Demat account is just like your bank locker. We store our important document and jewelry in the bank locker. While our investment securities, like equity shares are stored in the demat account. Demat account is essential if you have want to take delivery of stocks.
Depositories (CDSL & NSDL) ease holding of securities in electronic form in dematerialized format. This reduces a lot of paper work and enables ease in transfer and trading of securities both for investors and companies. As we transfer our money from one account to another, shares can also be transferred easily.
For any reason, if you want to transfer from one Demat to other, you can fill up the Delivery Instruction Slip (DIS), and get your shares transferred. In case you want to close you old Demat account and transfer holding to the new one, you can do that easily by getting the Client Master list from your new broker and providing the same to your old broker. They will transfer the equity in off-market transactions at a minimal cost.
In India, we have two depositories. As mentioned earlier – NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Service Ltd.). Your demat account will be either of these. If both the demat accounts are with same depository, you’ll be making an intra-depository transfer. If they belong to different depository, then it will be called an inter-depository transfer.
Opening a new Demat account and transferring your holdings
If you are opening a new Demat account, you will need to transfer shares from your old Demat account. This can be done by filling the Delivery Instruction Slip (DIS) with you old demat account broker and providing the new DP ID details. DIS looks like a cheque book in which you DP ID details are already filled. You just have to provide your new DP ID details to which you want to transfer the shares. Once you do that. the transfer should be done in couple of days.
Delivery Instruction Slip
There are 2 types of DIS slip. One is for doing transfer within same Depository. So if you your broker have account with NSDL and new broker also have the account in NSDL, you will need this type of slip.
The second type of DIS are known as Inter-Depository Delivery Instructions(IDTs) which will be used if you have to transfer share inter-depository so from NSDL to CDSL or vice versa. So before you ask for DIS slip, make sure that your new account is with which DP, so that you can ask for specific DIS slip from your broker. These DIS have a nominal charge of about Rs 30- Rs 50 would depend on your broker.
Details you have to provide for filling the DIS forms are as follows:
DP ID: Depository Participant’s ID. Your broker, through whom you opened the demat account is your DP. An investor can not directly go to the depository and open the demat account. The DP stands between you and the depository i.e. NSDL and CDSL.
Insert your current DP’s ID.
BO Client ID: BO means Beneficiary Owner i.e. you. The demat account holder is called the BO.
First/ sole holders name: the demat a/c holder’s name.
Now a days, in almost all DISs the above information comes printed. If not, it will be on the cover or first page of DIS booklet.
There are 2 date you need to fill. One is the date when you submit the DIS to the DP. This will be on the top right side of the DIS. Another one is the execution date. The date when you want the transfer to take place. These dates can be same or can vary. It is suggested to write the execution date after consulting your DP.
Now the table, where securities to be transferred is mentioned.
Every security is given an ISIN (International Security Identification Number). For Indian securities it starts with “IN”. So, IN may be printed on the DIS.
You can get this number from your transaction statement or contract note. Or just confirm with your broker. You cannot put a wrong ISIN. Each share, each Mutual fund, bond, every security in this world has an ISIN.
Then write the share name and the quantity you want to transfer. Here we are talking about transferring all the shares and other securities to a new account. So, write the total number of units you hold.
- You will be making an off-market transaction if the new demat a/c is with same depository.
- You will be making an on-market transaction if the new demat a/c is with another depository.
So put a tick mark accordingly. And below or further, again, the DP id –Counter BO ID, Counter DP ID this is about the new demat a/c. Here you have to fill up the details of where the securities should be transferred.
The relationship managers of your broker (DP) are for your assistance. Consult and fill the DIS properly.
Some of the bigger brokers have started providing e-instruction so you don’t have to provide DIS every time you want to transfer share. Most of these brokers have 2 page form which you have to fill and provide your new DP ID details. You can add upto 5 DP ID in which you can transfer the shares.
This is a onetime registration which have to be done physically at your broker premises. Once you do that, you can directly transfer your holding from your Demat account to your new Demat account online. So there will be no need for visiting the office every time. This facility is right now provided by ICICI Direct.
Transfer Demat holding from ICICI Direct to Zerodha
I will provide you with an example of how you can transfer your share from ICICI direct to Zerodha. ICICI DP is mostly with NSDL and Zerodha DP is with CDSL. So in this case you will need Inter-Depository Delivery instruction slip from ICICI direct. You will also need DP details from your new Zerodha account which can be found in Zerodha back office at q.zerodha.com. If you are not able to find it in backoffice, you can call their customer service and ask from CML from Zerodha.
Once you have this, just fill DIS slip at any ICICI direct office and provide CML copy to them. In case you are closing account, you can ask them to transfer all your holding to Zerodha. The transfer should happen within 24 hours.
Some people think that instead of transferring, can we not sell our share from old brokers and then buy again from new broker. This is possible but in this case, the transaction cost which include brokerage and Govt. taxes have to be paid twice. While if you use DIS for transfer, there is no brokerage and Govt taxes. Also long term tax benefit would have to be forfeited if you sell that share and buy again. So it is always a better idea to transfer share using DIS. The process is simple and transaction cost are low.
Partial transfer from one Demat to your other Demat account
In case you want to transfer some of the holding from one DP to other, please follow the instructions below. The DIS slips are becoming uncommon as more and more people are moving towards online trading. I would advise you to keep you holding in one Demat account as it will make maintenance of the account easier.
The Delivery Instruction Slip is like a cheque. You need it transfer your shares to your other demat account or to another person. At first look it may seem too complicated. It’s easy to fill it. However, no errors should be there.
Often, the stock broker and the DP are not the same. Hence, keep in mind that you have to deal with the DP, where you have your demat account. It is not necessarily that brokerage house is your DP. A third party can also be your DP. But if you have signed up with one, they’ll provide you all the facilities. In case, you have opened a demat a/c with one entity and have trading a/c with another, go to the Demat a/c entity.
For complete transfer of securities to a new demat account, no charges are imposed. And you can have many demat accounts.