Prepared byRagini Rathore

Bad deliveries

Fake certificates

Loss of certificates in transit

Mutilation of certificates

Delays in transfer

Delay in refund and remission of dividend etc

The first depository -1947 in Germany. In India -1996 with the enactment of Depositories

Act 1996

operations Regulations made by SEBI , bye-laws and rules of Depositories Act and SEBI

(Depositories and Participants) Regulations Act 1996

It is an organization

assists in the allotment and transfer of securities and securities lending

Shares-electronic accounts

BANK Holds Funds in an

Account Transfers Funds between

accounts as per instruction

Facilitates transfers without having to handle money

Facilitates safekeeping of money

DEPOSITORY Hold securities in an

account Transfers securities

between accounts as the instruction

Facilitates transfers of ownership without having to handle securities

Facilitates safekeeping of shares

National Securities Depository Limited (NSDL)- on june 7 1996

promoted by IDBI, UTI, NSE

Central Depository Services Limited (CSDL)- 1998

promoted by Stock Exchange Mumbai in association with Bank of Baroda, Bank of India, SBI and HDFC Bank

Depository Depository Participant (DP) Issuing company Investors

Stock Exchanges and Stock Brokers Registrars Clearing Corporation/ Clearing House and

Clearing Members

An agent of the depository. Must possess requisite qualifications prescribed by

the concerned depository maintaining the investor securities a/c an account similar to a bank a/c has to be opened

with the DP As per SEBI Regulations , financial institutions,

banks, custodians, stock brokers investor can deal with1 or more DP’s

SEBI made compulsory trading of shares of the companies listed in stock exchanges in demat form w.e.f 2nd Jan 2002

investor has to open beneficiary a/c, If he wants to trade in respect of the companies which have established connectivity with NSDL & CSDL

Beneficiary a/c-opened by the investor or a broker with a DP of his choice to hold shares in demat form

Only shares registered in the name of the a/c holder are accepted for dematerialisation

First open a demat a/c or security a/c with any DP of investor’s choice

Obtain a/c no. from his DP

A dematerialisation request form (DRF) to be submitted to the DP who intimates depository of the request

DP then submits the certificate along with the DRF to the registrar who confirms the demat request

Registrar validates the request, updates records ,destroys the certificates and informs depository who in turn credits the DP a/c

Depository participant updates the investor a/c and informs the investor

process takes about 15 days time and utmost 30 days

An investor may demat a part of his holdings and hold the balance in physical mode for the same security

It means conversion of demat holdings back into certificates

First he has to request DP for remat

Investor must fill up a remat request form (RRF)

The DP will forward the request to depository after verifying that the shareholder has the necessary balances

Depository will in turn intimate the registrar,RTA (registrar & transfer agent) will print the certificates and dispatch investor

NSE The SE , mumbai Calcutta Stock Exchange Delhi SE Ludhiana SE Bangalore SE Over the counter exchange of India Madras SE Inter connected SE Ahmedabad SE

▶ DP cannot effect any debit or credit in the demat a/c of the investor,valid authorisation of the investor is needed

▶ Regular reconciliation between DP and depositories

▶ Periodic inspection by depositories of the office of DP and registrar.

▶ DPs exercise care and diligence while issuing Debit Instruction Slips(DISs)

▶ DISs carry bar code and pre-printed serial no.

▶ All investors have a right to receive their statement of a/c’s periodically from the DP

▶ If the depository goes bankrupt, the creditors of the DP will have no access to the holdings in the name of the clients of the DP. Such investors may however transfer their holdings to another DP

▶ Compulsory internal audit of operations of DP by practicing Chartered Accountant every quarter

▶ Steps to be taken for safe keeping and back up of data at all levels

To the nation: Growing and more liquid markets

Increase in competitiveness in the international market place attracting many investors

Improved prospects for privatization of public sector units by creating a conducive environment

Considerable reduction in delay

Minimizes settlement risk and fraud restoring investors’ faith in the capital markets

To the investors (public)

Reduction of risks associated with loss, mutilation, theft and forgery of physical scrip

Elimination of financial loss from loss of physical scrip

Greater liquidity from speedier settlements

Reduction in delays in registration

No requisite of filling the transfer deed, payment of stamp duty and a lot of paper work

Reduced transaction costs through greater efficiency

To issuers:

Up-to-date knowledge of shareholders’ names and addresses

Reduction in printing and distribution costs of new issues

Easy transfer of corporate benefits

Improved ability to attract international investors without having to incur expenditure of issuance in overseas markets