As you may know already, a demat account is a mandatory prerequisite for trading in the Indian stock markets. It allows you to store securities like shares, mutual fund units, bonds, and Exchange Traded Funds (ETFs) in an electronic form instead of the more traditional paper form. The demat account is more akin to a bank account.
Both of them are electronic accounts, they’re used to safely and securely store assets, and the assets can be transferred into and out of the account at will. And just like with bank accounts, you can also have multiple demat accounts in your name. Additionally, you can even transfer shares from one demat account to another.
Want to know more about how you can transfer shares and securities from one demat account to another? Continue reading to find out how you can go about doing it.
The stock market is a heavily regulated and automated environment. And since most of the actions are automated, they are executed with little to no intervention from the trader or any other individual, or from any regulating body.
For instance, when you purchase shares in the stock market, the shares that you purchased will be transferred out of the seller’s demat account and automatically transferred into yours within T+2 days. And similarly, when you sell shares in the stock market, the shares that you sold will again be automatically transferred out of your demat account and into the buyer’s demat account as per schedule.
In both cases, the transfer of shares happens without the need for your intervention. That said, did you know that you can initiate this transfer of shares manually from your end?
Yes, that’s right. Just like how you would transfer money from one bank account to another via the internet banking facility, you can transfer shares from one demat account to another. However, since this would be a manual transfer, it would be an off-market transaction.
Considering the fact that the transfer of shares into and out of your demat account occurs automatically when you purchase or sell your shares in the stock market, why would anyone need to transfer them manually? Surprisingly, there can be multiple different reasons behind this. Here’s a quick look at a few of the reasons why you would want to transfer shares from one demat account to another.
As mentioned above, you can have several demat accounts in your name. While possessing more than one demat account can have its own advantages, at some point, you might want to consolidate all of your investments into a single account and close the rest. In such a case, you would have to transfer the securities manually from each one of your demat accounts to the final target demat account.
Not all Depository Participants or stock brokers provide the same range of services. And nor do they levy service charges on the same level. So, if you feel that the services offered by your Depository Participant or stock broker are not up to the mark, or if the charges levied by them seem to be a little on the higher side for your budget, you may choose to change your DP or stock broker. And this would require you to manually initiate the transfer of shares and other securities contained in the old demat account to the new one.
If high brokerage charges have you worried, you can put those concerns to rest by opening a demat account with Tradesmart Online. The brokerage charges are just 0.007% of the trade under the Value Plan, and only Rs. 15 per trade under the Power Plan.
Some individuals might want to transfer a portion of their investments as a gift to a family member or to another individual. If you want to do this, keep in mind that it would be an off-market transaction. So, you would have to manually transfer the assets from your demat account to the demat account of the recipient individual.
Now, there are two different ways, offline and online, to effect a manual transfer of shares from one demat account to another. Here’s a brief overview of both of these ways.
When you open a demat account with a Depository Participant, you will be given a booklet with a set of leaves known as Delivery Instruction Slips (DIS). These slips can be used to transfer shares from one demat account to another.
All that you would have to do is fill out a DIS, where you will be asked to enter details such as the Beneficiary Owner ID of your account and the target account, the International Securities Identification Number (ISIN) of the shares being transferred, and the mode of transfer.
Once you’ve filled the DIS, the next step is to sign it and submit it to your stock broker, who transfers the same to the Depository Participant. The Depository Participant will verify the DIS and process the transfer from your demat account to the target demat account.
Alternatively, if you prefer to transfer the shares through the online method, here’s what you would have to do.
Now that you know how to transfer shares from one demat account to another, let’s take a look at a couple of things that you should keep in mind before you effect such a transfer.
The transfer of securities from one demat account to another is not instantaneous. It may take anywhere from around 2 business days to up to 5 business days to be completed. So, this is something that you should account for.
Some stock brokers and Depository Participants may charge you a nominal fee for the transfer of shares and other securities from one demat account to another. Therefore, it is a good idea to find out what the charges levied by your DP or broker are, if any, for transferring shares beforehand.
Another major factor that you should keep in mind while transferring shares is that if you plan to close the demat account after the transfer, the entire process can be done for free without any charges whatsoever. If you don’t plan to close your demat account after the transfer, then you’re likely to be levied a nominal transfer fee.
Looking to start trading in stocks? Open a demat and trading account with TradeSmart Online right now. The account opening process is very simple and takes only a few minutes to complete. Also, it is completely paperless too.
It normally takes anywhere from 2 to 5 business days for the transfer to get completed.
In the case of offline transfers, the Delivery Instruction Slip is mandatory to transfer shares from one demat account to another. However, in the case of online transfers, the DIS is not needed at all.
If you’ve run out of DIS, you can simply raise a request with your Depository Participant and have them delivered to your address. Alternatively, you can also initiate an online transfer through your depository’s platform.
Yes. You will be notified via an email to the registered email address and via an SMS to the registered mobile number upon successful transfer of the securities.
Of course. You can initiate as many transfers as you wish. However, if you’re doing it manually, you might have to fill a separate DIS for each transfer. And if you’re doing it online, you can simply initiate multiple transfer requests.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.
Open Demat Account &
Trade @ Rs15 per order.
“Filing of complaints on SCORES – Easy & quick”
Please note that by submitting the above mentioned details, you are authorizing TradeSmart to call and email you and also to send promotional communication even though the contact number may be registered under DND.