Many people buy shares daily for different purposes and get them in their demat accounts. However, most such individual investors need to catch up when transferring these shares to another demat account when they want. The article below will be your complete guide to how to transfer shares from one demat account to another.
Another step that most learners miss is learning the basics, but we don’t let our readers miss the fundamentals. Let us take a look at some of these in brief-
What is Demat Account?
A Demat account, short for Dematerialized Account helps an investor to hold its investments in securities and shares in a digital form. A Demat account also helps one to keep a track of its investments in different securities all in one place.
A Demat account almost negates the possibility of theft and forgery. It also avoids the unnecessary paperwork and makes the process of purchase and transfers faster and easier.
Why is there a need to transfer shares?
Other than just holding shares and securities, a demat account also makes it easier to transfer these investments to other accounts and also has an overall view and idea of all the holdings of the account holder all at one place.
Following are the reasons why one would want to transfer shares from one demat to another –
- To bring all shares to one place to make the arrangement and dealings easier for the account holder.
- When a person wishes to change the depository participant, it may give fewer costs and hence better returns.
- One may have been having a bad experience with their broker and may want to change them for a better one. In such a situation they look to transfer from one demat to another, to change their broker.
- Different brokers provide different services. One might wish to avail of some additional services which the current broker may not be providing. In such a case they might want to change their broker.
- Another reason could be when an investor wishes to change their broker from a discount broker to a full-service broker.
How to transfer shares?
The transfer of shares from one demat account to another can be done in two ways, offline or manually and online method.
Before choosing to transfer the shares, one must make sure that the shares that are about to be transferred are under the ownership of any of the Depository Systems, that is NSDL or CDSL.
Manually or Offline Process
When both the current and new broker have an account in the ownership of the same depository the transfer is intra-depository else it is an inter-depository transfer.
Following are the steps of the transfer-
When making an intra-depository transfer, one is required to fill out the Delivery Information Slip (DIS) which is provided by a broker.
The slip includes information like the ISIN number, which is a 12-digit identification code. The beneficiary’s ID to which the shares will be transferred.
After completely filling out the DIS, put your signature on the slip. It is mandatory that the signature matches the signatures which were put in when a demat account was opened with the existing broker.
This completed DIS is now to be submitted to the existing broker, and the broker upon verifying the slip will hand over the acknowledgement slip.
The online process to transfer shares is much easier and faster. Here are the steps of the same-
Register yourself on CSDL or NSDL website, after the verification is done by the depository, you will be allowed to make your own transfers. This registration can be made as below –
For CDSL– New User Registration > Speed e > Registration
For NSDL– Register for Easiest > Fill your Demat Details and OTP
After completing step 1, the next step is to get a printout of the registration form and submit it to the current broker.
The broker then verifies the details and after such verification is done, the login id and password are sent to the registered email id. Using these credentials, one can log in and make their transfers.
Some special circumstances of transfer-
There could be some specific circumstances under which a transfer takes place. We will now take a look at these cases –
Same depository and no Credits due
When a transfer is to take place between the same depository and there are no credits or debits due in the account, in such a case the account holder can begin with the process of transfer and no other additional permissions are required.
Transfer with a position in the market
It is tough to make the timing perfect and plan a transfer when there is no position in the market. Most such transfers are made when the account holder has a position in the market. Depending on the security holding, the ease of the process could be different. In case the position in the market is in equities, the transfers are easier, however, since the process of such transfers is different and complicated for others like Futures and Options, one is advised to first settle their position in the market and then proceed to the transfer process.
Transfer when Credit is due
When credits are due, the process is complicated. Credit due means when there is something that is due to you. This could be a share purchase order placed and not credited to your account for the most common reasons.
The most ideal manner in which this can be handled is to just ask the broker to transfer all the credits that are due to you within a week, which most brokers do when asked to. As soon as this happens, the next steps to make the transfer can be followed.
Also Check: High Leverage Brokers in India
How to verify the success of the transfer?
Now that you know the process of making shares transfers from one demat to another, the next important thing is to understand how can you confirm if the transfer was successful. One can directly contact the new stockbroker to validate the details of the transfer that took place. It is also vital that the policies and requirements for such transfer are communicated and understood clearly.
It is also beneficial to check and verify the documents and the details regarding the transfer so that the entire process of moving shares between brokers can be hassle-free.
Making a transfer of shares can be a little intimidating when one looks at the procedure and then some people avoid it too. However, when done in reality, it is definitely not that tough or big of a deal. Now that you know all about what is to be done in case you wish to transfer shares from one demat to another, feel free to try it for yourself and learn more.