Freeze on every fourth demat a/c

With the deadline for furnishing details of permanent account number (PAN) lapsing on December 31, a quarter of the 98.5 lakh demat accounts will be frozen from January 1.

Around 24 lakh demat accounts would be affected on account of non-submission of PAN details, said sources close to the development.

The Securities and Exchange Board of India (Sebi) had earlier notified depository agents that every investor trading online should provide PAN details.

The National Securities Depository Ltd (NSDL) will see closure of around 18 lakh demat accounts. Around 77 lakh demat accounts are registered with it.

On the other hand, CSDL has around 21.5 lakh demat accounts, of which around 5.5 lakh accounts have been suspended from debit and 3 lakh are passive accounts, where there is not much holding.

"Since the September extension date, more than 15 lakh demat account holders have furnished PAN details.

So, the extension of the date proved helpful for many," said a senior NSDL official. Effective January 2, both CDSL and NSDL will suspend trading in demat accounts whose beneficiary owners have not furnished PAN details.

"Around 2.6 lakh accounts have a holding but don't have a PAN. In cases, while one holder has a PAN card, the second holder does not," said a senior official.

He also added that unless investors submitted their PAN details, their accounts would not be debited. Credit could come into the accounts, but no trading could take place through them.

However, people could submit their PAN card details even after January 1 and get their accounts activated immediately without any penalty being charged.

Sebi had taken the measure to tighten the "know your client" norms, following the initial public offer scam. Even where individuals or corporates invest Rs 50,000 or more in a single mutual fund scheme, they are required to apply for a mutual fund number (MIN), as prescribed by KYC norms.

Instructions for closure of demat accounts are provided at the depository participant level (banks, stockbroking firms, financial institutions and custodians), where retail investors open demat accounts for dematerialised holdings and their transfers.