project on working of depostry system

8/21/2019 project on working of depostry system

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Working of Depository system

A PROJECT REPORT

On Working of

Depository system

A project Report submitted in partia fufiment of t!e re"uirements

for t!e a#ard of t!e degree of

$A%TER O& '(%)*E%% AD$)*)%TRAT)O* TO

%R) %A) CO++E,E O& E*,)*EER)*, A*D

TEC-*O+O,.

P(*JA' TEC-*)CA+ (*)/ER%)T.

JA+A*D-AR

'.

%(%-)+ 0($AR

RO++ *O23435516346

(nder t!e guidance of

$r P(*EET %-AR$A 7-OD8



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TO WHOMSOEVER IT MAY CONCERN

T!is is to certify t!at t!e project report tited 9Working of depositort system: carried out

by $rsus!i kumar; %<o %!ri Rnd!ir sing! 7&at!er=s *ame8 !as been accompis!ed under my

guidance > super?ision as a duy registered $'A student of t!e %ri sai coege of engineering

and tec!noogy; 'ad!ani T!is project is being submitted by !im in t!e partia fufiment of t!e

re"uirements for t!e a#ard of t!e $aster of 'usiness Administration from %ri sai coege of

engineering and tec!noogy

-is project #ork represents !is origina #ork and is #ort!y of consideration for t!e a#ard of t!e

degree of $aster of 'usiness Administration

@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@

7*ame > %ignature of t!e &acuty Ad?isor8

Tite Working of depository system

Date @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@



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AC0*OW+ED,E$E*T

) #oud ike to eBpress my appreciation and gratitude to ?arious peope #!o !a?e s!ared

t!eir ?auabe time and made possibe t!is project ;t!roug! t!eir direct indirect cooperation

$y !onorabe %ir $r Puneet %!arma 7-OD8 and $iss Ripsy ma!ajan 7Project in

c!arge8; for ao#ing me to #ork on t!is project and pro?ide necessary !ep

) t!ank my respected facuties; dear friend > coeagues; #!o !ep me in e?ery possibe

#ays ; support me and encouraged me to eBpore ne# dimensions

%(%-)+ 0($AR

$'A nd %emester

RO++ *O 23435516346



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INDEX

S.NO.

PARTICULARS PAGE NO.

1. Certificate 0

!. Dec"arati#$ 0%

&. Preface 0'

(. I$tr#)*cti#$

• De+#,it#r-

• De+#,i#r- ,-,te

•Lea/a" frae#r #f DS

• 2*$cti#$, #f DS

• 3e$efit, #f DS

• Safet- feat*re i$ t4e DS

• Differe$ce 56 3a$ a$) De+#,it#r-

• S#e i+#rta$t +r#ce,, i$ DS

07

08

1&

1(

18

!1

!!

&

&%

. Nati#$a" ,ec*ritir, )e+#,it#r- ,-,te• A5#*t NSDL

• Ma$a/ee$t #f NSDL

• 2ee ,tr*ct*re #f NSDL

• Tec4$#"#/- a$) c#$$ecti9it- i$ NSDL

• C##$ ,#ftare *,e i$ NSDL

(!:0 (&

(

('

(7

0

%. Ce$tra" ,ec*ritir, )e+#,it#r- ,-,te

A5#*t CSDL

S4are4#")er, #f CSDL

3#ar) #f )iect#r, a$) a$a/ee$t

2ee ,tr*ct*re #f CSDL

1:

!

&

(



1


'. Re,earc4 et4#)#"#/-

• O5;ecti9e, #f t4e ,t*)-

• T-+e, #f re,earc4

442

46

46

42



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• Met4#), #f )ata c#""ecti#$

• T##", #f a$a"-,i,

• Re,earc4 )e,i/$

42

42

7. Data a$a"-,i, a$) i$ter+retati#$ 4F48. O5,er9ati#$,

10. S*//e,ti#$, 2

11. Liitati#$, F

1!. C#$c"*,i#$ 63

1&. 3i5"#/ra+4- 61

1(. Ori/$a" ,-$#+,i, 6G

1. <*e,ti#$eerie 6

CERT)&)CATE

T!is to certify t!at %(%-)+ 0($AR ;$'A %emester ;%%CET 'ad!ani

7Pat!ankot8 under PT( Jaand!ar !as done project on 9Working of depositary system== and !as

successfuy competed !is project on my guideine



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)t is ony for academic purpose and is a bonfires #ork done by researc!er

Project ,uide

$r Puneet %!arma

&acuty

%%CET

DEC+ARAT)O*

) am %us!i 0umar do !ere by decare t!at t!e project #ork entite on t!e 9Working of

depositary system== is t!e origina #ork done by me



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T!is project report presented as a partia fufiment re"uirement for t!e degree of $aster

of 'usiness administration

%us!i kumar

$'A nd semester

%%CET

PRE&ACE

T!e successfu competion of t!is project #as a uni"ue eBperience for me because by

?isiting many pace and interacting ?arious person; ) ac!ie?ed a better kno#edge about t!is



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system T!e eBperience #!ic! ) gained by doing t!is project #as essentia at t!is turning point

of my carrier t!is project is being submitted #!ic! content detaied anaysis of t!e researc!

under taken by me

T!e researc! pro?ides an opportunity to t!e student to de?ote !is<!er skis kno#edge

and competencies re"uired during t!e tec!nica session

T!e researc! is on t!e topic 9Working of Depositary system:



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)*TROD(CT)O*

INTODUCTION

One of t!e biggest probem faced by t!e indian capita market !as been t!e manua

and paper based settement system (nder t!is system; t!e cearing and settement of transaction

take pace ony #it! t!e use of paper #ork T!e system of p!ysica dei?ery of scrip=s poses



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many probems for t!e purc!aser as #e as t!e seer in t!e form of deayed settements; ong

settement periods; !ig! e?e of faied trade; !ig! cost of transaction; bad dei?eries etc )n

many cases transfer process takes muc! onger time t!en t#o mont! as stipuated in section 115

of companies Act; 1F4 or section GG A of t!e securities Contracts 7Reguations8 Act; 1F4

$oreo?er; a arge number of transactions end up as bad dei?eries due to fauty compiance of

paper #ork; mismatc! of signatures on transfer deeds #it! specimen record of t!e issuer or

ot!er procedura reasons 'esides; t!eft; forgery; mutination of certificates and ot!er

irreguarities !a?e aso become rampant

-o#e?er; as a conse"uence of impementation of reforms measures; t!e )ndian

capita market !as s!o#n rapid gro#t! in t!e recent past #it! foreign in?estors; more stock

eBc!anges and increased market intermediaries T!e od manua system of settement and

transfer !as amost faied to !ande t!e gro#ing ?oume of paper t!at !as oaded t!e market

T!us; to eiminate paper#ork; faciitate scrip ess trading and eectronic book entry of t!e

transfer of securities; s!orten settement periods; and to impro?e i"uidity in t!e stock market; it

#as found necessary to repace t!e od system of transfer and settement #it! t!e ne# and

modern system of depositories Accordingy t!e go?ernment of )ndia enacted t!e depositories

Act in 1FF for t!e ordery gro#t! and de?eopment of t!e )ndian capita market

)t is a system #!ereby t!e transfer and settement of scrip=s take pace not t!roug!

t!e traditiona met!od of transfer deeds and p!ysica dei?ery of scrip=s but t!roug! t!e modernsystem of effecting transfer of o#ners!ip of securities by means of book entry on t!e edgers or

t!e depositary #it!out t!e p!ysica mo?ement of scrip=s T!e ne# system; t!us ; eiminates

paper #ork; faciities automatic and transparent trading in scrip=s; s!ortens t!e settement period

and utimatey contributes to t!e i"uidity of in?estment in securities T!e system is aso kno#n

as Hscripes trading system=

T!ere are essentiay four payer in t!e depository system

• T!e Depositary participant

• T!e 'eneficia o#ner<in?estor

• T!e issuer



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• T!e depositary

A depositary is a firm #!erein t!e securities of an in?estor are !ed in eectonic

form in t!e same #ay a bank !ods money )t crries out t!e transactions of securities by means

of book entry; #it!out any p!ysica mo?ement of securities T!e depositary based settement

system is aso caed Hbook entry transfer settement= T!e depositary acts as a defecto o#ner of

t!e securities odged #it! it forn t!e imited purpose of transfer of o#ners!ip )t functions as a

custodian of securities of its cients T!e name of t!e depositary appears in t!e records Wit!

increase in t!e number of transactions in t!e stock market; it !ad become difficut for t!e

in?estors to !od s!are certificates and debt instruments in buk 'ut no#; depositary institutions

!ande t!is job At present t!ere are t#o depositories in india

*umber of Depositories in )ndia

• *ationa securities depositary +td 7*%D+8

• Centra depositary ser?ices 7india8 +td 7CD%+8

*%D+ #as formed and registered under t!e companies= act 1F4 during December 1FF4 and

commenced operations during no?ember1FF *%D+ #as promoted by )ndustria De?eopment

'ank of )ndia 7)D')8t!e argest de?eopment bank in )ndia; (nit trust of )ndia 7(T)8t!e argest

mutua fund in )ndia and *ationa stock eBc!ange 7*%E8t!e argest stock eBc!ange in )ndia

%ome of t!e prominent banks in t!e country aso !a?e a stake in *%D+

Centra Depository ser?ices 7)ndia8 imited #!ic! commenced operations during &ebruary

1FFFC%D+ #as promoted by stock eBc!ange; $umbai in association #it! 'ank of 'aroda;

'ank of )ndia; %tate 'ank of )ndia and -D&C 'ank



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DEPO%)TAR.

%.%TE$

WHAT IS DEPOSITORY

Eectronic re?oution !as broug!t about a number of c!anges in t!e functioning of )ndian

capita market T!e most re?outionary c!ange t!at #as broug!t in t!e entire !istory of t!e

)ndian market is t!e introduction of depository



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T!e century od )ndian market !as been ?ibrant a aong but its paper based settement

of trades caused probems ike bad dei?ery; deayed transfers etc; unti t!e en!ancement of

depository act in 1FF T!e depository mode in )ndia is a competiti?e muti depository system

in )ndia t!e system of demateriaiIation is foo#ed; #!erein t!e securities #i be canceed as

against t!e system of immobiiIation in #!ic! t!e securities are kept in custodyA depository is

an organiIation #!ere t!e securities of an in?estor are !ed in eectronic form and carries out t!e

securities transaction by book entry

A depository is a fie or set of fies in #!ic! data is stored for t!e purpose of safekeeping

or identity aut!entication A common eBampe is t!e set of persona data fies at a credit

reporting agency suc! as E"uifaB Anot!er eBampe is t!e data contained at a state motor ?e!ice

department )n a biometric security system; a depository contains data about peopes p!ysica

c!aracteristics suc! as iris prints and finger images

Additiona information may be added; incuding facia c!aracteristics; ?oice prints; and

!and prints W!en a persons identity must be ?erified; one or more biometric sampes is taken

in rea time; and t!is data is compared #it! t!e data in t!e depository )n genera information

storage appications; a depository is a p!ysica site #!ere data is kept in t!e form of !ard copies;

magnetic disks; magnetic tapes; compact disks 7CDs8; and simiar media A good eBampe is t!e

safe deposit ?aut in a financia institution An idea depository is secure; in t!e sense t!at ony

aut!oriIed persons or institutions can gain access to t!e data it contains -o#e?er; eBperience!as s!o#n t!at many depositories; no matter !o# secure t!ey caim to be; can be compromised

by a determined !acker or t!ief

WHAT IS DEPOSTORY SYSTEM

T!e erst#!ie settement system on )ndian stock eBc!anges #as aso inefficient and

increased risk; due to t!e time t!at eapsed before trades #ere setted T!e transfer #as by

p!ysica mo?ement of papers T!ere !ad to be a p!ysica dei?ery of securities a process

http://searchsecurity.techtarget.com/sDefinition/0,,sid14_gci211621,00.html








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fraug!t #it! deays and resutant risks T!e second aspect of t!e settement reates to transfer of

s!ares in fa?our of t!e purc!aser by t!e company T!e system of transfer of o#ners!ip #as

grossy inefficient as e?ery transfer in?o?es p!ysica mo?ement of paper securities to t!e issuer

for registration; #it! t!e c!ange of o#ners!ip being e?idenced by an endorsement on t!e

security certificate )n many cases t!e process of transfer #oud take muc! onger t!an t!e t#o

mont!s stipuated in t!e Companies Act; and a significant proportion of transactions #oud end

up as bad dei?ery due to fauty compiance of paper #ork T!eft; forgery; mutiation of

certificates and ot!er irreguarities #ere rampant )n addition; t!e issuer !as t!e rig!t to refuse

t!e transfer of a security A t!is added to costs and deays in settement; restricted i"uidity and

made in?estor grie?ance redressa time consuming and; at times; intractabe

To ob?iate t!ese probems; t!e Depositories Act; 1FF #as passed )t pro?ides for t!e

estabis!ment of depositories in securities #it! t!e objecti?e of ensuring free transferabiity of

securities #it! speed; accuracy and security )t does so by 7a8 making securities of pubic imited

companies freey transferabe; subject to certain eBceptionsK 7b8 demateriaising t!e securities in

t!e depository modeK and 7c8 pro?iding for maintenance of o#ners!ip records in a book entry

form )n order to streamine bot! t!e stages of settement process; t!e Act en?isages transfer

o#ners!ip of securities eectronicay by book entry #it!out making t!e securities mo?e from

person to person T!e Act !as made t!e securities of a pubic imited companies freeytransferabe; restricting t!e companys rig!t to use discretion in effecting t!e transfer of

securities; and t!e transfer deed and ot!er procedura re"uirements under t!e Companies Act

!a?e been dispensed #it! T#o depositories; ?iI; *%D+ and CD%+; !a?e come up to pro?ide

instantaneous eectronic transfer of securities

)n any stock eBc!ange; trades or transactions !a?e to be setted by eit!er s"uaring up t!e

carrying for#ard positions or setting by payment of net cas! or net dei?ery of securities T!is

account settement period; if it is ong eads to se?era price distortions and ao#s for market

manipuation )t increases t!e c!ances of specuation resuting in ?oatiity; #!ic! !urts t!e

sma in?estors Wit! t!e appication of )T in t!e securities market screenbased trading and

trading t!roug! t!e )nternet it !as been possibe to reduce t!is settement period



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Le/a" 2rae#r #f )e+#,itar- ,-,te

T!e operations of t!e depositories are primariy go?erned by t!e Depositories Act; 1FF;

%ecurities and EBc!ange 'oard of )ndia 7Depositories > Participants8 Reguations; 1FF; 'ye

+a#s appro?ed by %E'); and 'usiness Rues framed in accordance #it! t!e Reguations and'ye+a#s

T!e Depositories Act passed by Pariament recei?ed t!e Presidents assent on August 13;

1FF )t #as notified in a ,aIette on August 1G of t!e same year T!e Act enabes t!e setting up

of mutipe depositories in t!e country T!is #as to see t!at t!ere is competition in t!e ser?ice

and t!ere is more t!an one depository in operation At present; t#o depositories are registered

#it! %E') T!e *ationa %ecurities Depository +imited 7*%D+8 and Centra Depository

%er?ices 7)ndia8 +imited 7CD%+8

Ony a company registered under t!e Companies Act; 1F4 and sponsored by t!e

specified category of institutions can set up a depository in )ndia 'efore commencing

operations; depositories s!oud obtain a certificate of registration and a certificate of

commencement of business from %E')

T!e rig!ts and obigations of depositories; depository participants; issuers and beneficia

o#ners are spet out ceary in t!e Depositories Act 1FF

A, +er t4e Act =

L Secti#$ ( DP is an agent of t!e Depository A DP is an agent of t!e depository; #!o pro?ides

?arious ser?ices of t!e depository to in?estors T!e DP !as to enter into an agreement #it! t!e

depository to t!is effect Any in?estor #!o #oud ike to a?ai t!e ser?ices of a depository !as to

enter into an agreement #it! any DP of !is c!oice T!e DP #i t!en make t!e depository

ser?ices a?aiabe to t!e in?estor

L Secti#$ ' &ree Transferabiity T!e securities !ed by an in?estor in t!e depository are freey

transferabe from one beneficia o#ner to anot!erL Secti#$ 7 Option to !od securities in demat form )n t!e depository system; e?ery in?estor

subscribing to securities offered by an issuer !as an option to recei?e t!e same in p!ysica form

or demateriaised form )f an in?estor opts for recei?ing t!e securities in demateriaised form;

t!e issuer intimates t!e depository t!e detais of aotment of security On receipt of t!is



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information; t!e depository enters t!e name of t!e aottee as t!e beneficia o#ner of t!at

security in its record

L Secti#$ 8 %ecurities !ed in a depository are fungibe A securities !ed by t!e depository

are in demateriaised and fungibe form

L Secti#$ 10 Registered O#ner and 'eneficia O#ner T!e depository is deemed to be t!e

registered o#ner for t!e purpose of effecting transfer of o#ners!ip of security on be!af of a

beneficia o#ner 'ut as a registered o#ner; it does not !a?e any ?oting rig!ts or any ot!er

rig!ts in respect of t!ose securities T!e beneficia o#ner is entited to a rig!ts and benefits as

#e as subject to a iabiities in respect of !is securities !ed in t!e depository

L Secti#$ 1( Option to opt out of depository A beneficia o#ner may opt out of a depository in

respect of any security by re"uisite intimation to t!e depository

L Secti#$ 1% Depository to indemnify osses A depository s!a indemnify a beneficia o#ner;

any oss caused due to negigence of t!e depository or its participant

E"i/i5i"it- Criteria f#r a De+#,it#r- > A$- #f t4e f#""#i$/ a- +r##te a )e+#,it#r-=

1 A pubic financia )nstitution as defined in section A of t!e Companies Act; 1F4K

G A bank incuded in t!e %econd %c!edue to t!e Reser?e 'ank of )ndia Act; 1F5K

5 A foreign bank operating in )ndia #it! t!e appro?a of t!e Reser?e 'ank of )ndiaK A recognised stock eBc!angeK

4 An institution engaged in pro?iding financia ser?ices #!ere not ess t!an 64M of t!e e"uity is

!ed jointy or se?eray by t!ese institutionsK

A custodian of securities appro?ed by ,o?ernment of )ndia; and

6 A foreign financia ser?ices institution appro?ed by ,o?ernment of )ndia

T!e promoters of a depository are aso kno#n as its sponsors A depository company

must !a?e a minimum net #ort! of Rs 133 crore T!e sponsor7s8 of t!e depository !a?e to !od

at east 41M of t!e e"uity capita of t!e depository company Participants of t!at depository; if

any; can !od t!e baance of t!e e"uity capita -o#e?er; no singe participant can !od; at any

point of time; more t!an 4M of t!e e"uity capita *o foreign entity; indi?iduay or coecti?ey



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eit!er as a sponsor or as a DP; or as a sponsor and DP toget!er; can !od more t!an G3M of t!e

e"uity capita of t!e depository

Re/i,trati#$ N As per t!e pro?isions of t!e %E') Act; a depository can dea in securities ony

after obtaining a certificate of registration from %E') T!e sponsors of t!e proposed depository

s!oud appy to %E') for a certificate of registration in t!e prescribed form On being satisfied

#it! t!e eigibiity parameters of a company to act as a depository; %E') may grant a certificate

of registration subject to certain conditions

C#e$cee$t #f 3*,i$e,, N A depository t!at !as obtained registration as stated abo?e; can

function ony if it obtains a certificate of commencement of business from %E') A depository

must appy for and obtain a certificate of commencement of business from %E') #it!in one year

from t!e date of recei?ing t!e certificate of registration from %E')

%E') grants a certificate of commencement of business if it is satisfied t!at t!e

depository !as ade"uate systems and safeguards to pre?ent manipuation of records and

transactions %E') takes into account a matters ree?ant to t!e efficient and ordery functioning

of t!e depository )t particuary eBamines #!et!er

1 T!e depository !as a net #ort! of not ess t!an Rs 133 croreKG T!e 'ye+a#s of t!e depository !a?e been appro?ed by %E')K

5 T!e automatic data processing systems of t!e depository !a?e been protected against

unaut!orised access; ateration; destruction; discosure or dissemination of records and dataK

T!e net#ork; t!roug! #!ic! continuous eectronic means of communication are estabis!ed

bet#een t!e depository; participants; issuers and issuers agents; is secure against unaut!orised

entry or access

4 T!e depository !as estabis!ed standard transmission and encryption formats for eectronic

communication of data bet#een t!e depository; participants; issuers and issuers agentsK

T!e p!ysica or eectronic access to t!e premises; faciities; automatic data processing

systems; data storage sites and faciities incuding backup sites; and to t!e eectronic data

communication net#ork connecting t!e DPs; issuers and issuers agents is controed; monitored

and recordedK



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6 T!e depository !as a detaied operationa manua eBpaining a aspects of its functioning;

incuding t!e interface and met!od of transmission of information bet#een t!e depository;

issuers; issuers agents; DPs and beneficia o#nersK

2 T!e depository !as estabis!ed ade"uate procedures and faciities to ensure t!at its records are

protected against oss or destruction and arrangements !a?e been made for maintaining backup

faciities at a ocation different from t!at of t!e depositoryK

F T!e depository !as made ade"uate arrangements incuding insurance for indemnifying t!e

beneficia o#ners for any oss t!at may be caused to suc! beneficia o#ners by t!e #rongfu act;

negigence or defaut of t!e depository or its participants or of any empoyee of t!e depository

or participantK

13 T!e granting of certificate of commencement of business is in t!e interest of in?estors in

securities market

Agreement bet#een Depository and )ssuers N )f eit!er t!e issuer 7a company #!ic! !as

issued securities8 or t!e in?estor opts to !od !is securities in a demat form; t!e issuer enters into

an agreement #it! t!e depository to enabe t!e in?estors to demateriaise t!eir securities

N# ,*c4 a/reee$t i, $ece,,ar- 4ere

i Depository; is t!e issuer of securities; orKii T!e %tate or Centra ,o?ernment is t!e issuer of go?ernment securities

W!ere t!e issuer !as appointed a registrar to t!e issue or s!are transfer; t!e depository

enters into a tripartite agreement #it! t!e )ssuer and Registrar > Transfer 7R>T8 Agent; as t!e

case may be; for t!e securities decared eigibe for demateriaisation At present; *%D+ is

disc!arging t!e responsibiity of R>T Agent for t!e securities issued by %tate and Centra

,o?ernments

Rig!ts and Obigations of Depositories N Depositories !a?e t!e rig!ts and obigations conferred

upon t!em under t!e Depositories Act; t!e reguations made under t!e Depositories Act; 'ye

+a#s appro?ed by %E'); and t!e agreements made #it! t!e participants; issuers and t!eir R>T

agents



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E?ery depository must !a?e ade"uate mec!anisms for re?ie#ing; monitoring and

e?auating t!e depositorys contros; systems; procedures and safeguards )t s!oud conduct an

annua inspection of t!ese procedures and for#ard a copy of t!e inspection report to %E') T!e

depository is aso re"uired to ensure t!at t!e integrity of t!e automatic data processing systems

is maintained at a times and take a precautions necessary to ensure t!at t!e records are not

ost; destroyed or tampered #it! )n t!e e?ent of oss or destruction; sufficient back up of records

s!oud be a?aiabe at a different pace Ade"uate measures s!oud be taken; incuding

insurance; to protect t!e interests of t!e beneficia o#ners against any risks

E?ery depository is re"uired to eBtend a suc! cooperation to t!e beneficia o#ners;

issuers; issuers agents; custodians of securities; ot!er depositories and cearing organisations; as

is necessary for t!e effecti?e; prompt and accurate cearance and settement of securities

transactions and conduct of business

T!e depository s!oud indemnify beneficia o#ners of securities for any oss caused to

t!em due to t!e negigence of t!e DP -o#e?er; #!ere t!e oss is caused due to t!e negigence

of a DP; t!e depository s!a !a?e t!e rig!t to reco?er it from suc! DPs

3-e:La, N A depository is re"uired to make 'ye+a#s go?erning its operations T!e 'ye

+a#s !a?e to be in conformity #it! t!e Depositories Act and t!e reguations made t!ereunder;

and need to be appro?ed by %E') before becoming effecti?e

De+#,it#r- N E?ery depository is re"uired to maintain t!e foo#ing records and documents

T!ese !a?e to be preser?ed for a minimum period of fi?e years

1 Records of securities demateriaised and remateriaised

G T!e names of t!e transferor; transferee; and t!e dates of transfer of securities

5 A register and an indeB of beneficia o#ners

Detais of t!e !odings of t!e securities of beneficia o#ners as at t!e end of eac! day

4 Records of instructions recei?ed from; and sent to; participants; issuers; issuers agents and

beneficia o#ners

Records of appro?a; notice; entry and canceation of pedge or !ypot!ecation

6 Detais of participants

2 Detais of securities decared to be eigibe for demateriaisation in t!e depository



1


F %uc! ot!er records as may be specified by %E') for carrying on t!e acti?ities as a depository

Ser9ice, #f De+#,it#r- N A depository estabis!ed under t!e Depositories Act can pro?ide any

ser?ice connected #it! recording of aotment of securities or transfer of o#ners!ip of securities

in t!e record of a depository Any person #iing to a?ai t!e ser?ices of t!e depository can do so

by entering into an agreement #it! t!e depository t!roug! any of its participants A depository

can pro?ide depository ser?ices ony t!roug! a DP A depository cannot directy open accounts

and pro?ide ser?ices to cients E?ery depository in its 'ye+a#s must state #!ic! securities are

eigibe for demat !oding ,eneray; t!e foo#ing securities are eigibe for demateriaisation

7a8 %!ares; scrips; stocks; bonds; debentures; debenture stock or ot!er marketabe securities of a

ike nature in or of any incorporated company or ot!er body corporate

7b8 (nits of mutua funds; rig!ts under coecti?e in?estment sc!emes and ?enture capita funds;

commercia paper; certificates of deposit; securitised debt; money market instruments;

go?ernment securities; nationa sa?ing certificates; kisan ?ikas patra and unisted securities

7c8 %ecurities admitted to *%D+ depository are notified to a DPs t!roug! circuars sent by

emai )n?estors are informed about t!ese securities t!roug! *%D+s Website ###nsdcoin

and *E%T (pdate a mont!y ne#setter of *%D+

2*$cti#$, #f De+#,it#r-

Demateriaisation One of t!e primary functions of depository is to eiminate or

minimise t!e mo?ement of p!ysica securities in t!e market T!is is ac!ie?ed t!roug!

demateriaisation of securities Demateriaisation is t!e process of con?erting securities !ed in

p!ysica form into !odings in book entry form

Account Transfer T!e depository gi?es effects to a transfers resuting from t!e

settement of trades and ot!er transactions bet#een ?arious beneficia o#ners by recording

entries in t!e accounts of suc! beneficia o#ners

Transfer and Registration A transfer is t!e ega c!ange of o#ners!ip of a security in t!e

records of t!e issuer &or effecting a transfer; certain ega steps !a?e to be taken ike

endorsement; eBecution of a transfer instrument and payment of stamp duty T!e depository

acceerates t!e transfer process by registering t!e o#ners!ip of s!ares in t!e name of t!e

http://www.nsdl.co.in/

http://www.nsdl.co.in/



1


depository (nder a depository system; transfer of security occurs merey by passing book

entries in t!e records of t!e depositories; on t!e instructions of t!e beneficia o#ners

Corporate Actions A depository may !ande corporate actions in t#o #ays )n t!e first

case; it merey pro?ides information to t!e issuer about t!e persons entited to recei?e corporate

benefits )n t!e ot!er case; depository itsef takes t!e responsibiity of distribution of corporate

benefits

Pedge and -ypot!ecation T!e securities !ed #it! *%D+ may be used as coatera to

secure oans and ot!er credits by t!e cients )n a manua en?ironment; borro#ers are re"uired to

dei?er pedged securities in p!ysica form to t!e ender or its custodian T!ese securities are

?erified for aut!enticity and often need to be transferred in t!e name of ender T!is !as a time

and money cost by #ay of transfer fees or stamp duty )f t!e borro#er #ants to substitute t!e

pedged securities; t!ese steps !a?e to be repeated (se of depository ser?ices for pedging<

!ypot!ecating t!e securities makes t!e process ?ery simpe and cost effecti?e T!e securities

pedged<!ypot!ecated are transferred to a segregated or coatera account t!roug! book entries

in t!e records of t!e depository

+inkages #it! Cearing %ystem W!et!er it is a separate cearing corporation attac!ed to

a stock eBc!ange or a cearing !ouse 7department8 of a stock eBc!ange; t!e cearing system

performs t!e functions of ascertaining t!e payin 7se8 or payout 7buy8 of brokers #!o !a?e

traded on t!e stock eBc!ange Actua dei?ery of securities to t!e cearing system from t!eseing brokers and dei?ery of securities from t!e cearing system to t!e buying broker is done

by t!e depository To ac!ie?e t!is; depositories and t!e cearing system s!oud be eectronicay

inked

-a?ing understood t!e depository system; et us no# ook at t!e organisation and functions of

*ationa %ecurities Depository +imited 7*%D+8



1


3ENE2ITS O2 DEPOSITORY SYSYEM

• *o risks associated #it! p!ysica certificates suc! as oss of s!are certificate; &ake

securities; Etc

• *o bad dei?ery

• &aster settement cyces

• +o# transaction cost for purc!ase and sae of securities compared to p!ysica mode

• )ncrease i"uidity of securities

• Reduction of paper #ork

• Aotment of )PO; 'onus; Rig!ts s!ares etc in eectronic form

• Wa?ier of stamp duty on transfer of securities

• )ntimation ike c!ange of address; bank mandate; nomination; re"uest of transmission;

re"uired to be gi?en ony to Depository Participant 7DP8 )rrespecti?e of t!e number of

companies in #!ic! s!ares !ed

2aci"itie, #ffere) 5- )e+#,it#r- ,-,te

• Demateriaisation

• Remateriaisation

• Eectronic settement of trades in stock eBc!anges connected to depositories

• Pedging<!ypot!ecation of demateriaiIed securities

• Eectronic credit of securities aotted in pubic; rig!ts; bonus issue

• *omination faciity

• &reeIing of Demat accounts; so t!at t!e debits from t!e demateriaiIation are not

permitted

• %er?ices reated to c!ange of address; nomination; mandate; transmission; etc

• Ot!er ser?ices ?iI!oding debt instruments in t!e same demat account

• A?aiing stock ending<borro#ing faciity; etc



1


Safet- feat*re, i$ t4e )e+#,it#r- ,-,te

To ensure safety to t!e in?estors t!e foo#ing measures eBist

• %trict norms for becoming depository participant *et #ort! criteria; %E') appro?a etc

is mandatory

• DP cannot effect ant debit or credit in t!e demat account of t!e in?estor #it!out t!e ?aid

aut!oriIation of t!e in?estor

• Reguation reconciiation bet#een DP and t!e depositories

• Periodic inspection by Depositories of t!e office of t!e DP and Registrar

• A in?estors !a?e a rig!t to recei?e t!eir statements of accounts periodicay from t!e

DP

• )n t!e depository system; t!e depository !ods t!e in?estor accounts on trust T!erefore if

t!e DP goes bankrupt t!e creditors of t!e DP #i !a?e no access to t!e !odings in t!e

name of t!e cients of t!e DP

• Compusory interna audit of operations of DP by practicing company secretary of t!e

c!artered accountant e?ery "uarter

• /arious procedures for backup and safe keeping of data at a t!e e?es

%E') !as made compusory trading of s!ares of a t!e companies isted in %tock EBc!ange

in demat form #ef G January G33G -ence; if t!e in?estor #ants to trade in respect of t!e

companies; #!ic! !a?e estabis!ed connecti?ity #it! *%D+ > CD%+; !e may !a?e to open a

beneficiary account

3e$eficiar- acc#*$t

A beneficiary account is an account opened by t!e in?estor or a broker #it! a DP of !is c!oice;

to !od s!ares in demateriaiIed form and undertake scrip ess trading

I$9e,t#r c#$tacti$/ t4e )e+#,it#r-



1


T!e in?estor must open a demat account #it! a Depository Participant Opening a demat

account #it! a DP is simiar to opening an account #it! bank T!e seection of DP is to be done

by t!e in?estor based on fee payabe; proBimity; ser?ice e?es; etc

D#c*e$t, re?*ire) f#r #+e$i$/ )eat acc#*$t

&or demat account opening t!e foo#ing documents are re"uired to be gi?en

• Demat account opening form duy fied

• Address proof

• P!otograp!

• )dentity proof

Ot4er f#ra"itie, i$ Deat acc#*$t #+e$i$/

Once a demat account is opened; t!e in?estor must sign an agreement #it! t!e DP T!e

in?estor #i be aotted an account no kno#n as cient identity T!e cient identity number

aong #it! t!e DP identity number forms a uni"ue combination 'ot! t!ese numbers s!oud be

"uoted in a t!e future deaing #it! Depositories <DP <RTA <Company -o#e?er in case of

CD%+ t!ere is no DP identity and t!e 1digit Cient identity itsef is a uni"ue number T!e

in?estor must coect forms ike demateriaiIation re"uest form 7DR&8; Dei?ery instruction sips

etc

Certai$ +#i$t, t# 5e c#$,i)ere) 4i"e #+e$i$/ Deat acc#*$t

Demat account cannot be opened in t!e name of t!e partners!ip firms; as a partners!ip

firm is not a ega entity -o#e?er; a demat account can be opened in t!e name of t!e partners

Demat account cannot be opened in t!e name of t!e -(& )t !as to be opened in t!e name of t!e

0arta of t!e -(&

)n t!e case of a minor; t!e depository account s!oud be opened in t!e name of t!e minor

and t!e guardian=s name s!oud be mentioned T!e guardian #i sign as signatory on be!af of

t!e minor

)n?estor can open any number of DP accounts #it! any number of DP=s -o#e?er; in?estor

!as to incur cost for eac! of suc! account)n?estor must open different Demat accounts for

s!ares !ed in different combination of names Aternati?ey in?estor can submit t!e certificate

for Demat aong #it! transposition form



1


Mi$i* 5a"a$ce #f ,ec*ritie,$ re?*ire) t# 5e ai$tai$e) i$ Deat acc#*$t

T!ere is no minimum baance re"uired to be maintained in a Demat account and an

in?estor can e?en maintain ni baance

Ot!er steps t!e in?estor s!oud take

T!e in?estor s!oud inform !is DP of any c!ange in !is address; bank account;

nomination; etc immediatey upon c!ange t!ereof

C4ar/e, f#r Deat acc#*$t #+e$i$/ a$) #t4er )e+#,it#r- tra)i$/

T!e depository does not c!arge any fee directy from t!e in?estors T!e depository

c!arges ony t!e DP=s -o#e?er; t!e DP is free to c!arge its cients for t!e ser?ices offered T!e

c!arges of DP=s aso ?ary

St#c e@c4a$/e, c#$$ecte) t# t4e De+#,it#rie, f#r Deat tra)i$/

At present t!e foo#ing 13 stock eBc!anges are connected to t!e Depositories

• *ationa %tock EBc!ange

• T!e %tock EBc!ange $umbai

• Cacutta %tock EBc!ange

• De!i %tock EBc!ange

• +ud!iana %tock EBc!ange

• 'ang ore %tock EBc!ange

• O?er t!e counter stock eBc!ange of )ndia

• $adras %tock EBc!ange

• )nter connected %tock EBc!ange

• A!medabad %tock EBc!ange



1


Maret tra)e a$) #ff aret tra)e

Trade done and setted t!roug! a stock eBc!ange and cearing corporation is markettrade Trade done pri?atey #it!out t!e in?o?ement of t!e %tock 'roker of %tock EBc!ange is

off market trade

3*-i$/ a$) ,e""i$/ #f ,4are, 5- t4e i$9e,t#r

T!e in?estor can buy and se s!ares ony t!roug! a stockbroker and not t!roug! a DP

DP !eps in dei?ering t!e s!ares against a sae transaction or recei?ing t!e s!ares for a purc!ase

transaction

C#r+#rate 5e$efit,

Corporate benefit is a corporate e?ent )t can be cas! corporate benefit ike di?idend;

interest; etcor noncas! corporate benefits ike rig!ts; bonus etc

W!en any corporate e?ent suc! as rig!t or bonus or di?idend is announced for a particuar security; depository #i gi?e t!e detais of a cients !a?ing eectronic !odings in

t!at security as of t!e record date to t!e RTA<Company #i t!en cacuate t!e corporate benefits

due to a t!e s!are!oders T!e disbursements of cas! benefits suc! as di?idend<interests #i be

done by t!e RTA<Company directy to t!e s!are!oders *oncas! benefits #i be distributed

t!roug! depository by crediting t!e entited "uantity of s!ares into s!are!oders demat account

Direct cre)it #f ,4are, i$ e"ectr#$ic f#r=

)n t!e pubic<Rig!t issue appication form of depository eigibe companies; t!ere #i be

a pro?ision for t!e in?estor to indicate t!e manner in #!ic! !e #ants t!e securities aotted to

!im E?en in t!e case of bonus issue t!e in?estor is gi?en an option for getting t!e s!ares



1


aotted in p!ysica or eectric form T!e in?estor must mention !is cient )D *umber and DP

)D *o

A)9a$ta/e #f /etti$/ a""#te$t i$ e"ectr#$ic f#r=

• %E') !as announced t!at t!e s!ares of a t!e companies going in for pubic issue #i

!a?e to be compusoriy setted in demat form by a in?estors )t is; t!erefore;

ad?antageous for an in?estor to prefer t!e aotment in demat form; so t!at t!e s!ares

!a?e !ig!er i"uidity

• )n case of Discrepancies in corporate benefits t!e in?estor can approac! !is DP #!o in

turn #i contact t!e RTA<Company for carifications regarding aotment of securities

• Cearing members; Cearing corporations and ot!er intermediaries cannot !a?e ?oting

rig!ts in respects of t!e s!ares !ed in poo account &urt!er t!e cearing member or

ceaning corporation is aso responsibe for distribution of bonus; rig!t and ot!er

corporate benefits ying in !is account to t!e in?estor

Me$ai$/ #f Tra$,fer Tra$,i,,i#$ a$) Tra$,+#,iti#$

Tra$,fer

Depository is eectronicay inked to depository participants; issuer company or Registrar >

transfer agent and t!e cearing corporation< cearing !ouse of t!e stock eBc!ange T!is is done in

order to faciitate settement of trades and to perform a daiy; reconciiation of a t!e account

baances !ed #it! depository T!us; an integrated system is set up for maintenance of in?estor

accounts

Tra$,i,,i#$

)n t!e case of transmission; t!e caimant #i !a?e to fi a transmission re"uest form;supported by documents ike deat! certificates; etc T!e DP; after ensuring t!at t!e appication is

genuine; #i transfer securities to t!e demat account of t!e caimant &or t!is purpose caimant

must !a?e a depository account T!e major ad?antage in transmission of demateriaiIed

!odings is t!e transmission formaities for a securities !ed #it! t!e DP can be competed in



1


one go; unike in t!e case of s!are certificate; #!ere t!e caimant #i !a?e to interact #it! eac!

RTA<Company

Tra$,+#,iti#$

)n case of transportationcumdemateriaiIation; t!e in?estor can get t!e securities

demateriaiIed in t!e same account if t!e names appearing on t!e certificate matc! #it! t!e

names in #!ic! t!e demat account !as been opened but are in a different order; by

submitting t!e security certificate aong #it! t!e transportation form and t!e

Demateriaisation re"uest form:7DR&8 to t!e DP

P"e)/i$/

• Pedging of demateriaiIed securities

• Pedging demateriaiIed securities is easier and more ad?antageous as compared to

pedging p!ysica securities T!e procedure as foo#s

• 'ot! borro#er 7pedger8 as #e as t!e ender 7pedgee8 must !a?e depository account

• T!e pedger must initiate t!e pedge by submitting to !is DP t!e detais of t!e securities

to be pedged in a standard format

• T!e pedge s!oud confirm t!e re"uest t!roug! !is DP

Once t!is is done t!e securities are pedged A financia transactions bet#een t!e pedger and

t!e pedgee are !anded outside t!e depository system

Pr#ce)*re f#r t4e c"#,*re #f +"e)/e

After t!e borro#er !as repaid t!e oan; t!e borro#er can re"uest for a cosure of pedge by

instructing !is DP in a prescribed format T!e ender on recei?ing t!e repayment #i instruct !is

DP confirmed t!e cosure of t!e pedge



1


C4a$/e #f ,ec*ritie, #ffere) i$ a +"e)/e)f t!e pedger 7ender8 agrees; t!e in?estor may c!ange t!e securities offered in a pedge

N#i$ati#$

%!ares !ed in p!ysica as #e as eectronic form can be nominated *omination can be

made ony by indi?iduas !oding beneficiary accounts on t!eir o#n be!af eit!er singy or

jointy On indi?iduas; society; trust; body corporate ;partners!ip firm; 0arta or -indu

undi?ided &amiy; !oder of po#er of attorney cannot nominate *omination is permitted for accounts #it! joint !oder; but in case of deat! of any of t!e

joint !oder; t!e securities #i be transmitted to t!e sur?i?ing !oder7s8 ony in t!e e?ent of

deat! of a t!e joint !oders; t!e securities #i be transmitted to t!e nominee

Ony an indi?idua can be a nominee A nominee s!a not be a society; trust; body

corporate; partners!ip firm; karta of -indu undi?ided &amiy or a po#er of attorney !oder

A minor cannot nominate eit!er directy or t!roug! its guardian

A minor can be a nominee )n suc! a case; t!e guardian #i sign on be!af of t!e

nominee and in addition to t!e name and p!otograp! of t!e nominee; t!e name; address and t!e

p!otograp! of t!e guardian must be gi?en%eparate nomination cannot be made for eac!

security *omination can be made Demat account #ise and not security #ise

T!e in?estor must fi in and submit to !is DP t!e nomination form T!e account !oder;

*ominee and t#o #itnesses must sign t!is form and t!e nameK address and p!otograp! of t!e

nominee must be submitted

T!e nomination can be c!anged anytime by t!e account !oder by fiing up t!e re?ised

nomination form and submitting it to t!e DP T!e account !oder; *ominee and t#o #itnesses

must sign t!is form and t!e nameK address and p!otograp! of t!e nominee must be submitted )n

case of joint !oders; a joint !oders must sign

Deat #f )e5t i$,tr*e$t



1


Debt instrument can aso be !ed in demat form )nstruments ike bond; debentures;

commercia papers; certificates of deposit; etc irrespecti?e #!et!er t!ese instruments are

isted<unisted<pri?atey paced or e?en issued to a singe !oder can be demateriaiIed

Commercia paper can aso be kept in demat form As per R') $onetary and credit poicy N

banks; &inancia )nstitutions; primary Deaers and sateite deaers are directed to con?ert t!eir

outstanding in?estment in commercia papers in script form; into Demat form T!e abo?e

entities !a?e aso been directed to make fres! in?estment in commercia paper ony in demat

form

'onds and debentures can aso kept in demat form )n its midterm re?ie# of t!e

monetary and credit poicy R') !as mentioned t!at banks and financia institutions s!a make

in?estment in debentures and bonds ony in demat form Any ne# instrument can be issued

directy in demateriaiIed form #it!out recourse to printing of eit!er etter of aotment or

certificates %ecurities #i be directy credit into t!e demat accounts of t!e in?estor by t!e

depositories on receipt of aotment detais from RTA<Company

T4e i$9e,t#r $ee) $#t #+e$ ,e+arate )eat acc#*$t f#r )eat #f )e5t i$,tr*e$t.

T!e procedure of demateriaiIation of debt instrument is same as t!at carried out for

e"uity s!ares )n order to demateriaiIed !is<!er certificatesK an in?estor #i !a?e to first open a

demat account #it! a DP and t!e a re"uest for t!e demateriaiIation of certificates by fiing up ademateriaiIation re"uest form 7DR&8; #!ic! is a?aiabe #it! DP and submitting t!e same

aong #it! t!e p!ysica certificates T!e in?estor !as to ensure t!at before t!e certificates are

!anded o?er to t!e DP for demat; !e marks 9%urrendered for DemateriaiIation: on t!e face of

t!e certificates

• Account opening

• Demat<Remat

•

Account $aintenance• Custody

• Transaction; etc

B$#i$/ #f ,ec*ritie, 5a"a$ce i$ )eat acc#*$t



1


T!e in?estor is pro?ided #it! a transaction statement by !is DP at reguar inter?as 'ased on

t!at t!e in?estor #i kno# !is security baances

Recei9i$/ Tra$,acti#$ ,tatee$t 5- i$9e,t#r

T!e DP #i send a transaction statement once in a "uarter if t!ere is no transaction during t!e

"uarter )f t!ere are any transactions DP #i send t!e statements #it!in fifteen days of t!e

transaction

2reei$/ #f )eat acc#*$t

T!e depository system pro?ides t!e faciity to freeIe t!e demat account for any debits or for

bot! debits and credits )n an account; #!ic! is 9free Ied of debits:; no debits #i be permitted

from t!e account; ti t!e time it is defreeIe T!is is in additiona security feature of t!e

in?estors

Sta$)i$/ i$,tr*cti#$ t# DP

T!e in?estor can gi?e one time standing instruction to !is DP to recei?e a t!e credits coming to

!is depository account automaticay -o#e?er; t!e in?estor cannot gi?e standing instruction for

any debits in !is account

Acce,, #f i$9e,t#r acc#*$t, 5- a"" DP,

A DP cannot access t!e in?estors account of any ot!er DPT!e DP can access ony t!ose

in?estors accounts ser?iced by t!em

&urnis!ing of bank account particuars in DP

Detais of bank account of t!e cient; incuding t!e Fdigit code number of t!e bank and branc!

appearing on t!e $)CR c!e"ue issued by t!e bank !a?e to be gi?en to t!e DP at t!e time of

account opening Companies use t!is information for printing t!em on di?idend<interest

#arrants etc; to pre?ent its misuse )n case t!e cient #is!es to c!ange t!is bank account detais;

!e can do so by submitting t!e c!ange in #riting to t!e DP



1


Pr#ce)*re #f c"#,*re #f )eat acc#*$t

An in?estor can cose a demat account by gi?ing an appication in prescribed form )n

case t!ere is any baance in t!e demat account soug!t to be cosed; t!e foo#ing steps are

necessary

1 Remateriaisation of a securities standing to t!e credit of t!e demat account at t!e time

of making t!e appication for t!e cosure

G Transferring t!e baance to t!e credit of anot!er demat account ; #it! t!e same

participant or #it! a different participant

Deateria"iati#$

DemateriaiIation is t!e process of con?ersion of s!ares or ot!er securities !ed in p!ysica form

into eectronic form

W!om to approac!

T4e i$9e,t#r *,t a++r#ac4 4i) DP f#r Deateria"iati#$

T!e s!ares t!at an in?estor can demateriaiIe

T!e in?estor can demat t!e s!ares of any company t!at !as estabis!ed connecti?ity #it! *%D+

or CD%+

Ste+, i$9#"9e) i$ )eateria"iati#$

1 )n?estor must submit re"uest form and s!are certificate to DP



1


G DP #i c!eck #!et!er security is a?aiabe for Demat )n?estor must deface t!e s!are

certificate by stamping 9surrendered for demateriaiIation: and DP #i punc! t#o !oes on

t!e name of t!e company and #i dra# t#o parae ines across t!e face of t!e certificate

5 DP enters t!e Demat re"uest in t!eir system to be sent to t!e depository DP

dispatc!es t!e p!ysica certificates aong #it! t!e DR& to t!e RTA< Company

Depository records t!e detais of t!e system and for#ards t!e re"uest to Registrar and

transfer agent or issuer ie t!e company #!ose s!ares are soug!t to be demateriaiIed

4 RTA Company on recei?ing t!e p!ysica documents ?erifies re"uest and c!eck t!em

Once t!e RTA<Company finds t!at s!ares are in order; demateriaiIation of t!e concerned

securities is eectronicay confirmed to t!e depository

Depository credits t!e demateriaiIed securities to t!e beneficiary account of t!e

in?estor and intimates t!e DP eectronicay T!e DP issues a statement of

transaction to t!e cient

Si/$i$/ #f t4e )eat re?*e,t f#r i$ ca,e #f ;#i$t 4#")er,

A joint !oders s!oud sign t!e DR&

C#+a$- i)e$tificati#$ $*5er f#r )eat +*r+#,e,

Once t!e company is admitted in t!e depository system; t!e depository aots an )%)* T!is

number is uni"ue for eac! security of t!e company t!at is admitted in t!e depository

$entioning of t!e )%)* in t!e DR&

T!e )%)* s!oud be mentioned in t!e DR&T!is to certain eBtent ensures t!at t!e security

mentioned in t!e DR& is t!e one #!ic! t!e in?estor intends to demateriaiIe

Distinguis!ing bet#een party paidup s!are and fuy paid up s!ares in t!e depository

Parties paid up s!ares and fuy paid up s!ares are identified by separate )%)*=s 7)nternationa

security identification number8 T!ese are aso traded separatey at t!e stock eBc!anges T!e

company issues ca notices to t!e beneficia !oders of party paid up securities in t!e eectronic

form T!e detais of suc! beneficia !oders #i be pro?ided to t!e RTA<company #i

automaticay con?ert t!e party paid up s!ares to fuy paid s!ares



1


Reateria"i,ati#$

Remateriaisation is con?ersion of eectronic !odings into p!ysica certificate form

Ste+, i$9#"9e) f#r Reateria"i,ati#$

T!e in?estor must fi up a remat form 7RR&8 and gi?e it to t!e DP T!e DP #i for#ard t!e

re"uest depository after ?erifying t!at t!e s!are!oder !as necessary baances Depository in turn

#i intimate t!e RTA<Company #i print t!e certificate and dispatc! t!e same to t!e in?estor

E"ectr#$ic ,ett"ee$t #f t4e Tra)e,

Procedure for seing demateriaiIation securities in t!e stock eBc!anges is simiar to t!e

procedure for seing p!ysica securities )nstead of dei?ering p!ysica securities to t!e broker;

t!e in?estor must instruct !is<!er DP to debit !is<!er demat account #it! t!e number of

securities sod by !im<!er and credit broker=s cearing account

Pr#ce)*re f#r ,e""i$/ ,ec*ritie, i, /i9e$ 5e"#=

• )n?estor ses securities in any of t!e stock eBc!ange inked to depository t!roug! a

broker

• )n?estor gi?es instruction to DP to debit !is account and credit t!e brokers 7cearing

account poo8 account

• 'efore t!e payinday )n?estor=s broker transfers t!e securities to cearing

corporation

• T!e broker recei?es payment from t!e stock eBc!ange 7Cearing Corporation8

• T!e in?estor recei?es payment from t!e broker for t!e sae in t!e same manner

payment is recei?ed for a sae in t!e p!ysica mode



1


Pr#ce)*re f#r +*rc4a,e #f )eateria"ie) ,4are,

• T!e procedure or buying demateriaiIed securities in stock eBc!anges is simiar to

t!e procedure for buying p!ysica securities )n?estor may gi?e a one time standing

instruction to recei?e credits into !is <!er account or may gi?e separate instruction eac! time

in !e prescribed format

• T!e transaction reating to purc!ase of securities are summariIed beo#

• )n?estor purc!ases securities in any of t!e stock eBc!anges connected to depository

t!roug! a broker

• 'roker recei?es payment from in?estor=s

• 'roker arranges payment to cearing corporation

• 'roker recei?es credit of securities in cearing account on t!e payout day

• 'roker gi?es instruction to DP to debit cearing account and credit cient=s account

• )n?estor recei?es s!ares in !is account

• T!e in?estor s!oud ensure t!at t!e broker transfer t!e securities purc!ased to !is

account; before t!e book cosure )f t!e securities remain in t!e cearing account of t!e

broker; t!e company may gi?e corporate benefits to t!e broker T!erefore; t!e in?estor !as to

coect benefits from t!e broker



1


DI22ERENCE 3ETWEEN 3ANB AND DEPOSITORY

'A*0 DEPO%)TOR.

• Aocates account number

• -ods funds in accounts

• $inimum baance re"uired

• &unctions t!roug! branc!es

• )ssues account statement > pass

book

•

C!arges commission< ser?icec!arges

• Pro?ides interest to t!e account

!oders

• Aocates cient )D number

• -ods securities in accounts

• *ormay no minimum baance

re"uired

• &unctions t!roug! depository

participants

• )ssues account statement ie

statement of !oding and statement

of transactions

• Depository Participant c!arges

o Account opening and

cosing fee

o Demat and Remat fee

o Transaction fee 7buy; se;

off market8

o Custody c!arges

• )n future; t!roug! stock ending; it

#i be possibe to earn income on

Depository Account



1


S#e i+#rta$t Pr#ce,,e, i$ )e+#,itar- ,-,te

• DemateriaiIation

• RemateriaiIation

• )nitia pubic offers

• Trading > settements

On $arket transactions

Off market transactions

)nter Depository transactions

DemateriaiIation Process

P!ysica %ecurities Eectronic &orm



1


Prere"uisites

L Demat Account #it! any DP of t!e DepositoryL )%)* for t!e securities a?aiabe #it! t!e Depository

L )n?estor s!oud be registered !oder for t!e securities in t!e books of t!e company

Reateria"iati#$

RemateriaiIation or remat is a compier optimiIation #!ic! sa?es time by recomputing a ?aue

instead of oading it from memory )t is typicay tig!ty integrated #it! register aocation;

#!ere it is used as an aternati?e to spiing registers to memory )t #as concei?ed by Preston

'riggs; 0eit! D Cooper ; and +inda TorcIon in 1FFGRemateriaiIation #orks by keeping track

of t!e eBpression used to compute eac! ?ariabe; using t!e concept of a?aiabe eBpressions

%ometimes t!e ?ariabes used to compute a ?aue are modified; and so can no onger be used to

remateriaiIe t!at ?aue T!e eBpression is t!en said to no onger be a?aiabe Ot!er criteria

must aso be fufied; for eBampe a maBimum compeBity on t!e eBpression used to

http://en.wikipedia.org/wiki/Compiler_optimization

http://en.wikipedia.org/wiki/Register_allocation

http://en.wikipedia.org/w/index.php?title=Preston_Briggs&action=edit&redlink=1


http://en.wikipedia.org/w/index.php?title=Keith_D._Cooper&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Linda_Torczon&action=edit&redlink=1

http://en.wikipedia.org/wiki/Available_expression

http://en.wikipedia.org/wiki/Compiler_optimization

http://en.wikipedia.org/wiki/Register_allocation



http://en.wikipedia.org/w/index.php?title=Keith_D._Cooper&action=edit&redlink=1

http://en.wikipedia.org/w/index.php?title=Linda_Torczon&action=edit&redlink=1

http://en.wikipedia.org/wiki/Available_expression



1


remateriaiIe t!e ?aueK it #oud do no good to remateriaiIe a ?aue using a compeB

computation t!at takes more time t!an a oad (say t!e eBpression must aso !a?e no effects

RemateriaiIation process

Eectronic &orm P!ysica %ecurities

I$itia" +*5"ic #ffer,

An initia pubic stock offering 7)PO8 referred to simpy as an offering or fotation; is

#!en a company 7caed t!e issuer8 issues common stock or s!ares to t!e pubic for t!e first

time T!ey are often issued by smaer; younger companies seeking capita to eBpand; but can

aso be done by arge pri?ateyo#ned companies ooking to become pubicy traded

http://en.wikipedia.org/wiki/Common_stock

http://en.wikipedia.org/wiki/Share_(finance)

http://en.wikipedia.org/wiki/Financial_capital

http://en.wikipedia.org/wiki/Privately_held_company

http://en.wikipedia.org/wiki/Public_company

http://en.wikipedia.org/wiki/Common_stock

http://en.wikipedia.org/wiki/Share_(finance)

http://en.wikipedia.org/wiki/Financial_capital

http://en.wikipedia.org/wiki/Privately_held_company

http://en.wikipedia.org/wiki/Public_company



1


)n an )PO t!e issuer may obtain t!e assistance of an under#riting firm; #!ic! !eps it

determine #!at type of security to issue 7common or preferred8; best offering price and time to

bring it to market

An )PO can be a risky in?estment &or t!e indi?idua in?estor; it is toug! to predict #!at t!e

stock or s!ares #i do on its initia day of trading and in t!e near future since t!ere is often itte

!istorica data #it! #!ic! to anayIe t!e company Aso; most )POs are of companies going

t!roug! a transitory gro#t! period; and t!ey are t!erefore subject to additiona uncertainty

regarding t!eir future ?aue

T!e first sae of stock by a pri?ate company to t!e pubic )POs are often issued by

smaer; younger companies seeking t!e capita to eBpand; but can aso be done by arge

pri?atey o#ned companies ooking to become pubicy traded )n an )PO; t!e issuer obtains t!e

assistance of an under#riting firm; #!ic! !eps it determine #!at type of security to issue

7common or preferred8; t!e best offering price and t!e time to bring it to marketAso referred to

as a pubic offering

)POs can be a risky in?estment &or t!e indi?idua in?estor; it is toug! to predict #!at

t!e stock #i do on its initia day of trading and in t!e near future because t!ere is often itte

!istorica data #it! #!ic! to anayIe t!e company Aso; most )POs are of companies going

t!roug! a transitory gro#t! period; #!ic! are subject to additiona uncertainty regarding t!eir

future ?aues

I$itia" +*5"ic #ffer, +r#ce,,

http://en.wikipedia.org/wiki/Underwriting

http://en.wikipedia.org/wiki/Security_(finance)

http://en.wikipedia.org/wiki/Preferred_stock

http://en.wikipedia.org/wiki/Investment

http://en.wikipedia.org/wiki/Underwriting

http://en.wikipedia.org/wiki/Security_(finance)

http://en.wikipedia.org/wiki/Preferred_stock

http://en.wikipedia.org/wiki/Investment



1


Tra)i$/ ,ett"ee$t,

Transfer of securities in< out of t!e Demat A<c can arise in t!e foo#ing instances

• &or eBecution of Off $arket Transactions



1


• &or setting On $arket Transactions

• &or )nter depository transactions

Off Maret Tra$,acti#$,Transaction done on person to person basis #it!out going t!roug! stock eBc!ange mec!anism

Prere"uisites

• Transfer of securities from one 'O A<c to anot!er 'O A<c

• 'ot! A<c=s are #it! same Depository t!oug! #it! different

DPs

• *eit!er buyer=s A<c nor seer=s A<c is #it! cearing !ouse<cearing corporation

Off market transaction process

O$ Maret Tra$,acti#$

Trades done by in?estors t!roug! stock eBc!ange mec!anism and setted using same stock

eBc!ange mec!anism



1


• seer as #e as buyer account is #it! C-<CC

)nter Depository Transactions

• %E') 7Depository and participants8 Reguations; 1FF re"uires depositories to be inter

connected

• %ecurities a?aiabe for demateriaiIation on bot! depositories

• Debit< credit instructions !a?e to gi?en on interdepository dei?ery or receipts forms to

t!e DP=s of seer and t!e buyer

• T!ese instructions are eBc!anged onine for eac! day bet#een t!e depositories



1


Nati#$a" Sec*ritie, De+#,it#r- Liite)



1


)n a span of about nine years; in?estors !a?e s#itc!ed o?er to eectronic Qdemat

settement and *ationa %ecurities Depository +imited 7*%D+8 stands at t!e centre of t!is

c!ange )n order to pro?ide "uaity ser?ice to t!e users of depository; *%D+ aunc!ed a

certification programme in depository operations in $ay 1FFF T!is certification is conducted

using *C&$ infrastructure created by *%E and is caed *%D+ Depository Operations

$odue T!e programme is aimed at certifying #!et!er an indi?idua !as ade"uate kno#edge

of depository operations; to be abe to ser?ice in?estors Depository Participants are re"uired to

appoint at east one person #!o !as "uaified in t!e certification programme at eac! of t!eir

ser?ice centres T!is !andbook is meant to !ep t!e candidates in t!eir preparation for t!e

certification programme

T!is !andbook !as been di?ided into four ?oumes for readers con?enience T!e first

?oumegi?es an o?er?ie# of t!e )ndian capita market and *%D+ depository system T!e second

?oume deas #it! admission procedure for different business partners of *%D+; t!eir

obigations; practices; systems and procedures to be foo#ed by t!em and benefits and safety of

depository system T!e t!ird ?oume !eps in ac"uiring a #orking e?e understanding of certain

basic ser?ices offered by *%D+ ike account opening; demateriaisation; and transfer of

securities and reated operations T!e ast ?oume deas #it! specia ser?ices offered by *%D+

ike Pedge; %tock +ending and 'orro#ings; Corporate Actions; *ationa %a?ings Certificates <

0isan /ikas Patra 7*%C<0/P8 in demat form; Ware!ouse Receipts; $arket Participants and)n?estor Database 7$AP)*8 and TaB )nformation *et#ork 7T)*8

T!e procedures eBpained in t!e !andbook are based on t!e Depositories Act; %ecurities

and EBc!ange 'oard of )ndia 7Depositories > Participants8 Reguations and 'yea#s >

'usiness

Rues of *%D+ T!e book contains iustrations; fo# c!arts and c!eckists for better

understanding of ?arious concepts and procedures A sampe test paper is gi?en at t!e end of t!e

fourt! ?oume to !ep t!e candidates appearing for *C&$ test form an assessment of t!eir

preparedness A t!oroug! understanding of t!is !andbook #i form a good base for "uaifying

t!e certification test



1


Readers may ike to ?isit *%D+ #ebsite ###nsdcoin for updates and to kno# t!e

ne#

procedures introduced or c!anges broug!t about in t!e eBisting procedures A feedback form is

gi?en at t!e end of t!e fourt! ?oume Readers may gi?e t!eir feedback; #!ic! #i be of great

!ep in en!ancing t!e ?aue of t!is -andbook in its subse"uent editions

*ationa %ecurities Depository +imited

*ationa %ecurities Depository +imited is t!e first depository to be setup in )ndia )t #as

incorporated on December 1G; 1FF4 T!e )ndustria De?eopment 'ank of )ndia 7)D')8 t!e

argest de?eopment bank in )ndia; (nit Trust of )ndia 7(T)8 t!e argest )ndian mutua fund

and t!e *ationa %tock EBc!ange 7*%E8 t!e argest stock eBc!ange in )ndia; sponsored t!e

setting up of *%D+ and subscribed to t!e initia capita *%D+ commenced operations on

*o?ember 2; 1FF

O#ners!ip

*%D+ is a pubic imited company incorporated under t!e Companies Act; 1F4 *%D+

!ad a paidup e"uity capita of Rs 134 crore T!e paid up capita !as been reduced to Rs 23

crore since *%D+ !as boug!t back its s!ares of t!e face ?aue of Rs G4 crore in t!e year G333

-o#e?er; its net #ort! is abo?e t!e Rs 133 crore; as re"uired by %E') reguations

T!e foo#ing organisations are s!are!oders of *%D+ as on $arc! 51; G334

1 )ndustria De?eopment 'ank of )ndia

G Administrator of t!e %pecified (ndertaking of t!e (nit Trust of )ndia DR&

5 *ationa %tock EBc!ange

%tate 'ank of )ndia

4 Orienta 'ank of Commerce

Citibank *A

6 %tandard C!artered 'ank

2 -D&C 'ank +imited

F T!e -ongkong and %!ang!ai 'anking Corporation +imited

13 Deutsc!e 'ank A,

11 Dena 'ank



1


1G Canara 'ank

Ma$a/ee$t #f NSDL

*%D+ is a pubic imited company managed by a professiona 'oard of Directors T!e day

today operations are conducted by t!e C!airman > $anaging Director 7C$D8 To assist t!e

C$D in !is functions; t!e 'oard appoints an EBecuti?e Committee 7EC8 of not more t!an 14

members T!e eigibiity criteria and period of nomination; etc are go?erned by t!e 'ye+a#s

of *%D+ in

t!is regard

3-e:La, #f NSDL

'ye+a#s of *ationa %ecurities Depository +imited !a?e been framed under po#ers

conferred under section G of t!e Depositories Act; 1FF and appro?ed by %ecurities and

EBc!ange 'oard of )ndia T!e 'ye+a#s contain fourteen c!apters and pertain to t!e areas isted

beo#

1 %!ort tite and commencement

G Definitions

5 'oard of Directors

EBecuti?e Committee

4 'usiness Rues

Participants6 %afeguards to protect interest of cients and participants

2 %ecurities

F Accounts<transactions by book entry

13 Reconciiation; accounts and audit

11 Discipinary action

1G Appeas

15 Conciiation

1 Arbitration

Amendments to *%D+ 'ye+a#s re"uire t!e appro?a of t!e 'oard of Directors of *%D+ and

%E')



1


3*,i$e,, R*"e, #f NSDL

Amendments to *%D+ 'usiness Rues re"uire t!e appro?a of *%D+ EBecuti?e Committee and

fiing of t!e same #it! %E') at east a day before t!e effecti?e date for t!e amendments

&unctions

NSDL +erf#r, t4e f#""#i$/ f*$cti#$, t4r#*/4 )e+#,it#r- +artici+a$t,

@ Enabes t!e surrender and #it!dra#a of securities to and from t!e depository

7demateriaisation and remateriaisation8

@ $aintains in?estor !odings in t!e eectronic form

@ Effects settement of securities traded on t!e eBc!anges

@ Carries out settement of trades not done on t!e stock eBc!ange 7offmarket trades8

@ Transfer of securities

@ Pedging<!ypot!ecation of demateriaised securities

@ Eectronic credit in pubic offerings of companies or corporate actions

@ Receipt of noncas! corporate benefits ike bonus rig!ts; etc in eectronic form

@ %tock +ending and 'orro#ing

%er?ices Offered by *%D+

*%D+ offers a !ost of ser?ices to t!e in?estors t!roug! its net#ork of DPs @ $aintenance of beneficiary !odings t!roug! DPs

@ Demateriaisation

@ Offmarket Trades

@ %ettement in demateriaised securities

@ Receipt of aotment in t!e demateriaised form

@ Distribution of corporate benefits

@ Remateriaisation

@ Pedging and !ypot!ecation faciities

@ &reeIing<ocking of in?estors account

@ %tock ending and borro#ing faciities



1


2ee Str*ct*re #f NSDL

*%D+ c!arges t!e DPs and not t!e in?estors directy T!ese c!arges are fiBed T!e DPs

in turn; are free to c!arge t!eir cients; ie; t!e in?estors for t!eir ser?ices T!us; t!ere is a

t#otier fee structure

I$,+ecti#$ Acc#*$ti$/ a$) I$ter$a" A*)it

*%D+ obtains audited financia reports from a its DPs once e?ery year *%D+ aso

carries out periodic ?isits to t!e offices of its constituents R>T agents; DPs and cearing

corporations N to re?ie# t!e operating procedures; systems maintenance and compiance #it!

t!e 'ye+a#s; 'usiness Rues and %E') Reguations

Additionay; DPs are re"uired to submit to *%D+; interna audit reports e?ery "uarter

)nterna audit !as to be conducted by a c!artered accountant or a company secretary in practice

T!e 'oard of Directors appoints a Discipinary Action Committee 7DAC8 to dea #it! any

matter reating to DPs cients; )ssuers and R>T agents T!e DAC is empo#ered to suspend or

eBpe a DP; decare a security as ineigibe on t!e *%D+ system; freeIe a DP account and

conduct inspection or ca for records and issue notices

)f a DP is aggrie?ed by t!e action of t!e DAC; it !as t!e rig!t to appea to t!e EC against

t!e action of t!e DAC T!is !as to be done #it!in 53 days of t!e action by DAC T!e EC !as to!ear t!e appea #it!in t#o mont!s from t!e date of fiing t!e appea T!e EC !as t!e po#er to

stay t!e operation of t!e orders passed by t!e DAC T!e information on a suc! actions !as to

be furnis!ed to %E')

%ettement of Disputes

A disputes; differences and caims arising out of any deaings on t!e *%D+;

irrespecti?e of #!et!er *%D+ is a party to it or not; !a?e to be setted under t!e Arbitration and

Conciiation Act 1FF



1


Tec4$#"#/- a$) C#$$ecti9it- i$ NSDL

S-,te Vie #f NSDL De+#,it#r- S-,te



1


Account !oders 7in?estors8 open account #it! t!e DPs T!e account detais; entered in a

computer system maintained by Depository Participants caed DP$; are eectronicay

con?eyed to t!e centra system of *%D+ caed D$ Companies #!o !a?e agreed to offer demat

faciity to t!eir s!are!oders use a computer system caed DP$ 7%-R8 to connect to t!e *%D+



1


centra system DP$ 7%-R8 may be instaed by t!e company itsef or t!roug! its R>T Agent

T!is system is used to eectronicay recei?e demat re"uests; confirm suc! re"uests or to recei?e

beneficia o#ner data 7'enpos8 from t!e depository %tock eBc!anges recei?e payin 7recei?ing

securities against saes made by brokers8 or to payout 7gi?ing securities to brokers against t!eir

purc!ases8 using a computer system connected to *%D+ caed DP$ 7CC8

A t!e computer systems instaed by DPs 7DP$DP8; companies 7DP$%-Rs8; and

stock eBc!anges 7DP$CC8 are connected to *%D+ centra system 7D$8 t!roug! /%AT 7?ery

sma aperture termina8 or eased ines T!ese are coecti?ey caed 'usiness Partner %ystems

Any transaction conducted by any computer system in t!e *%D+ depository system #!ic! is

targetted to reac! any ot!er computer system first gets recorded in D$ and t!en #i reac! t!e

target *o t#o business partners systems can communicate to eac! ot!er #it!out passing

t!roug! t!e D$

Mai$te$a$ce #f Acc#*$t, at t4e Ce$tra" S-,te

T!e *%D+ centra system kno#n as D$ maintains accounts of a account !oders in t!e

depository system A t!e transactions entered at any point in t!e computer system connected to

it are first effected in t!e centra system and subse"uenty at t!ese computers T!us; t!e centra

system of *%D+ !as t!e records of a detais of e?ery transaction conducted in t!e depository

system

Di,tri5*te) Data5a,e

Eac! of t!e computer systems connected to *%D+ system !as its o#n database reating

to its cients T!is !eps in gi?ing prompt and accurate ser?ice to t!e cients -o#e?er eac! of

t!e databases is reconcied #it! t!e data at t!e centra system e?eryday in order to ensure t!at

t!e data in t!e distributed database taies #it! t!e centra database

C##$ S#ftare

*%D+ de?eops soft#are re"uired by depository participants; companies; R>T Agents

and cearing corporations for conducting depository operations T!us; t!e computer systems

used by a t!e entities #i !a?e common soft#are gi?en by *%D+ -o#e?er; depending on t!e



1


business potentia; branc! net#orks and any ot!er specific features; DPs may de?eop soft#are

of t!eir o#n for coordination; communication and contro and pro?ide ser?ice to t!eir cients

%uc! eBcusi?e soft#are is caed back office soft#are DP$ system gi?en by *%D+ gi?es

eBport and import faciity to take out t!e transaction detais to be used by back office soft#are

and to feed in transaction detais generated from t!e back office soft#are

C#$$ecti9it-

T!e computer system used by DPs; companies; R>T Agents and stock eBc!anges may

be connected to *%D+ centra system t!roug! /%AT net#ork or eased ine net#ork *%D+

uses *%Es /%AT net#ork for t!e connecti?ity purposes T!us; /%ATs used by *%E brokers

can connect to *%D+ if t!e soft#are suppied by *%D+ is used /%AT uses sateites for

communication purposes %ome business partners may connect using eased ines pro?ided by

$T*+< '%*+ /%AT or eased ine connections are caed primary connecti?ity )f primary

connecti?ity fais for any reason; 'Ps must !a?e t!e abiity to connect t!roug! ot!er means

%uc! ot!er means are P%T* ines; )%D* ines; POP ines7norma teep!one ines8 t!roug! #!ic!

t!ey can dia in to t!e *%D+ system and conduct t!eir transactions



1


Ce$tra" De+#,it#r- Ser9ice, FI$)ia

Liite)

Ce$tra" De+#,itar- Sec*ritie, Liite)

A Depository faciitates !oding of securities in t!e eectronic form and enabes

securities transactions to be processed by book entry by a Depository Participant 7DP8; #!o as



1


an agent of t!e depository; offers depository ser?ices to in?estors According to %E')

guideines; financia institutions; banks; custodians; stockbrokers; etc are eigibe to act as DPs

T!e in?estor #!o is kno#n as beneficia o#ner 7'O8 !as to open a demat account t!roug! any

DP for demateriaisation of !is !odings and transferring securities

T!e baances in t!e in?estors account recorded and maintained #it! CD%+ can be

obtained t!roug! t!e DP T!e DP is re"uired to pro?ide t!e in?estor; at reguar inter?as; a

statement of account #!ic! gi?es t!e detais of t!e securities !odings and transactions T!e

depository system !as effecti?ey eiminated paperbased certificates #!ic! #ere prone to be

fake; forged; counterfeit resuting in bad dei?eries CD%+ offers an efficient and instantaneous

transfer of securities

CD%+ #as promoted by 'ombay %tock EBc!ange +imited 7'%E8 jointy #it! eading

banks suc! as %tate 'ank of )ndia; 'ank of )ndia; 'ank of 'aroda; -D&C 'ank; %tandard

C!artered 'ank; (nion 'ank of )ndia and Centurion 'ank

CD%+ #as set up #it! t!e objecti?e of pro?iding con?enient; dependabe and secure depository ser?ices

at affordabe cost to a market participants %ome of t!e important miestones of CD%+ system are

CD%+ recei?ed t!e certificate of commencement of business from %E') in &ebruary; 1FFF

18 -onourabe (nion &inance $inister; %!ri .as!#ant %in!a fagged off t!e operations of CD%+ on

juy 14;1FFF

G8 %ettement of trades in t!e demat mode t!roug! 'O) %!are!oding +imited; t!e cearing !ouse of

'%E; started in juy 1FFF

58 A eading stock eBc!anges ike t!e *ationa %tock EBc!ange; Cacutta %tock EBc!ange; De!i

stock EBc!ange; T!e %tock EBc!ange; A!medabad; etc !a?e estabis!ed connecti?ity #it! CD%+

8 As at t!e end of Dec G336; o?er 4333 issuers !a?e admitted t!eir securities 7e"uities; bonds;

debentures; commercia papers8; units of mutua funds; certificate of deposits etc into t!e CD%+

system

S4are4#")er, #f CDSL

CD%+ #as promoted by 'ombay %tock EBc!ange +imited 7'%E8 in association #it!

'ank of )ndia; 'ank of 'aroda; %tate 'ank of )ndia and -D&C 'ank '%E !as been in?o?ed

#it! t!is ?enture rig!t from t!e inception and !as contributed o?er#!emingy to t!e fruition of



1


t!e project T!e initia capita of t!e company is Rs1343 crores T!e ist of s!are!oders #it!

effect from 11t! December; G332 is as under

A professional Board of Directors with vast and varied experience in capital markets andbanking is at the helm of affairs at CDSL.

3#ar) #f Direct#r,

Sr.No.

Name of shareholders Vale ofholding !in

"pees Lacs#

$ terms to total e%it&

1 Bombay Stock Exchange Limited 3,825.46 36.61

2 Bank of India 1,. !.5"

3 Bank of Ba#oda 1,. !.5"

4 State Bank of India 1,. !.5"

5 $%&' Bank Limited 1,5. 14.36

6 Standa#d 'ha#te#ed Bank "5. ".18

" 'ana#a Bank 6"4.46 6.458 (nion Bank of India 2. 1.!1

! Bank of )aha#a*ht#a 2. 1.!1

1 +he amm- and a*hmi# Bank Limited 2. 1.!1

11 +he 'a/c-tta Stock Exchange 0**ociation Limited

1. .!6

12 the#* .8

'('AL )*+,-*.** 1.



1


r. S S 'hakr 'hai#man

r. V V "at )anaging %i#ecto# and 'hief Exec-tie ffice#

r. / S "edd& Exec-tie %i#ecto#

r. . ". a&&a Indeendent %i#ecto#

r. adh 0annan Son*o# %i#ecto# Bombay Stock Exchange Limited

r. L. /. Aggarwal Son*o# %i#ecto# Bombay Stock Exchange Limited

r. /rakash ". 0acholia Son*o# %i#ecto# Bombay Stock Exchange Limited

r. An1an Bara Son*o# %i#ecto# State Bank of India

r. A. D. . Chavali Son*o# %i#ecto# Bank of Ba#oda

r. A. ". 0ppswam& Son*o# %i#ecto# Bank of India

Ma$a/ee$t Tear. V V "at )anaging %i#ecto# and 'hief Exec-tie ffice#

r. / S "edd& Exec-tie %i#ecto#

r. /ramod Deshpande 'hief +echno/ogy ffice#

r. C&rs 0hambata S#.ice 7#e*ident.B-*ine** %ee/oment'-##ent/y on de-tation to '%SLent-#e* Ltd. a* 'E 9ith effect f#om "1226:

r. 2itendra Chad ice 7#e*ident.Info#mation +echno/ogy

s. Na&ana (valekar ice 7#e*ident. 0-dit, In*ection ; 'om/iance

r. Bharat Sheth ice 7#e*ident. 0cco-nt* ; 0dmini*t#ation

r. Snil Alvares ice 7#e*ident.B-*ine** %ee/oment

r. "amkmar 0. ice 7#e*ident.e#ation*

r. 2ignesh 3andhi ice 7#e*ident.<e9 7#o=ect*

r. Satish Bdhakar ice 7#e*ident.Lega/ ; 'omany Sec#eta#y

2EE STRUCTURE O2 CDSL'%SL fee* *t#-ct-#e to it* deo*ito#y a#ticiant* i* a* fo//o9*>



1


SR.NO. Detai", #f C4ar/e, CDSL

1 Accont (pening Charges <IL

2 Accont aintenance Charges <IL fo# indiid-a/*?*.5@ .a. to 'o#o#ate*

3 'ransaction Chargesarket 4 (ff5arket

?*.6@ 66

4 'ransaction Charges Clearingember Acconts

&/at cha#ge of ?*.5@ e# month on ') acco-nt* fo#ayin and ayo-t* #eceied f#om '$

5 Cstod& Charges <IL

6 Demat Charges <IL

" "emat Charges ?*.1@ e# 1 *ec-#itie* o# a#t A-antity o# ?*. 1@ e# ce#t. 9hichee# i* highe#.

8 /ledge78&pothecation Charges 7/edge accetance ?*.12@ e# #eA-e*t.(n/edge accetance ?*.12@ e# #eA-e*t.

7/edge Inocation 0ccetance <i/

! 9nternet :acilit& 'easi' ?*.2,@ one time fo# #egi*t#ation

1 9nternet :acilit& 'easiest' ?*.3,@ one time fo# #egi*t#ation ?*.1,[email protected]##ene9a/ of digita/ *ignat-#e

M#$t4"- c4ar/e, f#r DP, #r it, 5ra$c4e, .e.f. 1,t Ma- !00%

2#r Mai$ DP,= Rs5;333< per mont! or t!e amount of t!e actua bi for a gi?en mont! #!ic!e?er is

!ig!er

2#r DP:3ra$c4e,= RsG;333< per mont! or t!e amount of t!e actua bi for a gi?en mont! #!ic!e?er

is !ig!er

2ee, f#r C"eari$/ Me5er,

CD%+ coects ony Rs 433< per mont! from its DPs for a C$ eBcept for C$ )n?estors %ecuritiesAccount

T!e foo#ing tariff structure #i be effecti?e from We)$e,)a- A+ri" 01 !008.

$ont!y Transaction bi amount

7SRs<per transaction8

7in Rs8

Rate per

Debit Transaction

7in Rs8

$ore t!an Rs14 ak!s 64

$ore t!an Rs ak!s and upto Rs14 ak!s 433

$ore t!an Rs1 ak! and upto Rs ak!s 443

(pto Rs1 ak! 33



1


RESEARCH

METHODOLOGY



1


RESEARCH METHODOLOGY

Researc! $et!odoogy refers to searc! of kno#edge one can aso define reseac!

met!odoogy as a scientific and systematic searc! for re"uired information on aspecific topicT!e #ord researc! met!odoogy comes from t!e #ord 9ad?ance earner Hs dictionary

meaning of researc! as a carefu in?estigation or in"uiry especiay t!roug! researc! for ne#

facts in my branc! of kno#edge for eBampe some aut!or !a?e define researc! met!odoogy

as systemstiIed effort to gain ne# kno#edge

O3ECTIVES O2 THE STUDY

• To understand t!e basic term and process in depositary system

• ,et specific kno#edge about *%D+ and C%D+ and its in?estor pattners

• Pro?ide aducate and desirabe information for t!e readers

• To find out t!at factors or specuations t!ose are responsibe for creating a negati?e

image of D% in t!e mind of in?estor

• ,etiting t!e information about t!e a#areness of depository system

• &ind out t!e satisfactory e?e of t!e in?estors regarding t!is system

TYPES O2 RESEARCH

ANALYTICAL RESEARCH )t !as to used facts or information aready a?aiabe and anayIe

t!ese to make a critica e?auation of materia

SAMPLE SIE= Considering t!e constraints it #as decided to conduct t!e study based on

sampe siIe of 43 peope in specific age groups



1


METHODS O2 DATA COLLECTION

)n t!e project #ork Primary data secondary data 7bot!8 sources of data !as been used

PRIMARY SOURCE ) !a?e gat!ered information about our project from t!e interaction #it!

t!e customers of our company ie Reiance $oney T!e samping met!od used #as basicay

con?enience samping and most of t!e cas made #ere cod cas made on t!e generated

database of recipients of ot!er companies

SECONDARY DATA T!e secondary data; ) !a?e coected from t!e ?arious #ebsites ofreiance money; ?arious journas; magaIines etc

TOOL O2 ANALYSIS

)n t!e project #ork "uantitati?e tec!ni"ue > percentage met!od !as been used

RESEARCH DESIGN

&or t!e proper anaysis of data simpe "uantitati?e tec!ni"ue suc! as percentage #ere

used )t !ep in marketing more accurate generaiIation &rom t!e data a?aiabe T!e data #!ic!

#as coected from a sampe of popuation #as assumed to be representing entire popuation

#as interested



1


DATA A*A+.%)%

A*D

)*TERPRETAT)O*



1


ues 18 Are you kno# about Depository systemU

A8 .es 6

'8 *o 35



1


ues G8 -a?e you sufficient kno#edge and a#areness about *%D+ or C%D+U

A8 .es

'8 *o

C8 To %ome eBtend

A8 .es 1G

'8 *O 14

C8 To some eBtent G5



1


ues 58 Are you satisfy #it! fee structure of depository systemU

A8 .es

'8 *o

C8 To %ome eBtent

A8 .es 16

'8 *o G6

C8 To some eBtends 3



1


ues 8 'y #!ic! depository company you make tradingU

A8 %!arek!an

'8 )ndiabus

C8 Reiance

D8 )C)C) directcom

E8 Ot!er

A8 %!arek!an 36

'8 )ndiabus 11

C8 Reiance 1

D8 )C)C) directcom 32

E8 Ot!er 13



1


ues 48 )f your seected trading company increase t!ere annua c!arges #i you

go #it! itU

A8 .es'8 *o

C8 )f c!arges are reasonabe

A8 .es 3G

'8 *o GF

C8 )f c!arges are

reasonabe

1F



1


ues8 According to you #!ic! one is t!e most important factor for a trading

company to en!ance t!e oyaty and customers UA8 Pro?ide maBimum profit

'8 Pro?ide tips time to time

C8 *o !idden c!arges

D8 Ot!er factors

A8 Pro?ide maBimum profit 16

'8 Pro?ide tips time to time 32C8 *o !idden c!arges 12

D8 Ot!er factors 36

O3SERVATION



1


To s tudy t!e abo?e Doug!nut ; ,rap! and pie c!ar ts ) obser?e t!at t!e

most of t!e peope of pat!ankot !a?e kno#edge about depository system but

t!ey !a?e not a proper and basic kno#edge about t!is ?ast concept ony imited

information is t!ere

According to data anaysis resut represent beo#

• After anaysis of first one "uestion it cear t!at ony 35 7M8 respondents are not

introduce #it! term depository system but majority is goes #it! yes option 6

7FM8

• Data of second "uestion is s!o#s t!at ony 1G respondents !a?e a sufficient

kno#edge about C%D+ and *%D+ it means most of respondent !a?e a no or

ony itte bit kno#edge about t!ese t#o terms data says t!at 14 respondents go

#it! no and G5 go #it! to some eBtent

• Wit! obser?ation of t!ird "uestion #e find out t!at t!e most of t!e pubic of

pat!ankot are not satisfy #it! present fee structure of depository systemData

represents t!at G6 respondents are not satisfy #!ereas 16 are satisfy and 3 are

satisfy ony some eBtents

•

T!e obser?ation of t!is "uestion eBpain t!at t!e s!arek!an trading company isnot popuar in pat!ankot area because ony o6 respondents are make trading #it!

it; After t!at )C)C) directcom comes and get 32 ?otes; reiance get maBimum

?otes 1 and 13 respondents making trading #it! ot!er companies )n t!is

"uestion its cear t!at Reiance is popuar trading company in pat!ankot area

• &ift! one "uestion is basicay incude in t!is "uestioner for kno#ing t!e oyaty

of pubic; regarding its trading company According to data GF respondents are

not s#itc!o?er to ot!er company #!ie its present trading company increase its

annua fee )t means peopes are satisfy #it! its trading company and oya about

it

• +ast "uestion of my "uestioner is ?ery essentia for find t!e factor #!ic! are

directy infuence t!e amount and oyaty of t!e customer Data s!o#s t!at most



1


of peopes 7128 reaiIed t!at !idden c!arges are ?ery defaut factor in decreasing

t!e number of customers and its oyaty W!ereas 16 respondents are says t!at

$aBimum profits are t!e main factor; 32 go #it! time to time tips and ony 36

respondents seect ot!er factors option

SUGGESTION

RECOMMENDATIONS SUGGESTIONS



1


• Reguar statements of !odings s!oud be made a?aiabe at reguar inter?as

• T!e statement of !odings s!oud be pro?ided #it! t!e sae and purc!ase of t!e

s!ares

• A#areness of functioning of t!is system s!oud be spread to t!e pubic t!roug!

ad?ertisement

• Cear picture of t!e deductions made by depository participant or t!e c!arges

e?ied on t!e customers s!oud be pro?ided in back and #!ite

• Proper feedback s!oud be taken into consideration &or eg cas s!oud be made

#!en t!e account is opened

• 'ank s!oud eBpand its net#ork by opening its more branc!es and franc!ise and

t!ere s!oud be easy accessibiity of ser?ices rendered by a t!is system

• T!e processing of t!e demat account opening s!oud be made fast

• Aggressi?e efforts s!oud be made by saes team to tap t!e potentia customers

and to increase t!e customer base

• T!e bank s!oud aunc! more #efare sc!emes from time to time

• T!e ebroking ser?ice s!oud be introduced

• Customers s!oud be made a#are about t!e ser?ices ike p!one banking; net

banking; bi pay; demateriaiIation etc an instruction manua teing about !o#

to use t!eir ser?ices can aso be gi?en to t!e customer to make t!ese ad?anced

ser?ices more popuar



1


LIMITATION

• W!oe area is not co?ered in t!is project so ony 43 respondents are representati?e for

compete area its not idea data

• T!e study is imited to t!e different sc!emes a?aiabe under t!e Demat account seected

• T!e ack of information sources for t!e anaysis part is aso a imitation of t!is study

• +ess a#reness about t!is system in pubic is ?ery critica bock in t!is study

• )n t!is sytem ?ast financia terms are comes in t!is system but peopes are not introduce

#it! it so peopes are ony imited kno#edge about t!is system and not get sufficent

profit from t!is system



1


CONCLUSION

To concude; it can be said t!at t!e researc! findings ceary re?ea t!e good#i and

reputation of depository system among t!e customers 'ut t!ere is a need to strengt!en t!is

depository system by spreading a#areness about t!e ser?ices offered by *%D+; C%D+ and its

trading companies t!roug! ad?ertisement and by eBpanding t!e more branc!es of t!is system a

o?er t!e country and aso by tapping t!e potentia customers t!roug! inno?ati?e means



1


3I3LIOGRAPHY

We5,ite,

.re"iace#$e-.c#

.icici)irect.c#

.,4are4a$.c#

.i$)ia5*"",.c#

.#$e-c#$tr#".c#

.re)iff.c#

Referre) 5##,

1. 2i$a$cia" i$,tit*ti#$, a$) aret,:L.M.34a"e

!. I$9e,te$t a$a/ee$t:V.B.34a""a

&. Re,earc4 et4#)#"#/-:M#4it /*+taNa9)ee+ A//ara"

(. 2i$a$cia" ,er9ice,: S4a,4i . /*+ta Ni,4a a//ara"

http://www.icicidirect.com/

http://www.sharekhan.com/

http://www.indiabulls.com/

http://www.moneycontrol.com/

http://www.rediff.com/

http://www.icicidirect.com/

http://www.sharekhan.com/

http://www.indiabulls.com/

http://www.moneycontrol.com/

http://www.rediff.com/



1


ORIGNAL SYNOPSIS



1




1


<UESTIONEERIE

ues 18 Do you kno# about Depository systemU

A8 .es

'8 *o

ues G8 -a?e you sufficient kno#edge and a#areness about *%D+ or C%D+U

A8 .es

'8 *o

C8 To %ome eBtent

ues 58 Are you satisfied #it! fee structure of depository systemU

D8 .es

E8 *o

&8 To %ome eBtent

ues 8 'y #!ic! depository company do you make tradingU

&8 %!arek!an

,8 )ndiabu

-8 Reiance

)8 )C)C) directcom

J8 Ot!er

ues 48 )f your seected trading company increases t!eir annua c!arges #i you

go #it! itU

D8 .es

E8 *o

&8 )f c!arges are reasonabe

ues8 According to you #!ic! one is t!e most important factor for a trading

company to en!ance t!e oyaty and customersU

A8 Pro?ide maBimum profit

project on working of depostry system

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