Market regulator Sebi Thursday asked depository participants (DP) to refund the balance account maintenance charge (AMC) in case an investor closes or shifts his demat account prior to expiry of the term paid for.
"It has been decided that in the event of closing or shifting of the demat account from one DP to another, the AMC collected upfront on annual or half yearly basis by the DP shall be refunded by the DP to the beneficial owner (BO) for the balance of the quarter/s," the regulator said in a notification.
Sebi observed that in cases where the AMC is collected on an annual upfront basis, on closure or shifting of demat accounts, the AMC for the balance period, for which no service has been provided by the DP, is not refunded to the BO.
DPs have a system of collecting account maintenance charges from BOs towards maintenance of demat accounts. These are charged on a monthly, quarterly, half yearly or annual basis.
So, from now on, if an annual AMC has been paid by the BO and if the BO closes or shifts his account in the first quarter, he will be refunded the amount of the balance 3 quarters, which would be 3/4th of the AMC. Sebi said for the purpose of calculation of the remaining AMC period, the year will begin from the date of opening of the account.
The Securities and Exchange Board of India (Sebi) asked the depositories to make amendments to the relevant bye-laws, rules and regulations for implementation of the decision immediately.