Me and my sister are not active trraders. While I do have some shares I got through IPOs, my sister currently does not hold or transact directly in the markets. Instead, we rely mostly on Mutual Funds.
Thus, my sister recently got an email from Dhan saying her account will be dormant as no trade has been placed in the past year. My questions are:
Do Mutual Fund transactions not count towards account activity?
If not, do we have to keep trading at least once every year or can we just buy once and hold it to keep the account active?
Hi @hrishikesh Good to see you back after a while.
Yes, while Mutual Fund transactions are processed via exchange infrastructure (through BSE Star MF) they are not counted towards activity. You will have to one trade on exchanges (buy or sell) to keep your account from being dormant.
Hopefully in coming times the definitions would get simpler to reflect being active via MF as well.
Kfin and CAMS are RTAs, and as per regulations broking platforms should process MF transactions via exchange platforms, in this case BSE Star MF which is an exchange platform. They route our transactions to RTAs.
Thanks for the response, @PravinJ. Just to confirm, and I assume the answer is no, is it possible to just buy once and hold it to keep the account as “active”? As in, does the presence of shares (normal exchange transaction) in the account prevent it from being marked as dormant?
@hrishikesh The way it works is doing one transaction in 12 months. Keeping 1 share in your demat account or not, doesn’t matter. Now that I write this, even I feel its odd.
@PravinJ
Also wanted to know whenever there’s introduction of Demat MF, in this case there will be a credit of units to CDSL. So will the account status considered active with demat MF SIPs and no stock transaction?
(Obviously assuming customer chose the option of demat mutual fund instead of SoA mutual fund)
This is bit different. Demat (Depository), Exchanges (for Trade) and Broker (us) have their own definition of active customer. Broker’s definition is usually aligned with the Exchange, but they can have their own.
In the example you mentioned, the Units are stored in Demat, it keeps you active at Broker (in our case) and Depository; however not at the exchange level.