Why do we need to transfer shares from one Demat account to another?

After creating a Demat account, one can delve deeper into the other functions it can provide. Alongside holding shares and securities, a Demat account can also transfer shares to another Demat account. It helps in the consolidation of shares that makes it easy for a shareholder to have an overall view of all his shares.

There can be various instances based on which an investor shall need to transfer shares from one account to another. The possible reasons are:

1.  One of the reasons might be to bring all the shares under one roof to handle them easier.

2.  Another reason could be the investor’s wish to change the depository participant for a new one that gives better returns at a lower cost.

3.  Many shareholders can opt to transfer shares from one Demat account to another because they had a bitter experience with the previous broker.

4.  People choose to transfer shares because they want to try other types of investment or for different time periods, or they want to shift from a discount broker to a full-service broker. This is generally seen in people who like to take risks.

 

Who are the participants while transferring shares from one Demat account to another?

The following people are involved in the process of transfer of shares from one Demat account to another:

1.  Current Broker
2.  Investor
3.  New Broker
4.  Depository, i.e., NSDL and CDSL

 

Process of transfer of shares from one Demat account to another

The following is the process of transfer of shares from one Demat account to another in brief.

Step 1 - The investor fills the DIS (Delivery Instruction Slip) and submits it to the current broker.

Step 2 - The broker forwards the DIS form or request to the depository

Step 3 - The Depository will transfer your existing shares to the Demat account

Step 4 - Once all the shares are transferred, the same will be reflected in the investor’s new Demat account

Know: Documents required to open a demat account

 

Manual Transfer of Shares

Shares can be transferred manually. Here the process of transfer of shares from one Demat account to another is offline:

When an investor opens a Demat account with a stockbroker, he is provided with a delivery instruction slip or DIS along with the welcome kit. While applying offline, the investor has to fill the form or slip. Here are the fields to watch out for, while filling in the details:

1.  Target Client ID: It is a 16-digit identification number that is allocated to the investor. It is the broker’s ID, also known as Beneficiary Owner ID (BO ID)

2.  ISIN: International Securities Identification Number or ISIN as is 12 digits long. It assists in identifying securities like stocks, equities, notes bonds, funds, etc. It should be mentioned in the slip, along with details of the shares with the quantity.

3.  DP Name: Here, the name of the stockbroker or Depository Participant must be mentioned.

4.  Inter Depository: This blank is required to be filled up if the investor wants to transfer shares from one depository to another.

5.  Off Market: This space is filled up for carrying out the transfer of shares within the same depository.

 

Once all the required information have been filled up and the investor has signed the DIS, the following are the final steps:

1.  Submission of signed DIS to the current broker by the investor.

2.  The investor should take the due acknowledgement receipt of the DIS from the broker.

3.  After this, the broker will require some days to transfer the shares to the investor’s Demat account with the new broker.

Things to keep in mind while transferring shares

1.  The current stockbroker might charge the investor for this procedure. The charges vary from broker to broker.

2.  If the investor is planning to close the Demat account with the current broker, this process is free of cost.

3.  If the investor decides to close the Demat Account, he needs to return the unused DIS back to the broker.

 

Online transfer of shares from one Demat account to another

Shares can also be shifted from one Demat account to another online. The following steps give an idea of the process.

The investor needs to register his name on the CDSL or NSDL website by clicking on the “Register Online” button.

Then comes the selection of an option of a facility named “Easiest- electronic access to securities information and execution of secured transactions”.

After that, the investor needs to provide his details.

After filling the form, the investor can print it out and hand it over to the Depository Participant.

The DP then takes care of the proceedings further. He verifies the form filled by the investor.

Once the investor is verified of his authenticity, he will receive an email in his registered email ID.

He can use the password to log in to the account and start transferring shares independently.

 

Time Required for Transfer of Shares

The current broker requires approximately 3-5 business days for transferring shares from the investor’s old Demat account to the new broker. The charges levied for this service varies from broker to broker.