When you purchase any shares or securities in their electronic form, they are held in a dematerialized account, also known as a demat account. As a stock market investor, you may be familiar with the steps on how to open a demat account. In fact, as a frequent investor, you may or may not be in a position where you will hold multiple accounts.
But at some point in time, you may need to streamline the security holding that is scattered across all your accounts that have been opened at some point in your time. Furthermore, you may have to close the inactive or zero balance accounts. At this stage, you will also need to transfer all the securities in other demat accounts to only one account.
By doing so, this consolidation will help you save annual fees and charges, which you will normally incur on multiple accounts. However, to save you the trouble from visiting multiple DP offices or branches and submitting requisite forms and documents, you need to ensure that you are aware of the process.
Here is how you can merge the demat accounts into one:
Step 1: Get the delivery instruction slip
The delivery instruction slip (DIS) is like a cheque leaf. It enables the transfer of securities off the market, especially from one account to another. It will be required to be filled in and signed. Once done, it will be required to be handed over a depository participant’s office.
Step 2: Verify details on the DIS
The delivery instruction slip will hold the unique ISIN of the demat holdings to be consolidated. It would also include the name of the security and details of the source. It would also include the targeted demat accounts and DP ID. This delivery instruction slip will need to be signed by the demat account holder, as per the mode of the operations.
Step 3: Transferring the account
In the case of off-market transactions, it will put through the system. In case the target account hast the same account holders, there will be no tax implications. In this case, the demat account and the DP ID will be modified in records of the depository. However, the beneficiary owners will still be retained.
Step 4: Closing previous demat account
While you may the steps on how to open a demat account you will also be instructed on how to close the account. After the transfers have been completed, and the financial contents of the said accounts have transferred to the single demat account, the zero balances accounts will need to be closed by submitting an account closure form.
Once these steps are taken, you can easily use the single account for all your requirements. However, before you take this step, you should be aware that securities with a lock – in or lien cannot be transferred. Furthermore, securities transaction tax will not be payable for off-market transactions.