A frozen account is a solvable problem. It requires the right approach.

Reasons for Freezing

A DEMAT account may be frozen by the Depository Participant under direction from SEBI or at its own initiative for several reasons. Non-completion of KYC requirements, including non-linking of PAN, non-submission of nominee details, non-submission of income details, and non-submission of proof of address and identity, are the most common causes. Additionally, accounts may be frozen on account of regulatory instructions in specific cases or where the account holder has not responded to repeated communications from the Depository Participant.

Implications of a Frozen Account

A frozen account is restricted for debit transactions. The account holder cannot sell securities, transfer shares, or pledge holdings. Credit transactions, including receipt of allotments, dividends in the form of securities, and transfers into the account, may continue depending on the type of freeze. The restriction is lifted only upon completion of the deficiency that caused the freeze.

The Unfreezing Process

The first step is to identify precisely what compliance requirement has not been met. This requires obtaining information from the Depository Participant. Once the deficiency is identified, the required documents are collected, completed in the format prescribed by the Depository Participant, and submitted. The Depository Participant processes the submission, updates its KYC records, and lifts the freeze. Written confirmation of unfreezing should be obtained and retained.

What FISC Does

FISC coordinates with the Depository Participant to obtain the specific reason for the freeze, advises on the documents required to remedy the deficiency, assists in preparing the documents in the prescribed format, submits them to the Depository Participant, and follows through until the account is fully operational. Where multiple folios or DEMAT accounts are affected, FISC manages the process across all accounts in a coordinated manner.