How Do I Change My Default Depository?

Changing your default depository primarily involves coordinating with your current Depository Participant (DP) and initiating a transfer of your holdings to a new demat account linked with your preferred depository. This process is typically undertaken when an investor wishes to switch their primary depository from one entity (like CDSL) to another (like NSDL).

Understanding Depositories in India

In India, there are two main depositories that hold securities in electronic form:

National Securities Depository Limited (NSDL): The first and largest depository in India.
Central Depository Services (India) Limited (CDSL): The second major depository, also widely used.

When you open a demat account, it is linked to one of these two depositories through a Depository Participant (DP), which is usually a stockbroker, bank, or financial institution.

Why Would You Change Your Depository?

Investors might consider changing their preferred depository for several reasons:

Better Service: Dissatisfaction with the service or support from their current DP/depository.
Consolidation: To consolidate multiple demat accounts under one preferred depository or DP for easier management.
Broker Preference: If they switch to a new broker whose services are primarily tied to a different depository.
Cost-Effectiveness: Finding a DP or depository offering more competitive charges for demat services.

Step-by-Step Guide to Changing Your Default Depository

If you wish to choose a different depository (for instance, NSDL instead of CDSL as your preferred depository), the process involves several key steps:

Inform Your Current Depository Participant (DP):
The first step is to inform your preference to your current depository (e.g., CDSL in this scenario) and approach the Depository Participant of CDSL where you currently hold your demat account. This communication is crucial as your DP acts as the intermediary for all your demat-related transactions. They will guide you through the necessary procedures and paperwork.
Open a New Demat Account with Your Desired Depository:
You will need to open a new demat account with a Depository Participant that is associated with your desired depository. For example, if your current account is with CDSL and you wish to move to NSDL, you would open a new demat account with a DP linked to NSDL.
- Documentation: Prepare the required documents for opening a new demat account, which typically include:
  - Proof of Identity (POI)
  - Proof of Address (POA)
  - Proof of Income (for trading accounts)
  - Bank account details
  - PAN Card
  - Passport-sized photographs
Transfer Your Securities:
Once your new demat account is active, you can transfer your existing securities from your old account to the new one. This is done using an Off-Market Transfer Instruction Slip (DIS).
- Obtain DIS: Request an Off-Market DIS from your current DP (the one linked to CDSL).
- Fill Details: Carefully fill out the DIS form, including details of your old demat account (Client ID, DP ID), your new demat account (Client ID, DP ID), the scrip details (name of company, ISIN, quantity to be transferred), and the transfer reason.
- Submit: Submit the completed and signed DIS to your current DP.
Verify and Close Your Old Demat Account (Optional but Recommended):
After the transfer is complete, verify that all your securities have been credited to your new demat account. Once confirmed, you may choose to keep the old account active or close it. Closing the old account can help you avoid unnecessary annual maintenance charges (AMCs) and simplify your portfolio management. To close the account, you will typically need to submit an Account Closure Request form to your old DP.

Key Considerations

Charges: Be aware of potential charges for transferring securities (inter-depository transfers) and account closure fees from your current DP. Your new DP will also have account opening and annual maintenance charges.
Timeframe: The entire process, from opening a new account to transferring securities, can take several business days to a few weeks, depending on the DPs involved and the efficiency of the process.
No Direct "Switch": It's important to understand that you cannot directly "switch" the depository of an existing demat account. Instead, you facilitate a transfer of holdings from an account with one depository to an account with another.
Demat Account Number: Remember that your demat account number (Client ID or BO ID) is unique to your specific DP and depository combination.

By following these steps and working closely with your Depository Participants, you can effectively change your preferred depository and manage your investments under the system that best suits your needs.

Aspect	Current Depository (Example: CDSL)	New Depository (Example: NSDL)
Initial Action	Inform your preference to your current DP.	Open a new demat account with a DP affiliated with NSDL.
Key Document	Off-Market Transfer Instruction Slip (DIS) from your current DP.	Your new demat account details (Client ID, DP ID).
Primary Contact	Your existing Depository Participant.	The new Depository Participant you choose.
Outcome	Securities moved out of this account.	Securities moved into this account.
Account Status	Can be closed to avoid charges, or maintained if needed.	Becomes your primary account for holding securities.

For more detailed information, you can always refer to the official websites of the depositories or the Securities and Exchange Board of India (SEBI).