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SUBMITTED BY Group - 2
Raj Sekhar Abhishek kumar
system.
Transfer of ownership of securities is done through simple account This method does away with all the risks and hassles normally
Who is depository?
Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by
book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors
A company formed and registered under the companies Act, 1956, and Which has got a Certificate of Registration from the SEBI.
Depositories in India
The depository model adopted in India provides for
a competitive multi-depository system. There can be various entities providing depository services. Such system is known as Multi-Depository System. At present two Depositories are registered with SEBI.
established in August 1996 It has 267 depository Participants (as on 13.12.08) Address:
Trade World, a Wing, 4th &5th Floors Kamala Mills Compound Lower Parel Mumbai 400013 website: nsdl.co.in
PROMOTERS OF NSDL
1. Industrial Development Bank of India Limited 2. Unit Trust of India 3. National Stock Exchange of India Limited
SHAREHOLDERS OF NSDL
State Bank of India
Oriental Bank of Commerce Citibank Standard Chartered Bank HDFC Bank Limited The Hongkong and Shanghai Banking Corporation Limited Deutsche Bank
Dena Bank
Canara Bank Union Bank of India
SERVICES
This is the second depository in India. This was formed and registered in 1999. It has 455 DPs as on 4.08.08 Address:
Phiroz Jeejeebhoy Towers 16th Floor, Dalal Street Mumbai website: www.cdslindia.com
PROMOTERS OF CDSL
Bombay Stock Exchange Limited Bank of India, Bank of Baroda, State Bank of India and HDFC Bank
SHAREHOLDERS OF CDSL
Standard Chartered Bank Centurion Bank of Punjab Ltd Canara Bank Union Bank of India Bank of Maharashtra Jammu and Kashmir Bank Limited The Calcutta Stock Exchange Association Limited Others
A Bank-Depository Analogy
Bank
1.Holds funds in an account on behalf of a customer 2.Transfer funds between accounts on the instruction of the account holder. 3.Physical handling of funds is avoided. 4.Provides safe custody of fund
Depository
1.Holds securities in an account on behalf of an investor. 2.Transfer securities between accounts on the instruction of the account holder. 3.Physical handling of securities is avoided. 4.Provides safe custody of securities.
depository through which it interfaces with an investor. A DP can offer depository services only after it gets proper registration from SEBI. A DP is just like a Branch of a Bank.
Types of ownership
In the depository system, the ownership of securities dematerialized is bifurcated in to:
REGISTERED OWNER
BENEFICIAL OWNER
Benefits to investors:
1.
2. 3. 4. 5. 6.
The transactions in electronic mode eliminated the risk and problems of delays. The risk of bad deliveries is totally eliminated There is no requisite of filling up the transfer deeds, payment of transfer stamp duty and a lot of other paper work at the end of the investor. It totally eliminates the risk associated with fraudulent interception of certificates in postages or transits.. Transfer of ownership of securities is immediate in case of depository mode. The investment, automatically, becomes more liquid. contd.
Contd.
The problem of odd lot is also eliminated, as the depository mode does not have any concept of market lot. 8. Holding investments in equity and debt in a single account. 9. Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately. 10. Transmission of securities is done by DP eliminating correspondence with companies. 11. Nomination facility.
7.
1.
ACCOUNT OPENING:
In order to avail of depository facilities, an investor has to open a beneficiary account with a depository participant of his choice.This is similar to opening a bank account to use the banking services. Just as one can hold funds in a bank account and transfer funds across accounts without actually handling cash;one can hold securities in a depository account and transfer securities across depository accounts without actually handling share certificates.
contd.
Contd.
The account holder is called 'beneficial owner' in a
Contd.
For the purpose of verification, investor has to submit the following documents along with the prescribed account opening form.
driving license etc.) 2. Proof of Address (POA) (ration card, ank pass book copy voter id card etc.) 3. Passport-size photograph
Contd.
Copy of PAN card The DP will also provide a copy of the DP-Client
agreement.
The demat account cannot be operated on "either or survivor" basis like the bank account. In case of the joint account for the beneficial owners, all the joint holders have to sign the account opening form. The investor will submit to his DP the duly filled in account opening form & DP-client agreement along with the documents. On successful opening of the account, the DP will give: Client Id - an eight digit number to be used along with DP Id for any future transactions. Delivery Instruction slip book.
1. 2.
contd.
More than one demat account can be opened in the
similar / identical name and order with the same DP or different DPs. A periodical statement of holdings and transactions is provided by DP. This can also be asked for from the DP
What is dematerialisation?
Dematerialisation is the process by which physical certificates of securities of an investor are converted to an equivalent number of securities in electronic form and credited into the investors account with his/her DP. It is to be noted that an investor can hold shares in physical form but for the purpose of trading in stock
Process of dematerialisation
An investor intending to dematerialise its securities needs to
Dematerialisation Request Form for dematerialisation, along with the certificates of securities to be dematerialised. Before submission, the client has to deface the certificates by writing "SURRENDERED FOR DEMATERIALISATION". The DP will verify that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. If the form and security count is in order, the DP will issue an acknowledgement slip duly signed and stamped, to the client.
Contd.
After intimating NSDL electronically, the DP sends the securities to
the concerned Issuer/ R&T agent. NSDL in turn informs the Issuer/ R&T agent electronically, using NSDL Depository system, about the request for dematerialisation. If the Issuer/ R&T agent finds the certificates in order, it registers NSDL as the holder of the securities (the investor will be the beneficial owner) and communicates to NSDL the confirmation of request electronically. On receiving such confirmation, NSDL credits the securities in the depository account of the investor with the DP. This procedure takes 15to 30 days.
Rematerialisation
Rematerialisation is the process by which a client can get his electronic holdings converted into physical certificates. A client can rematerialise his dematerialised holdings at any point of time.
Procedure of rematerialisation
The client has to submit the rematerialisation request to the DP with
whom he has an account. The DP enters the request in its system which blocks the client's holdings to that extent automatically. The DP releases the request to NSDL and sends the request form to the Issuer/ R&T agent. The Issuer/ R&T agent then prints the certificates, dispatches the same to the client and simultaneously electronically confirms the acceptance of the request to NSDL. Thereafter, the clients blocked balance are debited.
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