Suspension of demat accounts of existing clients whose KYC records are not found to be valid by KRAs after the validation process

National Securities Depository Limited (NSDL), vide Circular No. NSDL/POLICY/2026/0104 dated 27 July 2026, has announced an important update regarding the suspension of demat accounts of existing clients whose KYC records are not found to be valid by KRAs after the validation process.

Key Details of the Update –

• The circular provides the operational process for suspension of demat accounts of existing clients whose KYC records have been identified by KYC Registration Agencies (KRAs) as not valid after the KRA validation process.

• Applicability: The circular is applicable to all NSDL Participants maintaining demat accounts of clients whose KYC records have been classified as KRA non-compliant.

• The circular is issued in continuation of NSDL Circular No. NSDL/POLICY/2026/0093 dated 25 June 2026 relating to suspension of demat accounts of clients whose KYC records are not found to be valid after the KRA validation process.

• Pursuant to the earlier circular, demat accounts relating to KYC records found invalid for new PANs updated during May 2026 were suspended in the NSDL system on 4 July 2026.

• KRAs have subsequently provided details of KYC records that were not found to be valid, including cases involving invalid PANs, for new PANs updated during the period 1 June 2026 to 30 June 2026.

• Based on KRA data made available on 3 July 2026, NSDL has identified the DP-wise demat accounts and made the list available on the e-PASS portal under "Non-Complied KYC KRA Accounts" with the file name "Non-Complied_KYC_KRA_Accounts_June_2026" for Participants to review and contact the concerned clients.

• Effective Date: The identified demat accounts will be frozen by NSDL with the status "Suspended for debit and credit" on 1 August 2026, based on the updated KRA data to be made available on 31 July 2026.

• Key Changes: The circular extends the KYC validation and suspension process to demat accounts linked to June 2026 PAN updates identified by KRAs as non-compliant.

• Penalty/Consequence: Demat accounts identified as KRA non-compliant will be frozen with "Suspended for debit and credit" status until the prescribed process for removal of suspension is completed.

Actions if Any –

• Participants should review the DP-wise list of KRA non-compliant demat accounts available on the e-PASS portal and initiate follow-up with the concerned clients.

• Participants should send intimation to the affected clients after suspension of the demat accounts through letter, email, SMS or any other appropriate mode.

• For removal of suspension, Participants should follow the procedure prescribed under Points 5 and 6 of NSDL Circular No. NSDL/POLICY/2023/0109 dated 18 August 2023.

• Participants should ensure compliance with the requirements of the circular.

Compliance Deadline –

• 1 August 2026: Identified demat accounts will be frozen with "Suspended for debit and credit" status based on the updated KRA data to be made available on 31 July 2026.