Summary
A depository instruction slip is a document that facilitates the transfer of securities processed by a depository participant, especially off-market transfers.
A Depository Instruction Slip (DIS) is equivalent to a cheque book issued by a bank and facilitates the secure transfer of shares between demat accounts.
It is very important to carefully fill out and verify a DIS before submitting because a small error can lead to rejection of the transfer.
What is a Depository Instruction Slip?
A depository instruction slip, also known as delivery instruction slip (DIS), is a physical document similar to a bank’s cheque book, provided by a depository participant (DP). It allows investors to transfer their shares across demat accounts, especially off-market. It ensures that the transfer is recorded and filed without any errors. A depository instruction slip offers authorised movement of securities. It plays an important role in the stock market, where securities are transferred outside the regular transfer process.
How does a Depository Instruction Slip work?
The process for filing a transfer of a depository slip is mentioned below.
- Obtain a DIS booklet: After opening a demat account, the depository participant provides a DIS booklet to their investors.
- Fill in the details: Carefully fill the document with required information such as the ISIN number, quantity of securities, depository ID, client ID, etc.
- Purpose of transfer: Specify the reason behind the transfer. For example, if securities are sold off the market, or gifted to friends or family, or transferred to a different account of the investor.
- Signatures: As per the requirements, the signature of the account holder or investor needs to be taken, and it should not mismatch with the already registered signature.
- Verify information: After filling the DIS, submit it to the depository participant for further verification. Any error might lead to rejection of the transfer.
- Securities transfer: Once the verifications are done, the slip is processed in the depository system to process the transfer of securities
Types of Depository Instruction Slip
The classification of Depository Instruction Slips depends on the type of securities transfer involved and the processing platform used.
- Based on the transfer type
- Market transfer (on market): This is used for the transfer of securities through the stock exchange market for regular stock exchange settlements. It allows investors to transfer their securities from the seller’s account to the buyer’s account.
- Off-market transfer: It facilitates the seamless transfer of securities between demat accounts without the intervention of a stock exchange.
- Inter-depository transfer: This allows investors to transfer securities between accounts held by different depositories, such as transferring securities from a National Securities Depository Limited (NSDL) to a Central Depository Service Limited (CDSL)
- Based on the platform
- Physical DIS: It is a paper-based system for transferring securities, where investors must accurately fill in the required details, sign the form, and submit it to their DP for processing.
- E-DIS: This is the paperless digital alternative that investors use to process a transfer without manually submitting the form.
When do you need a DIS?
A depository instruction slip is required when an investor wants to transfer their securities manually or offline. Some of the reasons are mentioned below.
- Primarily, an investor needs a DIS Slip when they want to transfer their shares from one demat account to another demat account of the same investor.
- DIS Slip is required when an investor wants to transfer shares to another person’s demat account. For example, friends, family, etc as gifts
- DIS Slip is required when an investor wants to sell their securities, i.e., outside the exchange platform.
- Even for borrowing a loan, DIS Slips can be used as collateral. Investors may offer the investment as collateral to the lender or broker to borrow a loan or trading margin.
Common Mistakes to Avoid while using DIS
There are a few mistakes investors make while using a DIS. Some of them are mentioned below.
- Signature mismatch is one of the most common reasons for the rejection of a Depository Instruction Slip (DIS)
- Incorrect details and an incomplete slip are also mistakes made by investors that can be easily handled by seeking help from the authorities.
- Overwriting or manipulating the slip form is also responsible for transfer rejection.
- Not having sufficient balance during transfer is also not appreciated in the DIS slip form.
DIS vs Online Transfer: What is better for Investors Today?
The depository instruction slip and online transfer differ in many aspects. Some of them are listed below.
| Basis | DIS | Online transfer |
| Medium | Paper-based transaction | Paperless and digital transaction |
| Speed | Slow because it includes manual filling and physical submission | Fast because no involvement of manual paperwork |
| Authentication | Registered signature verification | OTP or transaction pin received in registered number |
| Convenience | Less convenient | More convenient |
Investors today may prefer online transfer over manual filing and processing of depository instruction slips because of the convenience and speed of processing. The online transfer or e-DIS makes the transfer of securities easier and faster. It reduces the possibility of errors and improves the overall investor experience.
How can Beginners Practice and Learn Safely?
For practicing and understanding the process of DIS, beginners can use the dummy slip that is provided with the actual DIS booklet.
- Beginners can obtain the DIS booklet from their depository participant. The booklet comes with dummy slips, which are provided specifically for practice purposes. Carefully read the details and try filling them without any errors.
- New investors can also choose to practice in e-DIS. The e-DIS guides the investors step-by-step to ensure there are no errors while filling out the form.
- Beginners can also learn from the specimen guides or samples provided by the depository participants to read and understand how the form needs to be filled and what information is required to be filled.
Final Thoughts
A DIS is a document slip provided by the depository participant to facilitate the process of transferring shares. It requires certain information that needs to be filled out without any errors in order to continue with the process without any hindrance.
The transfer of shares can be carried out manually as well as digitally. The online transfers are considered more convenient than the manual form because online transfers include paperless transactions, making them faster and easier. New investors can simply practice the process of transfer by reading the sample guides and using the dummy slips provided with the DIS booklet.
FAQs
A depository instruction slip (DIS) is a document that offers authorised transfer of shares from one demat account to another.
The e-DIS has replaced the physical form of DIS. However, many transactions may still prefer a manual form of depository instruction slip.
In case of incorrectly filing a DIS form, the transfer may get rejected or delayed, resulting in failure of the transfer process.
The process of transferring securities requires the involvement of a depository participant that supports the process and acts as an intermediary.
A depository instruction slip generally takes 1-3 days to complete the process; however, the processing time depends on the type of transfer being requested.
DIS is the physical or paper-based form that needs to be submitted manually to the depository participant. On the other hand, e-DIS is the digital or paperless form that allows investors to process the online transfer of securities.
