Inter-depository transfer
Also written IDT
A transfer of securities from an account in one depository (NSDL or CDSL) to an account in the other, possible because SEBI regulations require the two depositories to be inter-connected.
In plain language
India has two depositories, NSDL and CDSL. An investor's demat account is with one of them, but the person he is dealing with may hold an account with the other.
An inter-depository transfer (IDT) bridges the two. The sending DP captures an instruction in one depository; the two depositories exchange it online; and the securities appear in the receiving account in the other depository - as if both sides were in the same system.
It works only for securities available in both depositories, and when it is an off-market transfer it carries the same safeguards as any other off-market debit.
How it works
From Chapter 8 (section 8.3) and Chapter 11 (section 11.4.2):
Rules.
- Under the SEBI (Depositories and Participants) Regulations, 2018, both depositories must be inter-connected.
- Only for securities available for dematerialisation on both depositories.
- Either side may be a clearing member account or a beneficiary account.
- Debit: the CM/BO submits an Inter-depository Delivery Instruction form to its DP.
- Credit: automatic under standing instructions; otherwise an Inter-Depository Receipt Instruction form is needed.
- Instructions for the day are exchanged online between the depositories.
- DP deadline to verify and release IDT delivery/receipt instructions: 9.30 p.m. on weekdays, 2.30 p.m. on Saturdays.
- From December 21, 2020, in an NSDL-to-CDSL IDT where the receiving CDSL account is a CM account, securities credited under the appropriate settlement ID can only be used against that CM's settlement pay-in obligation.
- Off-market inter-depository transfers need the client's OTP consent and a registered beneficiary, like any off-market transfer (Chapter 8).
Government securities. IDTs between the depositories' Constituent SGL accounts are eligible for Value Free Transfer when arising from exchange trades between holders of different depositories. They cover Central Government securities, State Development Loans, Treasury Bills and Sovereign Gold Bonds; minimum quantity one unit; a one-time self-declaration of bona fide transactions is required. G-Sec IDTs run in batches:
| Day | Batch | DP deadline | Depository deadline |
|---|---|---|---|
| Weekdays | I | 12:00 noon | 12:15 p.m. |
| Weekdays | II | 3:00 p.m. | 3:15 p.m. |
| Weekdays | III / final | 5:00 p.m. | 5:15 p.m. |
| 1st, 3rd, 5th Saturdays | Final | 1:30 p.m. | 1:45 p.m. |
A worked example
Illustrative. Anand holds 400 shares of a listed company in his NSDL account. He is moving his holdings to a new CDSL account in the same names, same order.
Ordinary IDT.
- Anand submits an Inter-depository Delivery Instruction to his NSDL DP, naming the CDSL target account.
- His NSDL DP verifies and releases it by 9.30 p.m. (a weekday).
- The depositories exchange it online; OTP consent is taken.
- If his CDSL account has standing instructions, the 400 shares are credited automatically. If not, he must also submit an Inter-Depository Receipt Instruction to his CDSL DP.
Closing the old account. Because both accounts are identical in all respects, SEBI's 2006 decision means no transfer charges apply to moving the entire holding - but for an inter-depository shift Anand must give his NSDL DP a Client Master Report in crystal format certified by his CDSL DP (or target details certified by CDSL).
G-Sec IDT. Anand also holds 10 units of a Central Government security bought on an exchange. Before the IDT, his DP must have his one-time self-declaration on record. Released by 3:00 p.m. on a weekday, it goes in Batch II.
Why NISM asks about it
Chapter 8 (Functions of DP - Trading and Settlement, 13% weightage) defines inter-depository transfer and its deadline times; Chapter 11 (Debt Instruments and Government Securities, 10%) adds the G-Sec IDT rules and batch table; Chapter 4 covers the CMR requirement when shifting accounts across depositories and the joint-holder authorisation that includes IDTs. Questions test the 9.30 p.m./2.30 p.m. deadlines, when a receipt instruction is needed, and the eligibility conditions.
Common exam traps
- Only securities available on both depositories can be transferred across.
- Deadlines: 9.30 p.m. weekdays, 2.30 p.m. Saturdays for ordinary IDTs - G-Sec IDTs have their own batch timings.
- Receipt instruction is needed only without standing instructions.
- Either a CM account or a BO account can be at either end.
- Off-market IDTs need OTP and beneficiary registration just like transfers within one depository.
- G-Sec IDT needs a one-time self-declaration; minimum one unit.
- Pledges cannot be inter-depository (Chapter 9) - do not confuse pledge rules with transfer rules.
Check yourself
1.What is the deadline time for DPs to verify and release inter-depository transfer delivery and receipt instructions?
- a)5.00 p.m. on weekdays and 1.00 p.m. on Saturdays
- b)9.30 p.m. on weekdays and 2.30 p.m. on Saturdays
- c)3.00 p.m. on all days
- d)6.00 p.m. on weekdays, with no Saturday processing
Show the answer
Answer: (b) 9.30 p.m. on weekdays and 2.30 p.m. on Saturdays
The deadline time for DPs to verify and release Inter Depository Transfer delivery/receipt instructions is 9.30 p.m. on weekdays and 2.30 p.m. on Saturdays.
Option D is wrong on a point worth remembering separately: inter-depository transfers are processed on Saturdays, just with an earlier cut-off.
Do not confuse this with the client-level settlement instruction deadlines of 4 p.m. physical and 6 p.m. electronic on T+1, which govern a completely different instruction.
2.To protect clients' funds and securities, which laws specify that a stock broker shall segregate the securities or moneys of the client and shall not use them for self or for its other clients?
- a)The Securities Contracts (Regulation) Act, 1956 and the SEBI (Stock-Brokers) Regulations, 1992
- b)The Depositories Act, 1996 and the SEBI (Depositories and Participants) Regulations, 2018
- c)The Indian Stamp Act, 1899 and the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019
- d)The SEBI (Depositories and Participants) Regulations, 2018 alone
Show the answer
Answer: (a) The Securities Contracts (Regulation) Act, 1956 and the SEBI (Stock-Brokers) Regulations, 1992
The workbook: "In order to protect clients' funds and securities, the Securities Contracts (Regulation) Act, 1956 and SEBI (Stock-Brokers) Regulations, 1992 specifies that the stock broker shall segregate securities or moneys of the client and shall not use it for self or for its other clients."
This is where the pay-out rule comes from: all TM/CM must transfer the client's securities received in pay-out to the client's demat account within one working day.
The other laws appear elsewhere in the chapter for different purposes:
- SEBI (Depositories and Participants) Regulations, 2018 (B, D) — cited for the rule that both depositories must be inter-connected to enable inter-depository transfers.
- Indian Stamp Act and the 2019 Rules (C) — the framework for collecting stamp duty on securities market instruments at one place by one agency.
3.How are inter-depository transfers of government securities processed?
- a)In a single batch every working day including all Saturdays
- b)In three batches on weekdays and one batch on 1st, 3rd and 5th Saturdays
- c)In three batches on every day of the week
- d)Continuously through the day, with no batch processing
Show the answer
Answer: (b) In three batches on weekdays and one batch on 1st, 3rd and 5th Saturdays
The Inter-depository transfer of Government Securities are processed in three batches on weekdays and one batch on 1st/3rd/5th Saturdays.
Option A gets the Saturday coverage wrong twice — it is not every Saturday, only the 1st, 3rd and 5th. Option C forgets that Saturdays get a single Final Batch, not three.
The deadlines follow a pattern that makes them easy to hold: the depository's processing deadline is always 15 minutes after the Participant's deadline.
Days Batch Participant deadline Depository deadline Weekdays I 12:00 Noon 12:15 P.M. Weekdays II 03.00 P.M. 03.15 P.M. Weekdays III / Final 05.00 P.M. 05.15 P.M. 1st/3rd/5th Saturdays Final 01.30 P.M. 01.45 P.M. Do not confuse these with the general inter-depository transfer deadline for other securities, which is a single cut-off rather than a batch schedule.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Standing instructionA one-time authority, usually given at account opening, for the DP to credit securities into the account without a fresh instruction each time — the alternative is a Receipt Instruction for every single receipt.
- Clearing member accountThe special demat account a broker or custodian opens to settle exchange trades, through which clients' sold shares go to the clearing corporation and bought shares arrive; also called the pool account.
- Constituent SGL accountThe Subsidiary General Ledger account a depository holds with RBI on behalf of its clients, through which investors hold government securities in their ordinary demat accounts.
- Off-market transactionA transfer of securities between two demat accounts on terms agreed between the parties, settled directly through the depository without a clearing member or clearing corporation.
- Value Free TransferA transfer of government securities between SGL accounts with no simultaneous movement of funds, used to bring a holder's G-Secs into the depository's CSGL account and for eligible inter-depository G-Sec transfers.
- Consideration AmountThe value of an off-market transfer or pledge invocation captured in the depository system from the transferor's DIS, on which stamp duty is calculated and collected before the transfer executes.
- Client Master ReportThe depository-system report of a demat account's recorded details - holders, address, bank, contact and other static data - sent to the client on account opening and used as proof of account details.
- Mass shifting facilityThe depository facility that lets a DP move a whole group of client accounts from one DP module or location to another in one go - for example when it opens a new centre - without clients re-opening accounts.
- easiestCDSL's internet facility (Electronic Access to Securities Information and Execution of Secured Transaction) through which BOs and CMs submit debits, credits, freezes, pledges and confiscations.
- CDSLCentral Depository Services (India) Limited — one of India's two depositories, promoted by leading Indian banks and the Bombay Stock Exchange, registered in February 1999 and operational from 22 March 1999.
- Multi-depository systemThe Depositories Act, 1996 arrangement under which more than one depository can operate in India, so that no single depository holds a monopoly over the market — currently NSDL and CDSL.
- Inter-settlement transferAn instruction by a clearing member to move securities within its CM account from one market type-settlement number bucket to another from which pay-in is actually to be effected.