As per the requirements of the NSE Circular No. NSE/INSP/43488 dated Feb 10, 2020 / and NSE/INSP/46506 dated December 01, 2020 and BSE Notice no. 20200210-47 dated Feb 10, 2020 trading accounts of clients who have been inactive should be marked as inactive trading accounts in Exchange UCC database. As per subsequent NSE Circular No. NSE/INSP/49743 dated Sep 27, 2021 and BSE Notice No. 20210928-53 dated Sep 28, 2021 members are required to undertake fresh documentation, due diligence and IPV where a client is coming for reactivation after a period of 1 year of being flagged as inactive i.e. after 2 years from their last trading date.
Inactive Trading accounts: In case of trading account, the term inactive account refers to such accounts wherein no trades have been carried out since last 12 (Twelve) months across all Exchanges.
Once the account is marked as inactive further trading can be allowed by such clients only after sufficient due diligence (including IPV) is undertaken for them. (Demat account, Bank account, Email ID, Tel Phone no# & Client Address)
The Exchanges have subsequently clarified as below:
BSE vide FAQ dated Feb 19, 2020 have clarified that Institutional Clients will be exempt from the aforesaid requirement.
NSE vide email dated Feb 24, 2020 have clarified that Custodian Settled Accounts (those clients having a CP Code though not necessarily having a Custodian) will be exempt from the aforesaid requirement.
In case of all other clients, the inactive accounts identified based on the above criteria shall be flagged as ’Inactive’ or “closed” by the Operations Team in the UCC database of all the respective Exchanges. In case of any balances (funds / securities) lying with J.P. Morgan India Private Limited for such inactive clients, the same should be settled with the client within 90 days.
In case of failure to settle a client’s accounts due to non-availability of client’s bank account and demat account details and non-traceability of client, Operations will make all efforts to trace the client and to settle their funds and securities lying with J.P. Morgan India Pvt. Ltd. Also, an audit trail of all such efforts made for tracing such clients and settling funds and securities of such clients will have to be maintained. In case of failure to trace clients’ inspite of all efforts undertaken, Operations will follow the procedure as mentioned in clause 4 of NSE Circular No. NSE/INSP/43488 dated Feb 10, 2020.
The Circular became effective from Feb 10, 2020 and hence effective Feb 10, 2020 onwards any client who has not traded for the past 12 months should be identified and marked as inactive in the respective Exchanges’ UCC database.
Marking of an earlier flagged inactive account as active in UCC database will only be done post confirmation from WKO team.
If the KYC is refreshed within the 12-month period while the account in inactive, then the account will be treated as active as per the policy and no further action is required.
Fresh documentation, due diligence and IPV should be undertaken only when the client seeks reactivation after a period of 1 year of being flagged as inactive i.e., after 2 years from their last trading date. Further, no communication seeking clients to trade in order to prevent accounts from being flagged inactive should be sent.
BSE Notice No. 20200210-47 dated Feb 10, 2020
NSE Circular No. NSE/INSP/43488 dated Feb 10, 2020