Confused about multiple Demat Accounts? Here’s how to transfer all your securities to one account

A consolidated single Demat account makes the investment journey more fruitful and productive as it helps investors get a better grip on their transactions.
Multiple Demat Accounts
Multiple Demat Accounts

A look at any business sector from five years ago to the present is enough to make you realize the radical changes that have taken place. Digitization is the biggest change compared to any other change. Digitalization has emerged as such a force that its efficient maneuvering amidst increasing competition has become a matter of life and death for businesses around the world. In that context, the capital market has not only implemented technological innovations but also increased its profits with its disruptive effect.

Capital markets as an industry have ridden the wave of digitization very well. The transformation of the sector from a cumbersome pen and paper process to a seamless digital experience has allowed a larger number of people to participate in the capital markets and explore the financial opportunities that exist in the sector. The convenience of opening a Demat account digitally from anywhere at any time, be it from the comfort of your sofa at home or while on work travels. It has provided access to the securities market to many people who were previously left out, becoming just a drop in the ocean of financial possibilities.

The record increase in the number of retail investors is testament to how capital markets have used digitalization to become more inclusive. According to Securities and Exchange Board of India (SEBI) data, India recorded 8.97 crore new Demat accounts by the end of March 2022, a 63 per cent increase over the previous fiscal year.

However, an investor can also open multiple Demat accounts with the same or different Depository Participants (DP). Investors may have various reasons for opening multiple Demat accounts such as expanding or diversifying the investment portfolio or availing the services of different brokers. However, having more than one Demat account is more beneficial when you, as a participant, are both a trader and an investor in the stock market. Otherwise, on a general basis, more than one Demat account can be held only by investors who wish to clearly identify their nominees, joint holders, etc., against each Demat account.

A large section of Demat account holders practice keeping only one Demat account as holding multiple Demat accounts can be cumbersome in their portfolio management and perhaps in their trading experience. This will increase the total annual maintenance charges charged by the DP on each demat account. Also, if a Demat account remains inactive for a set period, the account may get frozen before being reactivated, which has its own challenges.

It is quite possible that multiple Demat accounts may have been opened in the past with different DP entities for various reasons. Many investors do not close accounts due to the complex nature of transferring securities and consolidating accounts. However, you will be surprised to know that it is very easy to transfer securities from one account to another.

The service of transferring your securities from one account to another is provided by the depository and the experience of doing it digitally is hassle-free. For example, suppose there is an investor named ‘X’, he has two Demat accounts which are making it difficult for him to keep a constant track of trading in the stock market. Here, by taking the following steps, ‘X’ can easily consolidate his accounts and get a dashboard view of the assets held in the said Demat account while having the entire portfolio in one Demat account.

Method of transferring securities to different Demat account

  • To initiate the process, ‘X’ must first visit the website of the depository service provider and register on the given portal for transfer of securities providing DP ID and Client ID.

  • Now, ‘X’ will receive an OTP on the registered mobile number, by entering which the investor will be able to set the username, security question and answer.

  • To proceed with the transaction, ‘X’ needs to add a trusted account. The trusted account gets activated within a maximum period of approximately 24 hours.

  • ‘X’ now needs to log in to the portal for transfer of shares, click on the ‘Transaction’ tab and select ‘Bulk Setup’ under the ‘Setup’ option.

  • To proceed with the process, ‘X’ must select ‘Transaction’, enter the execution date and select the ‘Trusted’ account.

  • Here, the ISIN of the securities that are to be transferred, the quantity of shares and the reason for their transfer need to be selected. After submitting the details, ‘X’ will be able to verify the request and approve it.

  • Now, ‘X’ simply needs to click on the ‘Commit’ option to initiate the transaction. ‘X’ will receive a verification PIN on the registered mobile number and email ID. After entering the PIN the transfer request will be submitted. After submission, the depository will send a request to the investor's DP for confirmation. Transfer request will be made after confirmation from DP.

A consolidated single Demat account makes the investment journey more fruitful and productive as it helps investors get a better grip on their transactions and plan wisely for the future by keeping all the data at one place.

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