You can explore more of the possibilities available to you when creating a Demat account. A Demat account may also transfer shares to another Demat account in addition to holding shares and securities. Consolidating the shares is helping to make it easier for shareholders to have an overall view of their shareholdings.
After knowing what is demat account, it is also essential to understand how to transfer shares from one demat account to another. Read this guide to know how to transfer shares from one demat account to another.
Steps to transfer Shares from one Demat Account to Another
Depending on the type of transaction, investors may be required to transfer their shares from one account to another. The following reasons could be considered:
1. It could be one of the reasons that all shares are put under one roof and handled more efficiently.
2. The investor's wish to change the depository participant to a new one that offers better returns at a lower cost could be another reason.
3. Many shareholders can transfer their shares into a different Demat account because they have had an unpleasant experience with the previous stockbroker.
4. People will transfer their shares to try other investment types for different periods or change from a discount to a full-service broker. People who like to take risks generally see this.
The short procedure for transferring shares from one Demat account to another is below.
Step 1: The investor completes and sends the Delivery Instruction Slip (DIS) to their existing broker.
Step 2: The broker shall forward the DIS form or application to the depository.
Step 3: The depository will transfer your shares to the demat account.
Step 4: The same is reflected in an investor's new Demat account once all the shares have been transferred.
Things to Remember while Transferring Shares
Consider the following points before transferring shares.
1. The investor might be charged for this procedure by the existing stockbroker.
2. The charges are different from one broker to another.
3. This procedure is free of charge if an investor wishes to close a Demat account with the current broker.
4. The investor must return the unused DIS to the broker when closing the Demat account.
Online Transfer of Shares from one Demat Account to Another
In addition, shares can be transferred electronically from one Demat account to another. An indication of the process can be found in these steps.
1. The investor must click the Register Online button at CDSL or NSDL's websites to enter his name.
2. It follows that an option named "Easiest electronic access to securities information and execution of secured transactions" has been selected.
3. The investor must provide the details after that.
4. The investor may print the form and send it to the Depository Participant after filling it out.
5. After that, the DP handles the remaining procedures. He checks the investor's completed paperwork.
6. Once verified as authentic, the investor will be given an email address registered in his name.
7. He can use the password to log on to the account and start transferring shares independently.
What are the participants when you transfer shares from one Demat account to another?
The following persons carry out the transfer of shares from one Demat account to another:
1. Current Broker
2. Investor
3. New Broker
4. Depository, i.e., NSDL and CDSL
Manual Transfer of Shares
The following procedures should be followed for a transfer of deposits between depositories:
1. Make a list of the shares to be transferred. In addition, you need to record the ISIN or International Securities Identification Number. The ISIN, or international security identification number, is a 12-digit code that must be identified by securities such as funds, shares, bonds, stocks, loans, and more.
2. Please specify the target client's ID. It's a sixteen-character code that contains both the client and DP ID and the new Demat account.
3. You must select a column labelled 'off-market transfer of funds' if the transfer mode is between depositories or from market to market. Choose the 'inter-depository' column if the transfer mechanism is inter-depositary. This decision must be made with caution.
4. To obtain their acknowledgment, the completed and signed DIS slip shall be sent to the current broker or DP of the account holder.
Conclusion
In most cases, once investors have selected a broker or strategy that provides the best returns, they start with multiple Demat accounts. It is, therefore, important for every investor to understand how shares are traded from one Demat account to another. A trading app like BlinkX is one of the best platforms to open a Demat or trading account.
Disclaimer: No Business Standard Journalist was involved in creation of this content