your CA or financial advisor if you hold complex securities or have multiple accounts.

By doing this, you not only avoid unnecessary delay, but you also ensure accuracy in your investment records and avoid surprise maintenance charges or tax complications.

FAQs

Q1. How long will it take for CDSL account closure/shifting?
If all is in order (no dues, holdings moved, form signed) the DP must complete within 2 working days.

Q2. What if I have outstanding dues in my demat account?
Your DP will notify you; you get 30 calendar days to clear dues. Once cleared, process again in 2 days. If you don’t clear, the request may be rejected.

Q3. My holdings are frozen due to corporate action; can I still shift?
Yes - but special conditions apply. Frozen or locked-in holdings may only be transferred under the same freeze status or may require specific instructions by DP. Clear pledges first if possible.

Q4. Do I need to pay separate fees to CDSL for shifting/closure?
No separate depository fee typically, but your DP might have transfer/closure fees per its tariff. You should check your DP tariff schedule.

Q5. Can I close a demat account online?
Some DPs may offer online initiation, but many still require a signed physical ACRF and supporting documents. Always check your broker/DP’s facility. The core rules apply regardless.