³That is what learning is. You suddenly understand something you've understood all your life, but in a new way.´
-Doris Lessing, Novelist


-very surprising


Depository system groundswell
ŠOver 1 crore 40 lakh demat accounts ŠOver 600 Depository Participants ŠOver 6,000 electronically connected service points ŠOver 99% of settlement volumes Š2 depositories (CDSL & NSDL)

Bank - Depository Similarity Bank¶s HO at Mumbai Delhi Branch Chennai Branch
Bank Depositors
Motilal Oswal (DP)

CDSL (Depository)

Kolkata Branch

State Bank of India (DP)

India Infoline (DP) Beneficial Owners


Legal Framework
ŠDepository to have net worth of Rs. 1 bn. ŠInvestor holdings in the depository cannot be attached except for Orders from competent authorities ŠMandatory indemnification against negligence


Legal framework

The Depositories Act
Enacted in July 1996 Investor has the option to hold securities in Paper mode or Electronic mode Depository will be the ³Registered Owner´ of the securities in the ROM Rights, Liabilities and Benefits are with Shareholders ( who will be the beneficial owners of the securities ) 8

Legal Framework SEBI (Depository & Participant) Regulations
Criteria for setting up of a Depository and for becoming a Depository Participant

Depository¶s Bye-Laws
Every depository to frame detailed Bye-Laws and procedures for its operations All participants will enter into agreement to follow 9 the rules and regulations

Depository Structure
Clearing Corporation Depository Issuer / Registrar

Clearing Members








DP 10



OnOn-line Inter-depository transfers Inter³On-line transfer facility´ between depositories means - instantaneous transfer, irrespective of investor¶s depository


What a depository does
Records ownership of securities in electronic form Records transfer of securities Facilitates Pledge/Lock-in/Earmarking of securities

What a depository does (contd.)
Updates records when fresh securities are issued or existing securities are extinguished in case of buyback Makes available up-to-date list of BOs for corporate actions


-making pleasant discoveries, obtaining advantageous results by accident, of things we are not in quest of


SecuritySecurity-related benefits to Investors in the depository system
Offers safety and convenience compared to holding securities in physical form Enhances liquidity by instantaneous transfers Delays, thefts, interceptions and subsequent misuse of certificates eliminated


Other benefits to Investors in the depository system
Change of name, address, Power of Attorney, deletion of deceased¶s name - can be done across companies by one single instruction to your DP Each share is a market lot for the purpose of transaction - so no odd lot problem Any number of securities can be transferred/delivered with one delivery order. Therefore, paperwork and signing of multiple transfer forms is done away with 16 No stamp duty on transfer of securities

System Access and Security
Pre-determined authorization levels for CDSL staff Policy-based Password protection User Profiles Triple DES encryption in software


Procedural Security 
Account monitoring - CDSL sends letters to BOs CDSL is subjected to a rigorous Internal audit procedure CDSL falls under the regulatory purview of SEBI


Contingency set-up set‡ Robust System Design to ensure safety ‡ Redundancy checks ± Redundant fail-over cluster ± DLT library ± Disaster Recovery Site


Disaster Recovery
‡ All data of holdings and transactions in BO accounts stored at the CDSL main site, is also backed up and stored at a remote site ‡ A pool of terminals for any DP can be set up at CDSL¶s main site or the remote site in case of disaster at DP site

«for the investor¶s peace of mind
Insurance ‡ Comprehensive insurance policy for investor protection ‡ Insurance cover of Rs. 50 crores per incident ‡ Self-excess of Rs. 50,000/-


Factors to be taken into account while choosing your DP
± Level of personnel infrastructure or and operating known to

± Bank, institution investors


± Proximity to place of residence/work ± Reasonableness of charges

Centralised Database Design
All records are stored and updated at a central location All transactions entered by users from anywhere in the country are updated instantaneously No room for entered transactions to remain uneffected - there are no transit positions

The CDSLTransaction Flow


Clearing Member

Clearing Member


24 Convenient services

easi (electronic access to securities information)
Statement of Holding of Securities in CDSL Demat Account Last 7 days transactions report for any ISIN Know rate and valuation of your holding Balances are updated after every 15 minutes from main system Information about DP, Issuers & RTAs Printing and downloading of Statement of Holding 25

easi (electronic access to securities information CDSL has introduced a unique facility giving information about ³ Corporate Announcements´ of companies, sourced from BSE Available to all users of easi & easiest


And now ..

asi est
electronic access to securities information
and 27

execution of secure transactions

easiest features 
Issue of

On-Market Early Pay-in Off-Market Inter-Depository instructions through internet

‡ SMS Alerts to demat account holders for - Debits in demat accounts - Corporate action like IPO Credits, Bonus, etc.


Types of securities available for demat CDSL has admitted securities of over 6000 Companies ‡ Admitted securities include: ± Equity shares ± Preference shares ± Debentures and bonds ± Government securities ± Commercial Papers ± Exchange traded funds ± Certificates of Deposit and ± Pass -Through Certificates ± Warehouse receipts (MCX & NCDEX Commodities)


«.after a rigorous examination of credentials
CDSL obtains
3 years Annual Report, Securities details, M&A of Association

Cross-referencing of facts done within documents and with independent data source Report of Issuers¶ Board of Directors and Auditors checked Letter sent to all stock exchanges where securities are listed 31

Audit Activism
Concurrent audit of key areas at DPs¶ office Report by independent auditor to be submitted by DPs twice a year Depository¶s on-site audit of DP operations once a year Besides the obvious transaction checks, infrastructure, staff, supervision levels are examined Depository itself is subject to audit by an independent auditor and report submitted to SEBI 32 once a year

The present tariff regime
Shift from ad valorem fee to ³fee-per-transaction´


It¶s time for Q & A



22723333 yogeshk@cdslindia.com