Rush to revive demat accounts

The stock market correction seems to be encouraging more and more investors to revive their demat accounts, perhaps to start buying shares, now that the prices have eased from their recent peaks.

Over 5.5 lakh demat account holders have submitted their Permanant Account Number (PAN) cards to activate their accounts, more than two months after the mandatory requirement of the IT department's number.

As per the latest statistics, around 14.5 lakh demat account holders with share positions are yet to submit the PAN cards, the alpha-numerical number issued by the Income Tax department for tax assessment purposes.

"On a conservative basis, the value of the shares in the frozen accounts of NSDL would be around Rs 120 crore," said a depository official on condition of anonymity. At CDSL, the total value of the holdings would be around Rs 15 crore.

The National Securities Depository Ltd (NSDL) has frozen 12.56 lakh accounts with share positions, and another 17.15 lakh accounts with zero positions. Around 78.58 lakh demat accounts are registered with the NSDL, as per the figures.

The Central Depository Services (India ) Ltd on the other hand has around 21.5 lakh demat accounts, of which 5.19 lakh demat account holders are yet to complete the PAN verification process. Of this, two lakh accounts are with holdings, while 3.2 lakh have nil holding.

"Since January around 89,000 account holders have submitted their PAN details and have unfrozen their account," said a senior CDSL official.

Account holders could submit their PAN card even now and can get their accounts activated immediately without any penalty being charged. 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.

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

Sebi had taken the measure to tighten the "know your client" norms, following the initial public offer scam.

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.