How to keep your broking account ‘active’

As a thumb-rule for stock market investing, doing less is more. “The stock market is designed to transfer money from the active to the patient," Warren Buffet famously said. However, exchange rules require you to make some transactions in your broking account to keep it active.

To be sure, the activity need not just be in stocks; it could be in any segment of an exchange and for the smallest possible value. But if there is no activity for 24 consecutive months, the account will be flagged as ‘inactive’ and no new transaction will be allowed in the broking account.

Once a broking account turns inactive, you have to follow the re-KYC (know your customer) process, which can be done online in most cases. Here is a look at how this process works, what happens to your holdings if an account turns ‘dormant’ and hacks to keep the account active.

The no-activity window, initially set for 12 months, was extended to 24 months in October last year. The rules stem from market regulator Securities and Exchange Board of India’s 2009 directions to increase transparency in brokers’ dealings with clients.

Exchanges have widened the scope of transactions beyond just stock trading activity. Bidding in an IPO, and buying or selling sovereign gold bonds and mutual funds would also be considered. Any transaction in any segment of the exchange will help keep the account active.

Non-financial transactions such as modifying your e-mail ID, mobile number and address through the same broker are also considered now.

While you can’t place fresh buy and sell orders once the broking account turns inactive, the demat account and holdings remain intact. You continue to receive credit in your bank account from dividends. If there is a bonus issue, the