Did you know that your trading account will be marked inactive if there’s no activity for 24 months? This can restrict your ability to trade, sell holdings, or add funds.

But don’t worry—keeping your account active is easy! In this blog, we’ll break down what an inactive trading account is, why it happens, and the simple steps to prevent or reactivate it. Let’s start with the basics.

What is a Trading and Demat Account?

To trade in the Indian stock market, investors need both a trading account and a demat account. While a trading account facilitates the buying and selling of securities, a demat account serves as a secure repository for holding them in electronic form. 

What is an Inactive/Dormant Trading Account?

As per the latest guidelines issued by the exchanges, a trading account is considered inactive if no trading activity has occurred for 24 consecutive months. This includes:

  • No stock, ETF, or derivative trades across any segment (Equity, Cash, etc.).
  • No participation in corporate actions such as buybacks, open offers, or Offer for Sale (OFS).
  • No successful subscription to IPOs, where shares have been allotted (excluding failed/cancelled IPO bids).
  • No modification or update of your KYC details (email ID, mobile number, address, etc.) is made.

To keep you informed, you will also receive a prior email notification. However, if you choose to trade in Stocks, ETFs, or F&O after receiving the notification, your account will remain active.

Important Notes:

  • Placing an IPO order does not count as trading activity unless the bid is successful and not cancelled.
  • Your account must be active to participate in corporate actions like buybacks and OFS.

Here’s how you can place an order with Share.Market.

How to Ensure Your Trading Account Remains Active?

To avoid your account from being flagged as inactive, you should ensure at least one of the following activities is carried out within 24 months:

✅ Buy/Sell Stocks, ETFs, or trade in F&O (Futures & Options)
✅ Participate in buybacks, OFS, or open offers
✅ Successfully subscribe to IPOs
✅ Update your KYC details (email ID, mobile number, address, etc.) with your stockbroker

What Happens When Your Trading Account Becomes Inactive?

🚫 You cannot place new trades in stocks, ETFs, or derivatives.
🚫 You cannot sell any existing holdings.
🚫 You cannot add funds to your account.
✅ You can still invest in IPOs, but cannot sell allocated IPO shares.

Important Notes:

  • All your holdings post inactivation will be stored safely in your demat account with your depository participant (DP). 
  • Any remaining funds balance with your stockbroker will be settled on a monthly or quarterly basis as per your preferences.

How to Reactivate an Inactive Trading Account?

If your account has been flagged as inactive, reactivation is simple but mandatory before you can resume trading.

Accounts inactive for more than 24 months: Re-KYC verification is mandatory.

You need to confirm any changes in:

  • Address, mobile number, email ID
  • Bank/DP account details
  • Income and financial details

If KYC details are outdated, they must be updated before account reactivation.

Why is this Rule Implemented?

These rules are part of SEBI’s regulatory framework to ensure:

  • Better investor protection
  • Prevention of unauthorised trades
  • Updated client records in compliance with PMLA (Prevention of Money Laundering Act) guidelines

By staying informed and taking timely action, you can prevent your account from becoming inactive. Make sure to place a trade or update your KYC details at least once in 24 months to avoid unnecessary reactivation procedures!