Delivery Instruction Slip

A demat account can be credited without the holder lifting a finger, if a standing instruction is in place. It can never be debited that way.

The rule is absolute: a beneficiary account is debited only when the beneficial owner has given a Delivery Instruction in the prescribed form — the Delivery Instruction Slip. All holders, or the authorised signatories, or the power-of-attorney holder must sign it. The form must be complete, and it must say clearly whether the transfer is a market transfer or an off-market one, because the depository processes the two along different routes.

A DIS booklet is therefore the cheque book of the demat account, and SEBI treats it with the seriousness that implies.

What has to be on the form depends on the kind of transfer.

For a market transfer the DIS must carry the name of the stock exchange, the market type and the settlement number for which the securities are being delivered, plus the CM BP ID of the clearing member account — the contract note tells the client all of these. A broker trading on more than one exchange keeps a separate set of CM accounts per exchange.

For an off-market transfer the "off-market trade" box is ticked, an execution date may be specified, and since 1 November 2020 the client's consent must additionally be confirmed through an OTP — an instruction left unconfirmed at end of day on the execution date is rejected. The transferee's account must also have been registered as a beneficiary under the transferor's account beforehand. Consideration details — mode of payment, bank account, date, cheque or reference number — are mandatory.

On timing, SEBI has advised DPs to instruct clients to submit settlement instructions on T+1, in physical form up to 4 p.m. and electronic instructions up to 6 p.m.

And the audit trail: under the SEBI circular of 7 January 2014, effective 1 October 2014, the DP must scan each used DIS, tag it to the correct serial number and upload the image to the depository not later than two days. Failure attracts a penalty.

A private off-market sale: 2,000 shares at Rs 415, a consideration of Rs 8,30,000, from a seller with one DP to a buyer with another.

If the seller ignores the OTP link, the instruction sits in "Pending for OTP Confirmation" and is rejected at end of day. Nothing moves, and the Rs 8,30,000 the buyer has already paid is sitting against no delivery.

For a market sale of the same 2,000 shares, the DIS instead carries the exchange, market type, settlement number and the broker's CM BP ID, and must be with the DP before the DP's acceptance deadline — physical instructions by 4 p.m., electronic by 6 p.m.

Chapter 8 (Functions of DP — Trading and Settlement) is built on the DIS, and Chapter 4 covers its issue. Expect the rule that a beneficiary account can be debited only on a delivery instruction, the three market-trade fields the slip must carry, the number of DIS issued free at account opening for a BSDA, and the OTP requirement for off-market transfers.

• Credits can be automatic; debits never are. A standing instruction covers receipts only — it can never authorise a debit.
• At least two DIS must be issued at the time of account opening for a Basic Services Demat Account.
• A client who has executed a power of attorney cannot be denied a DIS book. DPs must supply the book and let the client operate the account alongside the POA holder.
• A DIS is not a DDPI. The Demat Debit and Pledge Instruction, introduced by SEBI in April 2022, is a standing authorisation to the broker for the limited purpose of meeting pay-in obligations; a DIS is a single instruction for a single transfer.
• Market versus off-market must be ticked. An off-market DIS lacking exchange, market type and settlement number is correct; a market DIS lacking them is not.
• The OTP waiver exists only for the off-market reason code "Implementation of Government / Regulatory Direction / Orders" — not for ordinary transfers between family members.
• Two days is the DIS scanning and upload deadline, and it is enforced with a penalty on the DP.