What if Shares Aren't Transferred to Your Demat Account?
When you buy shares from your stock broker, the shares must appear in your demat account by T+2 trading days. The time period is trading days. For example, if you buy 100 shares of RIL on Friday and if the next Monday is a trading holiday, then T+2 day will be Wednesday, since Saturday and Sunday are trading holidays, anyway. That means; you must get the credit of 100 shares in your demat account by the end of Wednesday or latest by Thursday morning. What if you do not get credit by then?
Your shares may not come into your demat account app on T+2 day for a variety of reasons. Before you take the next step, understand why the shares have not reached your demat account. That will determine your course of action.
If there are dues on the demat / trading account
Normally, brokers don’t hold back transfer of shares for small outstanding, especially if you have a long relationship with the broker. At times, there may be some debits in your trading account as you may not have paid margins on time. Alternatively, there could be unfunded MTM losses in your trading account. Another possibility is that your demat AMC charges may be pending or the online mandate may have bounced. In such cases, the broker / DP may hold credit to your DP account. If you have not got the credit by the morning of T+3 day, you must get in touch with the broker. If there is no dispute on the charges, you can just pay the charges and the shares should be credited to your account.
When there is a delivery shortfall from the seller of shares
This rarely happens in the case of highly liquid shares. However, in case of mid cap and small cap shares that are illiquid Stocks this is common problem. For example you have bought 500 shares of a mid cap stock and the seller may have failed to give delivery. In this case, the shares will go into auction. Depending on the outcome of the auction, you will either get the credit of shares in 5-6 days or you will get the credit for the amount, with auction profits if any. This is something your broker normally informs you by email and SMS. Either ways, if you don’t get the shares in your demat account by T+3 morning, you must escalate to your broker / DP immediately.
Are you a trader who uses the BTST / STBT facility frequently?
A good number of traders use the BTST (Buy today, sell tomorrow) facility. When you buy shares you get delivery on T+2 date. But brokers allow you to sell the stock on T+1 on the understanding that once you get the stock you will give the delivery. In such cases, if the stock goes into auction, the risk is on the trader and not on the broker. There are two aspects to understand. Check if you have sold either full or part of these shares on T+1 day, in which case, you obviously will not get the delivery on T+2 day. Alternatively, you may have sold another stock by BTST and that may have gone into auction. Till the auction issue is sorted out, the broker will hold back demat account credit. For traders using the BTST facility frequently, daily verification of your ledger will help to address such issues easily.
What if the broker has not transferred shares for no specific reason?
These problems are quite common in the case of investors who also trade on stock margin by transferring stocks to the broker’s pool account. From September 2020, pool transfer will not be possible and all stock margins will be via pledge agreements only, but that is a different story. The problem is when your broker has not transferred the shares to your demat account without a valid reason.
In such cases, you must wait till end of T+3 and if there is no other reasons then escalate the issue with a mail to the Head of Compliance and the CEO of the broking company. If the broker agrees to do the transfer in a day or two, take a call based on your relationship with the broker. However, you must be careful that your shares are not being misused. We have seen a recent case of a broker pledging shares of clients with a bank to raise funds.
If you are not convinced, escalate the matter immediately to the stock exchange where you bought the shares and also to your depository (NSDL / CDSL). Mark copies to the compliance officer and CEO of your broking entity. Normally, things work out at this level. If it still does not work out, then file a formal complaint on the SCORE system of SEBI. That can be the last option