Demat Accounts Dormant for 5 Years to be Closed

Beneficiary accounts (demat accounts), which are mandatory for securities trading, will be closed if they remain inactive and are not renewed for five years. Of the over 6.92 million demat accounts currently opened in Nepal, more than 1.8 million are estimated to be inactive.

As concerns grow over long-term dormant accounts, the Securities Board of Nepal (SEBON) has included a provision in this year’s policy and program to close beneficiary accounts that have not been renewed for five years and hold no securities. SEBON has also allowed exemptions on renewal fees if such accounts are closed without payment.

To implement the provision, SEBON has instructed depository participants (DPs) to collect renewal fees before submitting related charges to the Central Depository System and Clearing Ltd (CDSC). CDSC will amend its regulations after necessary discussions to facilitate the process.

“Preliminary data suggest that over 1.8 million demat accounts are inactive,” said CDSC spokesperson Suresh Neupane. He added that CDSC will collect official data from DPs on accounts that have been inactive for five years and have no holdings to initiate the closure process.

As of now, over 5.99 million Meroshare accounts are registered, of which only about 4.17 million are actively used, indicating that approximately 1.83 million demat accounts linked to them are inactive, Neupane said. “After compiling the official figures, CDSC will draft the necessary regulations, while the actual closures will be carried out by the DPs,” he added.

SEBON spokesperson Niranjaya Ghimire said the board decided to prioritize the closure of long-dormant accounts to address the large number of inactive accounts reported over the years.

According to CDSC data, around 5.2 million demat accounts were added in the past five years. At the end of fiscal year 2019/20, there were 1.7 million demat accounts, which rose to 6.9 million by the end of fiscal year 2024/25. As of July 24, the number had reached 6.92 million, with over 21,000 accounts added in the last eight days.

Demat accounts were made mandatory on July 16, 2016, to make securities transactions technology-friendly. From that date, investors applying for publicly issued securities were required to provide a demat account. The rule came into effect for investors inside the Kathmandu Valley from July 16, 2016, and for those outside the Valley from January 14, 2017.