A DEMAT account is classified as dormant when there has been no activity in the account for a period specified by the Depository Participant, typically twelve to twenty-four months. Dormant accounts are restricted from debit transactions. Reactivation requires a formal request supported by updated KYC documentation. FISC manages the complete reactivation process.
The classification of a DEMAT account as dormant is governed by SEBI Circular CIR/MIRSD/16/2011 dated August 22, 2011, and the operational guidelines of the individual Depository Participant. An account is generally classified as dormant if no client-initiated transaction has been carried out in the account for twelve consecutive months. Some Depository Participants apply a twenty-four month threshold. The dormant classification is not a penalty; it is a compliance measure to prevent inactive accounts from being misused.
A dormant account is restricted for debit instructions. Transfers out of the account, including sales and off-market transfers, are not permitted until the account is reactivated. Mandatory credits, such as corporate actions and allotments, are typically not affected. The restriction is administrative and does not affect the ownership of the securities held in the account.
To reactivate a dormant account, the account holder is required to submit a formal reactivation request to the Depository Participant in the prescribed format. The request must be accompanied by updated KYC documents, including proof of identity, proof of address, PAN card, and any other documentation the Depository Participant may require. On receipt and verification of the documents, the Depository Participant reactivates the account and issues a confirmation.
FISC prepares the reactivation request in the format prescribed by the relevant Depository Participant, compiles the supporting KYC documentation, submits the complete set, and follows up until written confirmation of reactivation is received. Where the account has been dormant for an extended period, there may be additional requirements; FISC advises on these and attends to them as part of the service. In cases where the account holder has also received notice of freezing in addition to dormant status, FISC addresses both issues through a coordinated submission.