uTrade Algos
A trading account is a tool used to buy and sell assets across various exchanges. It is linked to your Demat account and bank account to provide you with a seamless trading experience. With the dawn of the Internet and the widespread use of smartphones, there was a rise in the popularity of trading accounts. With its help, you can invest across multiple exchanges like:
- National Stock Exchange (NSE)
- Bombay Stock Exchange (BSE)
- Multi-Commodity Exchange (MCX)
- National Commodity and Derivatives Exchange (NCDEX)
- India International Exchange (India INX)
- NSE International Exchange (NSE IFSC)
Apart from these, there are multiple exchanges in India. A trading account can help you trade stocks, ETFs, commodities, derivatives, etc. You can trade with the help of your trading account at any time without any issues. Many traders try out different stockbrokers and open up multiple trading and Demat accounts. If they aren’t used for a long time, they can be termed inactive trading accounts.
Table of Contents
Defining a Dormant Trading Account
A Demat or trading account can be termed a dormant trading account when there has been no trading activity in the last 12 months. A depository participant (DP) has the authority to disable the account if there is no activity on it. An investor can not trade when the account is dormant and must undergo the process of reactivating the account.
Need to Track a Dormant Trading Account
Your dormant trading account is not at all useful, but you should always keep track of it and check dormant trading accounts. There could be certain malpractices that could be carried out from your trading account, essentially keeping it as an active trading account despite you not using it for a long time. This could end up being problematic, as it can be part of some elaborate scheme by a hacker or the broker itself where they use your account to earn profits.
Vigilance over your dormant trading account is essential. Regularly review account statements to detect any unauthorised transactions. It’s advisable to log in frequently, ensuring that account details remain unchanged, as the addition of other bank or Demat accounts may lead to unauthorised transactions. This could result in losses if shares are sold without receiving the funds. Additionally, gains from the account may incur taxes even if it remains unused.
It’s advised to always be aware of all your trading accounts, keep checking them regularly, and not miss out on any details. Negligence could lead to major losses without you even being aware of them. Prevention is always better than cure, and in this case, one must be cautious as it could lead to losses of huge amounts. If you wish to trade using a dormant trading account you must reactivate it.
Reactivation of a Trading Account
Apart from monitoring your dormant trading account, if you were to ever make use of it again, you would have to first reactivate it.
- The most basic requirement for you to complete is the Know Your Customer (KYC) requirements.
- Along with this, you would have to pay certain maintenance fees for pending trade through the trading account.
- Share India specifically has zero trading account maintenance charges, ensuring you have no charges when you choose to reactivate your trading account. Learn about zero brokerage accounts where you can trade stocks, ETFs, and options without paying any commissions.
Conclusion
As an active trader, you wouldn’t have to worry about a dormant trading account. If you have one, you can easily reactivate it and make use of it to trade in the Indian stock market. Check your dormant trading account on a regular basis to avoid becoming a victim of any fraud or scam.