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Good Morning Everyone.

Presenting you…..
Depository system in India:
 Itsneed
 Process and

 Progress
The Depositories Act,1996.
 Introduction of Depository system in India.
 Issue, hold & transact in securities through
depositories.
 Two depositories operational i.e. NSDL & CDSL.

 Securities dematerialized at time of issue or
subsequently.
Need for Depository system.
 Immediate transfer of securities.
 Reduced cost of transaction.
 Elimination of risks related to physical securities.
 Reduction in paper work..
 Eliminating the need to intimating informational changes.
 Consolidation of folios & instruments.
 Faster & efficient services like transfer, transmission, receipt
of benefits, automatic credit of shares arising out of split,
consolidation & mergers.
Constituents of depository system
 Depository
 NSDL
 CDSL
 Depository participants (DP)
 Banks, including foreign banks.
 Financial institutions
 Stock brokers
 R&T Agents
 Custodians
 Clearing Corporations
 Non Banking financial companies
 Issuer / R&T Agent.
 Beneficial owners.
Bank Vs. Depository

arities… Differences…
ers Minimum balance requirement.
s rendered Account holder Vs. BO.
offices & Branches Use of Funds/ Securities.
mer identity verification
services
er of (funds/ securities)
c statements
ation facility
on of account.
g of account
ank/ depository transfers.
Processes…..
 Dematerialization

 Rematerialization

 Initial
public offers
 Trading & settlements.
 On Market transactions
 Off market transactions
 Inter Depository transactions
Dematerialization Process

Physical Securities Electronic Form.

Pre-requisites:

• Demat Account with any DP of the Depository.
• ISIN for the securities available with the Depository.
• Investor should be registered holder for the securities in the
books of the company.
Dematerialization Process
(Contd.)
1. DRF with certificates

BO DP

7. Statement of holding

3. DRF with
6. Credits 2.Electronic
certificates
In BO’s request
A/c

5.Confirms E-request.
Depository
Issuer/ RTA
4. Forwards Demat (NSDL/CDSL)
request
Rematerialization Process

1. RRF in duplicate

BO DP

3. RRF with
other Doc.s, 2. Enters
.Dispatch
if any. details
es 5.Debits
ertificate in BO’s in system
A/c

4.Confirms E-request. Depository
Issuer/ RTA (NSDL/CDSL)
Initial Public Offer Process
2. BO’s verification
Depository
Issuer / RTA 3. Verification Report (NSDL/CDSL)

4. Details of allotment.

5.Credit
securities

6. Intimation of allotment

BO

1.Application for allotment
Trading & Settlements Process
Transfer of securities in/ out of the Demat A/c can arise in the
following instances:

For execution of Off Market Transactions.
For settling On Market Transactions.

For Inter depository transactions.
Off Market Transactions
Transaction done on person to person basis without going
through stock exchange mechanism.

Pre-requisites:
Transfer of securities from one BO A/c to another BO A/c.

Both A/c’s are with same Depository though with different
DPs.
Neither buyer’s A/c nor seller’s A/c is with clearing house/
clearing corporation.
Off Market Transactions (Contd.)

1. Filled delivery instruction slip (DIS)
Seller
BO DP
4. Debits Securities.

2.Enters
Off mkt.
3.Transaction Transaction
5.Credits
ID generated In depository’s
Securities.
System.

Buyer Depository
BO (NSDL/CDSL) 6.Generates
Trade ID
On Market Transaction
Trades done by investors through stock exchange
mechanism and settled using same stock exchange mechanism.
 seller as well as buyer account is with CH/CC
Inter Depository Transactions.
 SEBI (Depository and participants) Regulations, 1996
requires depositories to be inter connected.
 Securities available for dematerialization on both depositories.

 Debit/ credit instructions have to given on inter-depository
delivery or receipts forms to the DP’s of seller and the buyer.
 These instructions are exchanged online for each day between
the depositories.
Progress So Far….

Particulars CDSL (updated NSDL (Updated
on 31st Aug’09)` on 29th Aug’09)
Companies 6313 7847
Depository 480 282
participants
DP service 6474 9725
centers
Investors A/c’s 59,21,904 1,00,33,692
(excl.Closed
accounts)
Looking Forward….
 Depository services to consolidate further.
 All scrip to be issued, held, traded and settled in Demat form.
 Banks would evince interest in extending loan against Demat
securities.
 Improved infrastructure.
 Simplification of operations & removal of barriers.
 Government securities admitted to NSDL.