Inactive Account

Policy regarding treatment of Inactive/Dormant Client Accounts

Purpose:

As per guidelines prescribed by SEBI vide circulars MIRSD/SE/Cir-19/2009 Dated December 3, 2009, National Stock exchanges vide circular no. NSE/INSP/64718 Date: October 25, 2024, NSE/INSP/43488 dated February 10, 2020, NSE/INSP/46506 dated December 01, 2020 and NSE/INSP/ 49743 dated September 27, 2021 and BSE Notice No. 20241025-25 dated 25 Oct 2024, 20200210-47 dated February 10, 2020, 20201201-27 dated December 01, 2020 and 20210928-53 dated September 28, 2021, this policy is being framed to deal with the inactive/dormant accounts

Objective:

The objective of the policy is to appropriately deal with the Inactive/dormant clients, where clients have not traded for more than 24(Twenty-Four) continuous months across the Exchanges.

The policy is also applicable for accounts which have been marked inactive on account of Rules, Bye laws, circulars and guidelines issued by SEBI, Exchanges and Internal Risk Management Policies.

Definition:

• Trading or participation in OFS/buy-back/Open Offer across any of the exchanges / segments* of the exchanges through the same Member or
  *Cash/Equity Derivative/ Currency Derivative/ Commodities Derivative/EGR /Debt/Online Bond Platform/ Execution Only Platform /Any other segment as may be allowed by SEBI/stock exchanges from time to time.
• Transaction in nature of applying/subscribing IPOs (where the IPO bid is successful & not cancelled)/SGBs/Mutual Funds (lump sum investment or investments through successful SIP instalment payments) on the Mutual Fund platform of the stock exchanges through the same Member or
• Modification/updation of e-mail Id/Mobile Number/Address in KYC record of client through the same Member and the same has been uploaded to KRA to ensure Validated/Registered status.
• Demat Account: A demat account is typically flagged as dormant if there have been no debit transactions (e.g., selling shares, transfers out) for a continuous period of 12 months.

Policy:

A) Treatment for handling Inactive/dormant accounts:

1. The inactive accounts identified based on the above criteria shall be flagged as ’Inactive’ by Signatureglobal Comtrade Private Limited (hereinafter referred as SGCPL) in UCC database of all the respective Exchanges and Back Office simultaneously.
2. All the accounts marked as “INACTIVE/DORMANT” will be monitored periodically by KYC/ops to avoid unauthorized transactions in the account.
3. Regulators may initiate appropriate disciplinary action in case if any trades are executed in any account flagged as ‘Inactive’.
4. Once the code is deactivated with Dormant flag, trading code is removed from Trading terminal i.e client cannot trade, unless client start reactivation process
5. In case if client initiate rekyc, system check client PAN Aadhar linking status and mandatory 6 attributes and once client confirm the 6 attributes, system will push the data to respective Exchanges to activate UCC. However, In case client is not KRA compliant Exchange does not allow client to trade. In such cases, clients are being communicated with KRA Non-Compliant status along with KRA validation link to initiate validation.
6. Any unutilized funds in your trading account with the broker will be settled (returned to your bank account) on a monthly or quarterly basis, as per your preference and SEBI guidelines. SEBI has recently eased these norms, allowing brokers to settle funds in inactive accounts during the monthly running account settlement cycle.
7. Your existing holdings in the demat account are safe and remain with your Depository Participant (DP).
8. The clients account would be reactivated only after undertaking proper due diligence process and fulfilment of such conditions as may be deemed fit, in the cases where the account has been freeze/deactivated. Fresh documentation, due diligence and IPV is to be carried out where the client is coming for reactivation after a period of 1 year of being flagged as inactive.
9. However, in case a client has undertaken transaction through the SGCPL with respect to IPO/Mutual Fund subscription and DP operations (if the Member is a DP) during this period, the same can be considered and the requirement for fresh documentation, due diligence, and IPV may not be required.
10. In case a client seeks re-activation before a period of 1 year of being flagged as inactive, while reactivating the client, SGCPL will collect the basic details of such client like Address, Mobile number, Email ID, Bank/DP account and will check if these are updated in its records as well in the UCC records of the Exchange. In case of any changes, necessary documents shall be called upon.
11. SGCPL will exercise appropriate due diligence of the client on an ongoing basis in compliance with the provisions of the PMLA guidelines issued from time to time and in accordance with respective KYC policies.
12. Further there won’t be any requirement of IPV by SGCPL, if,
    • Where the KYC of the investor is completed using the Aadhaar authentication / verification of UIDAI.
    • When the KYC form has been submitted online, documents have been provided through Digi locker or any other source which could be verified online.

Activation process

1. Call the customer care centre/main office/branch office/authorized person from a registered telephone number (recorded line) identifying himself and request for activation of account for placing orders/ transacting in the account.
2. Request through Mobile App (Anroid)/Letter/Registered email Id/ recorded telephone lines may be impressed upon to reactivate the account or carry out fresh transactions in a dormant/inactive account.
3. Account inactive for not more than 1 year’s can also activate through online by verifying existing KYC or client can update latest documents if required (Account will be activate in T+1 day as per exchange working day after verifying the documents)
4. Accounts inactive for more than 1 years can be activated through IPV and data confirmation i.e. Rekyc will be done.
5. While reactivating the client, SGCPL will check and ensure that the basic details of such client like Six mandatory attributes (Name, Pan, Address, E mail, Mobile, Income) and other details like Bank, DP account status, DOB, KRA, PAN-Aadhar Linking status, UCC linkage status & Family Declaration, PAN/Name mismatch cross verification with UCC/BO/DP are updated/rectified in its records as well in the UCC records of the Exchange. In case of any changes, necessary documents shall be collected.
6. KYC department may undertake additional due diligence if so required.
7. Once the reactivation is approved the client UCC will be marked as active on UCC portal across the Exchanges, it will be reactivated on back office and trading interfaces.

Treatment of client funds clients who are Un-traceable

In cases where SGCPL is unable to trace such clients in spite of all efforts taken, the following steps shall be taken:

1. The funds shall be parked in a separate Client Bank/ account designated for the purpose of safekeeping of funds of the untraceable client.
2. In case request received from the client for release of funds and/or will be transferred to his account after necessary due diligence.

Review Policy:

This policy may be reviewed as and when there are any changes introduced by any Regulatory authority or as and when it is evident to make necessary change on account of business needs and Risk Management policy.

The policy may be reviewed by the KYC/Compliance department and the changes in policy shall be placed before the Board at the meeting first held after such changes are introduced.

References:

• SEBI vide circular no MIRSD/ SE /Cir-19/2009 Dated December 3, 2009.
• NSE circular NSE/INSP/43488 dated February 10, 2020 and NSE/INSP/46506 dated December 1, 2020.
• BSE circular 20200210-47 dated February 10, 2020 and 2020120127dated December 1, 2020.