Transferring shares between demat accounts is an important process for investors looking to consolidate holdings, switch brokerage firms, or restructure their portfolios. Whether you’re an experienced trader or a new investor, understanding how to move shares between Demat accounts can help streamline your investment management.
Understanding Demat and Trading Accounts
A Demat account stands for dematerialized account and is an electronic account holding your securities, including stocks, bonds, mutual funds, and exchange-traded funds. It replaced the traditional paper documents system, ensuring the safekeeping of shares.
Why Transfer Shares Between Demat Accounts?
Share transfer is sometimes necessary for the following reasons:
Brokerage Change
If you find a brokerage offering lower fees or better services, you might want to switch while retaining your existing holdings.
Portfolio Consolidation
It is cumbersome to manage multiple demat accounts; transferring the shares to one account makes investments simple.
Gift Shares
Shares might be gifted to family members or friends.
Joint Account Transfers
The shares may be transferred from an individual account to a joint account.
Corporate Actions
The transfer of shares may arise due to mergers, demergers, stock restructuring, etc.
Types of Share Transfer
The transfer of shares into demat accounts may be confined to two:
There are two main types of demat account share transfers:
1. Intra-Depository Transfer (NSDL to NSDL or CDSL to CDSL)
If the source and destination demat accounts are with the same depository, either the proceedings are easier with the National Securities Depository Limited or the Central Depository Services Limited. The transfer in such cases is referred to as the off-market transfer, and it is completed through a delivery instruction slip (DIS) from the depository participant (DP).
2. Inter-depository Transfer (from NSDL to CDSL or vice versa)
If the source demat account is with NSDL, and the receiving account is with CDSL (and vice versa), such transactions involve an inter-depository transfer (IDT). Such transfer requires joint coordination between both depositories but becomes easy if outlined instructions regarding the process are followed properly.
How to Move Shares from One Demat Account to Another?
Step 1: Account Detailing
Next, before carrying out the transfer, make sure the target demat account is functional and that you have DP IDs as well as client IDs of the source and destination accounts.
Step 2: Get the Delivery Instruction Slip (DIS)
For manual transfer, one needs a Delivery Instruction Slip (DIS). This slip is made available by your depository participant (DP) and contains the following details:
– ISIN (International Securities Identification Number) of the securities
– Name of the security
– Quantity of shares to be transferred
– Target demat account details (DP ID and client ID)
– Mode of transfer (off-market or inter-depository)
Step 3: Fill Out the DIS Form
Ensure that the form is accurately filled and signed, before submitting it to your current DP. Any mistakes might lead to the rejection of requests or delays in the transfer process.
Step 4: Submit the DIS to Your DP
Submit the filled form to your DP. The transfer usually takes 2 to 5 business days, depending on the transfer type.
Step 5: Check Transfer Status
After submission, use your DP, or any online platform offered by NSDL or CDSL, to check the transfer status. Shares are usually shown in the target demat account after processing.
Transferring Shares with Online NSDL Speed-e Facility
Holders of an NSDL demat account, NSDL offers online facilities called Speed-e, through which investors can transfer shares electronically without going through the process of submission of a physical DIS. To do such a transfer:
- Generally, register for Speed-E with your NSDL DP.
- Log in using your credentials.
- Select the Transfer option and enter the target demat account details.
- Authenticate with your password or security token.
- Submit the transfer request.
This digital process can reduce errors and improve processing time.
Considerations to Note
- Brokerage Charges: Some DPs may levy fees for share transfers. Check applicable costs before initiating the process.
- Tax Implications: If the transfer is between different individuals, it may have tax consequences. Consult a financial advisor for clarity.
- Timing: Avoid transfers close to corporate actions like dividend declarations or stock splits to prevent disruptions.
- Account Holder Names: Ensure the names in both accounts match exactly to prevent rejections.
Conclusion
Transferring shares between Demat accounts is a straightforward process when conducted correctly. Therefore, whether one is transferring to a new brokerage, consolidating investments, or gifting shares, following the right procedure makes a hassle-free experience.
