uTrade Algos
A Demat account is a prerequisite to trading in the Indian stock market. The Securities and Exchange Board of India (SEBI) mandates that a trading account and a Demat account are a must for trading in equities. A Demat account is managed by depositories and stores different types of securities. An investor requires a depository participant (DP) to open a Demat account. Every DP is different and provides an array of features. For new investors, choosing a DP can be a tedious task. As one trader can hold multiple Demat accounts, they tend to open more than one Demat account. Soon, they realise that it’s a tedious task to maintain them all, and they finally settle on one broker.
Choosing a broker can be difficult, as there are multiple factors involved, like the features they provide, their support services, the tools they have, etc. Share India is a broker that provides an array of services and is customer-oriented. It’s a broker made by traders for all traders. After fixing a broker, the main question arises: ‘Can I transfer shares from one Demat account to another?’ The simple answer is ‘yes’, although it can be a long process.
Table of Contents
Who Are the Participants While Transferring Shares
The share transfer involves multiple participants. Here’s a list of the participants involved:
Investor
This is basically you or the individual who wishes to transfer shares from one Demat account to another. The details of the two Demat accounts must be provided by the investor.
Current Broker
This is the broker with whom the Demat account was created and the shares were bought.
New Broker
This is the broker to whom you hold a Demat account in which you want the shares to be transferred.
Depository
This is either the National Securities Depositories Limited (NSDL) or the Central Depository Services Limited (CDSL) or both, depending on where the two Demat accounts are.
Process of Transfer of Shares from One Demat Account to Another
Transfer of shares can happen in two different processes based on where the Demat account is.
Intra-depository Transfer
This occurs when both Demat accounts are in the same depositories. Shares are transferred off-market, within the depository itself. You need to clear your credits and debits from your Demat account. In intra-depository transfers, you will not be required to go through additional permissions.
Inter-depository Transfer
This transfer of shares occurs across two depositories. As an example, suppose shares from a Demat account in NSDL have to be transferred to a Demat account in CDSL or the other way around. In this transfer, you need to submit a Debit Instruction Slip (DIS) to your present broker. Once submitted, you can close your existing Demat account and start trading on your new Demat account.
There are two ways to transfer shares from one Demat account to another. They are:
Manual Transfer (Off-line Transfer)
Here are the steps you must complete to transfer shares from one Demat account to another Demat account.
- You would have to visit the broker firm where all the shares you wish to transfer are and collect a Debit Instruction Slip (DIS) or a DIS booklet.
- Add the names as well as the International Securities Identification Number (ISIN) of all the securities you wish to transfer. An ISIN is a 12-digit code used to validate the identity of all securities.
- Add the 16-character Target Client ID, which is a combination of the DP ID and the client’s ID.
- Based on where the two Demat accounts are, choose the off-market/intra depository transfer or the inter-depository transfer.
- Submit the completed DIS form to the DP from whom you received it.
- After the submission of the DIS form, ensure that you get an acknowledgement for the same. This is all the work that one must do, and the broker will do the rest.
Online Transfer
This could be a tedious process. However, the easy way is to do it online based on your comfort. This can be done easily through the CDSL website. Here are the steps to follow for transferring shares.
- Visit the CDSL website and log into it. If you do not have an account, you will have to get yourself registered.
- After logging in, go to the ‘Transaction’ tab and click on the setup option.
- From there, choose the ‘Bulk Setup’ option.
- Here you enter the various details required, like execution date, Beneficiary Owner ID, the ISIN that you wish to transfer, the quantity of transfer, and the reason for the transfer.
- After this, click on the ‘Submit’ button and you’ll have to verify the transfer request.
- To verify, you’ll have to click on the ‘Verify’ button and then on the ‘Commit’ button to confirm the transfer.
- After all of this, you would be asked to enter the CDSL PIN, which is an 8-digit alphanumeric code you create during the time of registration.
- With the completion of the above process, the DP would verify the details and the transfer would be initiated.
Things to Be Aware of During the Transfer of Shares
Here are certain things that you must know when you wish to transfer shares. The whole transfer process takes a certain amount of time. The whole process takes about 3 to 5 business days. Make sure to not get impatient. Along with the time frame, there could be a fee that is set by the DP for the transfer of these shares. It’s better to be aware of it rather than be surprised by the deduction.
Conclusion
Now that you know it is possible to transfer shares from one Demat account to another, you can go ahead and make the change. Make sure to do everything right so as not to face any issues in the first go. How to transfer shares from one Demat account to another is a common query among investors looking to reorganise their portfolios. The ability to transfer shares between Demat accounts empowers investors to manage their portfolios efficiently, adapt to changing financial goals, and optimise their holdings. By demystifying the share transfer process, this guide paves the way for individuals to make informed decisions and navigate the intricacies of the financial landscape with confidence.
Whether consolidating accounts, gifting shares, or adjusting investment strategies, the ability to transfer shares offers investors a valuable tool for achieving their financial objectives.