Transferring shares from one Demat account into another

A Demat account is similar to a bank account. It can be used for transfer of shares from one account into another. This process doesn't affect the ownership rights of the shares and eliminates the possibility for a transaction. The transfer does not have any tax implications. However, there are certain circumstances where it might be necessary to transfer shares from one account into another.

Because People wish to change brokers, shares can be transferred from one Demat account to another. If an account holder changes his/her requirements, a new broker will be required. It is necessary to transfer shares from old Demat accounts to new ones in such cases. A person who has multiple Demat accounts may also decide to combine them into one functional account. This requires a transfer of shares between the old and new accounts.

How do I transfer shares from one Demat to another?

You have two options for transferring shares from one Demat account into another: either manually or online.

Transfer of shares by manual or online

It is important to know certain details when manual transfers of shares are made from one Demat account into another. First, you need to be aware that the shares being transferred have been maintained and are held in depository system. Two Indian depositories are authorized to hold shares of account holders: National Securities Depository Limited, (NSDL), and Central Depository Services Limited, (CDSL).

The depository to which your broker is affiliated will determine the method of the transfer. There will be an intradepository transfer of the shares if the account holder and both the existing and new brokers are associated with the same depositories. If the new and existing broker are associated with different depositories, there will be an intradepository transfer.

Account holders must use a Debit Instruction Slip or a DIS booklet provided by their Depository Participant if they are making an intra-depository or off-market transfer. These are the steps to follow for an intra-depository transaction.

Step 1 Record the names and amounts of the shares to be transferred. The ISIN, or International Securities Identification Number, is a 12-digit code that can be used to identify securities, such as stocks, bonds, stocks and debts. Correctly entering the ISIN number is crucial as transactions will be processed on its basis.

Step 2 The target client ID must be recorded for the next step. It's a 16-character code that includes both the ID of client and the ID for the DP.

Step 3 This step is crucial as it involves selecting the transfer method. The column titled "Off-market transfer" must be chosen if the mode of transfer is intra-depository. If the transfer mode is inter-depository then you should select the column titled 'interdepository'. This option should be chosen with caution.

After the DIS slip is completed, there are a few last steps.

Step 4 – The completed and signed DIS slip should be sent to the account holder’s broker.

Step 5 – The acknowledgement receipt for the DIS slip should be obtained from the broker.

The transfer of the Demat shares will take the broker between 3 and 5 business days. Once the transfer is complete, the broker will then send the shares to the new broker. There may be some fees charged by the broker, and rates can vary between brokers.

Transfer shares online

Online transfer of shares can be done easily using CDSL if you are interested. To register, the account holder must visit the CDSL website. After completing the registration process, the form must be submitted to the DP. Once the verification is complete, the account holder can then make future transfers. These are the steps to follow:

Step 1 Once you have accessed the CDSL website, click the "Register Online" link.

Step 2 Next, fill out the form with all the details.

Step 3 After the form is filled out, you can choose to 'Print Form. Once the form is printed, it will then be sent to the account holder's email address.

Step 4 – After the DP completes the verification process, a password will sent to the account holder’s email id.

Step 5 The account holder can log into the system using the password provided and transfer the shares.

How do you transfer funds to your trading accounts?

To trade, you must first create a trading accounts. The trading account is where you will find the capital needed to trade. There are three main ways to transfer money into an account. You can choose to use the payment gateway or NEFT/RTGS services. Or, you can pay by cheque/DD directly to the broker.

1. Instant funds transfer through Payment Gateway
One of the most popular modes of transfer is through payment gateways. To transfer funds to their trading account, one can use any debit or bank card. This method has the advantage of transferring funds instantly. One can then start trading immediately after their account has reflected the deposited credit. You should note that every transfer incurs Rs. The charges for each transfer are Rs. 9 plus taxes. If transfers are done frequently, they may be quite high. Keep in mind, however, that credit cards and charge cards are not allowed to be used to transfer funds to an account. Only debit cards and net banking are permitted.

2. Depositing funds via NEFT / RTGS / IMPS
One of the most popular methods of fund transfer is National Electronic Fund Transfer (NEFT). Transfers of funds between bank accounts usually take around 2 hours. If the transfer is between two accounts at the same bank, however, the credit will be deposited immediately. This account must be listed as a beneficiary when funds are transferred to the broker's bank account. The transfer will be completed once the OTP and password have been received are in. NEFT can also be used to transfer funds into equity trading and commodity accounts. You can transfer funds online or deposit a NEFT cheque. Both methods take the same time. During a NEFT transfer, there are no additional fees. Real Time Gross Settlement (RTGS), is similar to a NEFT transfer. The only difference between RTGS and NEFT is that it can only be used to transfer funds greater than Rs. 2 lakh. Transfers such as NEFT or RTGS cannot be made outside of normal banking hours (9:00 a.m. to 6.00 p.m.). However, IMPS transfers can be made outside of these hours. The IMPS transfer can be made instantly, but there may be additional charges.

3. Deposit funds by cheque or demand draft
Only for offline trading accounts, funds can be transferred by depositing cheques. Online trading accounts require that funds be transferred via the payment gateway, NEFT/RTGS/IMPS transfer methods. Note that offline transfers require the cheque to be drawn in favor of the broker. This process can take 2-3 days. The clearing credit must be received by the broker before the cheque or demand draft credit can be sanctioned. If the account is not funded, one must sign the cheque. Otherwise they could be subject to penal charges.

How do I link a Demat account to a bank account?

It is important to remember that although the process of linking a bank account to a Demat or trading account may be the same, certain details may differ from one bank to the other. You can link one primary account with two secondary accounts. All pay-outs will be processed through the primary account. Pay-ins may be processed by the secondary accounts. To link a bank account to a Demat account, you need to:

Step 1 Visit the website for the bank where your account is located. To initiate the process, fill out the necessary form.

Step 2 In some cases, it may be necessary to print the completed form and mail it to the bank to which the account is mailed.

Step 3 To add a second account, you will need additional evidence of the secondary account. As proof, a cancelled and personalised check (name printed on the check), a bank statement or self-attested bank statement (including IFSC Code/MICR number) can all be presented.

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