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PROJECT REPORT AT STOCK HOLDING CORPORATION OF INDIA LIMITED ON A Descriptive Analysis of Depository Participant With Reference to Stock Holding

Corporation of India Ltd


A project Report submitted towards the partial fulfillment of the requirements of The two years full-time Post Graduate Diploma in Financial Services

Submitted by: Atulesh Kumar Singh Post Graduate Diploma in Financial Services (PGDFS) Roll No.: FT-FS-10-812 (2010-12 Batch) Institute for Integrated Learning in Management Graduate School of Management 16, Knowledge Park-II, Greater Noida-201306

DECLARATION FORM I hereby declare that the Project work entitled___________________________ _____________________________________________(write the title in Block Letters) submitted by me for the Summer Internship during the Post Graduate Diploma in Management Program to Institute for Integrated Learning in Management, Greater Noida is my own original work and has not been submitted earlier either to IILM GSM or to any other Institution for the fulfillment of the requirement for any course of study. I also declare that no chapter of this manuscript in whole or in part is lifted and incorporated in this report from any earlier / other work done by me or others.

Place : Date : Signature of Student

Name of Student Address

: _____________________________ : _____________________________ ______________________________ ________________________________

ACKNOWLEDGEMENT
An exchange of ideas generates a new object to work in a better way. Apart from the ability labor and time devotion, guidance and co-operation are two pillars for the success of a project. Whenever a person is helped or co-operated by others, his heart is bound to pay gratitude to others. A satiation and pleasure that accompany the successful completion of task would be incomplete without the mention of the people who have made it possible and whose consent guidance and encouragement served as a guiding light for the completion of the study. I express my sincere gratitude to Dr. Meena Bhatia, Director, IILMGSM, for providing me an opportunity to undergo summer training. And also for those who have guided and inspired me in completing this study. I would like to express my deep sense of gratitude to Ms. Sanchita Ghosh for giving me support and helping me during my project study. I would like to express my gratitude to my project guide Mr. Vijay Garg for his constant encouragement and guidance without the task would not have been completed. Last but not the least I would like to thank my parent and friends for their support and suggestions.

THANKYOU ALL ATULESH KUMAR SINGH

CONTENTS
Chapter No. Chapter I Chapter II At a Glance Introduction Contents Page 1-2 3-6

Background Purpose Objective Limitations of the study Plan analysis

Chapter III Chapter IV Chapter V Chapter VI Chapter VII Chapter VIII Chapter IX

Industry Profile Company profile Products and Services SWOT Analysis Methodology Analysis & interpretation Summary of findings Recommendations & Conclusion Bibliography Annexure

7-20 21-25 26-53 54-56 57-58 59-77 78-80 81-83 84 85-88

CONTENTS OF THE GRAPHS

Serial Number Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Table 16 Table 17 Table 18

Title Age group of respondents No. of shareholders trading in SHCIL No. of years the respondents holding the shares in SHICL How safe the securities are in opting the demat Most preferred DP product Selection of the source in which information is available Selection of Stock Exchange by the shareholders and brokers. Attribute of services available at SHCIL Selection of investment avenues. Tailor-made services Value-added services available to the clients at SHCIL Satisfaction in terms of Infrastructure, software of the organization. Effectiveness of the DP services compared to Other financial institutions. Interest rates in terms of loan against demat Held in DP. Safety & security of the demat account. Service charges charged by SHCIL Effectiveness in settling the stock On-line trading.

Page Number 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77

Stock Holding Corporation of India Limited

At a Glance

Executive Summary

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Stock Holding Corporation of India Limited

The study is about describing the different services and products offered at SHCIL. Project mainly deals with how the resources of the organization are used in their dayto-day activities. For a finance manager it will be of great help to know how to properly utilize the resources of the organization. It is not only the theory, which will help in the corporate world, but also how things happen practically. Here there is an opportunity to learn how the things happen practically. Every day the various activities happening in the department are observed and understood carefully. The study initially concentrated on obtaining the information from the investors on various parameters. As it is a finance project mainly data was be available internally. After finishing this task, the actual analysis of the project has been started where certain important calculations has been done. This helped to come out with some conclusions. Also the data pertaining to some Demat Section Managers has been taken and analyzed which made to arrive at some interim conclusions as a part of project. Stock holding has various financial Products and Services to be offered to the clients but problem lies in the low promotional activities undertaken by it, due to which though it has the services not offered by other DP's it fails in captivating customers. Another problem faced by it is technology; systems at stock holding are not technologically upgraded: it follows old technology and modes of making entries of payments into systems. Due to system error payments to franchisees are not made on time, which in turn affects their business relationship. Since stock holding is into DP's business from long time it still follows old methods of operations. Thus, I got interested to conduct study on the Depository Services under the title Descriptive analysis of Depository Participants with reference to Stock Holding Corporation of India limited.

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Introduction

Background

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Depository
A depository is a facility for holding securities, which enables securities transactions to be processed by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise them (so that they exist only as electronic records).' India has chosen the dematerialisation route. In India, a depository is an organization, which holds the beneficial owner's securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with it through a registered DP.

Depository Participant
A Depository Participant (DP) is an agent of the depository who is authorized to offer depository services to investors. Financial institutions, banks, custodians and stockbrokers complying with the requirements prescribed by SEBI/ Depositories can be registered as DP.

Benefits of Depository
Bad delivery eliminated Immediate transfer of shares No stamp duty on such transfers Elimination of risks that are normally associated in dealing with Physical certificates - loss / theft / mutilation due to careless handling / forgery / etc Reduced transaction cost

Services provided by Depository


Dematerialisation (usually known as demat) is converting physical certificates to electronic form Rematerialisation, known as remat, is reverse of demat, i.e. getting physical certificates from the electronic securities Transfer of securities, change of beneficial ownership Settlement of trades done on exchange connected to the Depository Pledge / Hypothecation of demat shares, viz. Loan against shares

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Electronic credit in public offering of the Companies Non - Cash corporate benefits, viz. Bonus / Rights - direct credit into electronic form

No. of Depository in the country


National Securities Depository Ltd. Central Depository Services Ltd.

Research Title
A Descriptive Analysis of Depository Participants in Delhi with reference to Indias Largest DP Stock Holding Corporation Of India Ltd.

Purpose
The past few years have seen a phenomenal growth in the capital market leading to an explosion in transaction holding despite the transparency offered by NSE and BSE, the primitive settlement and transfer process kept the biggest chunk of the market risk- bad delivery, delayed transfer, fake certificates, loss and theft etc, unresolved. The Depositories is the answer to such risk and problems. Introduction of the depositories has paved the way for instituting an infrastructure for eliminating these risks and increasing the efficiency of the system. The purpose of this study is to provide information to both the organization and the investors/savers, providing to the former present state and future prospect and to the later differences among the services provided by the various depository participants. This Analysis will help to have a better understanding about where SHCIL stands in the market today and also to compare various DPs on certain parameters.

Objectives
The main objectives of the project undertaken are To understand the attitude and perception of investors/savers towards the DPs. To ascertain SHCILs position in the competitive market. To collect the data on various parameters Tariff Service Reach(No. of branches)

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Promoters Product

To develop and analyze strategies of SHCIL to help improve its market share. To offer suggestions based upon the findings.

Limitations of the study


The study is limited only to SHCIL, HO Nehru Place New Delhi. There was a constraint of time. The entire study is based on the information provided by the various respondents at SHCIL. For the purpose of collecting vital information, Manager of the organization is only contacted & interviewed. Since he is an individual, his biases may have creped into the data given. The policy of the company does not allow getting all the information.

PLAN ANALYSIS
The collected data will be analyzed with the help of parametric techniques such as percentages, correlation, regression, co-efficient of variation and the like. Wherever necessary tables charts, graphs, diagrams are used.

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INDUSTRY PROFILE

INDUSTRY PROFILE

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FINANCIAL MARKET Globalization of the financial market has led to a manifold increase in the investment. New markets have been opened: new instruments have been developed: and new services have been launched. Besides, a number of opportunities and challenges have also been thrown open. Stock Holding Corporation of India Limited. (SHCIL), the premier custodian of Indian capital market providing services of international standards, is geared up to reposition itself in the changed scenario. With world acclaimed automation and a team of committed professionals, SHCIL is confident of scaling new heights. Combining its financial strength and technical expertise to serve the clients better, wherever and whenever it is needed, SHCIL envisages acting as a partner one can trust. The corporation has restructured and geared itself to serve the growing needs of individual investors in the paperless environment. SHCIL desires to give investors the time and attention in monitoring the performance of their securities consistently. All aimed at providing the investor with optimum financial gain. India has a well established capital market mechanism where in effective and efficient transfer of money capital or financial resources from the investing class to the entrepreneur class in the private and the public sector of the economy occur. There has been a shift of house hold savings from physical assets to financial assets, particularly the risk bearing securities such as shares and debentures. Capital market structure has also undergone sea Changes with number of financial services and banking companies, private limited companies coming into the scene which made the competition in the market stiffer. CAPITAL MARKET The capital market consists of primary market and secondary market segments. The primary market deals with the issue of new instruments by the corporate sector such as equity shares, preference shares and debentures. The public sector consisting of central and state governments, various public sector industrial units (PSUs), statutory and other authorities such as state electricity boards and port trust also issue bonds.

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The primary market in which public issue of securities is made through a prospectus is a retail market and there is no physical location. The secondary market or stock exchange where existing securities are traded is an auction arena. Since 1995, trading in securities is screen based. Screen based trading has also made an appearance in India. The secondary markets consist of 23 stock exchanges including the NSE and OTCE and Inter Connected Stock Exchanges of India ltd. The secondary market provides a trading place for the securities already issued to be bought and sold. It also provides liquidity to the initial buyers in the primary market to re-offer the securities to any interested buyer at a price, if mutually accepted. An active secondary market actually promotes the growth of the primary market and capital formation because investors in the primary market are assured of a continuous market and they can liquidate their investments in the stock exchange. DEPOSITORY Depository is an organization where the securities of a share holder are kept in the electronic form at the request of the shareholder through a medium of a depository participant (DP). The principal function of a depository is to dematerialise securities and enable their transactions in book form electronically. In India, the Depository Act defines a depository to mean A company formed and registered under the companies act, 1956 and which has been granted a certificate of registration under sub-section (la) of section 12 of the Securities and Exchange Board of India (SEBI) act, 1992. Legal Framework of Depositories: The depositories act of 1996 provides for regulation of depositories in securities and for matter there with or incidental there to and came into from 2Oth of September, 1995. SEBI formulated the Depositories and participants regulations act, 1996 to oversee the matter regarding admission and working of depositories and its participant. The depositories act passed by parliament received the president assent on august 1, 1996 enables the setting up of multiple depositories in the country. Only a company

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registered under the Companies Act Of 1956 and sponsored by the specified categories of institution can setup depositories in India. The depository offers services relating to holding of securities and facility processing of transactions in such securities in book entry form. The transactions handed by depositories include settlement of market trades, settlement of off trades, Securities lending and borrowing, pledge and hypothecations. Eligibility Criteria for a Depository: Any of the following may be a depository: 1. A public financial institution as defined in section 4a of the Companies Act Of 1956. 2. A bank included in the second schedule to the RBI Act, 1934. 3. A foreign bank operating in India with the approval of the RBI. 4. Recognized stock exchanges. 5. An institution engaged in providing financial services where not less than 75% of the equity is held jointly or severally by these institutions. 6. A custodian of securities approved by government of India. 7. A foreign financial services institutions approved by government of India. The promoters of depository are also known as its sponsor. A depository company must have a minimum worth of Rs. 100 Cr. The sponsor of the depository has to hold at least 51% of capital of the depository company. Agreement between Depository and Issuers: If either the issuer (a company which has issued securities) or the investor opts to hold his securities in demat form, the issuer enters into an agreement with the depository to enable the investors to dematerialize their securities. Where an issuer has appointed a registrar to the issue and Registrar and Transfer (R&T) agent, the case may be for the securities declared for dematerialization Rights and Obligations of Depositories:

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1. Every depository should have adequate mechanisms for reviewing monitoring and evaluating the controls, systems, procedures and safeguards. 2. Annual inspections of the procedures and same should be reported to SEBI. 3. To ensure that the integrity of automatic data processor systems is maintained to safeguard information. 4. Adequate measures including insurances, to protect the interests of the beneficial owners against any risk. Functions of Depository: Dematerlisation One of the primary functions of depository is to eliminate or minimize the movement of physical securities in the market. This is done through converting securities held in physical form in to holdings in to back entry form. Accounts Transfer The depository gives effects to all transfers resulting from the settlement of trade and other transaction between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer and registration A transfer is a legal change of ownership of a security in the records of the issuer. Transfer of securities under demat occurs merely by passing book entries in the records of the depositories, on the instructions of beneficial owners. Pledge and hypothecation Depositories allow the securities placed with them to be used as collateral to secure loans and other credits. The securities pledged are transferred to a segregated or collateral account through book entries in the records of the depository.

Linkages with clearing system

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The clearing system performs the functions of ascertaining the pay-in (sell) or pay (buy) of brokers who leave traded on the stock-exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by depository. To achieve this, depositories and the clearing system are linked electronically. To handle the securities in electronic as per the Depositories Act 1996, two depositories are registered with SEBI. They are: National Securities Depository Limited (NSDL), Central Depository Services (India) Limited (CDSL). DEPOSITORY PARTICIPANTS Depository participants (DPS) are described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an arrangement made between the two under the depositories act. In a strictly legal sense an OP is an entity who is registered as such with SEBI under the provisions of the SEBI Act. As per the provisions of this act an OP can offer depository services only after obtaining a certificate of registration from SEBI. Eligibility Criteria For Depository Participant A public financial institution as defined in sections of the companies act. A bank included for the time being in the second schedule to the RBI. A foreign bank operating in India with the approval of RBI. A state financial corporation established under the provisions of section 3 of the state financial corporations act, 1951. An institution engaged in providing financial services promoted jointly or severally by any of the institutions mentioned above. A custodian of securities who has been granted a certificate of registration by SEBI. A clearing corporations or a clearinghouse of stock exchange.

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A stock broker who has been granted a certificate of registration by SEBI. A non-banking finance company..

A person desirous of becoming a DP of NSDL should make an application to SEBI through NSDL. NSDL evaluates and sends to SEW within 30 with recommendations. If all the conditions are met SEBI grants the registration certificate to the applicant. SEBI prescribes a minimum net worth of Rs.50 Lakh for stock brokers, R&T agents and non-banking finance companies (NBFCs) for granting them a certificate & registration to act as a DR. A certificate of registration is valid for a period of 5 years. It may be renewed after 5 years. Rights and Obligations of Depository Participant 1. Agreement with beneficial owners: The OP must enter into an agreement with a beneficial owner before acting as a DR on his behalf. A DR while conducting business with a client, acts as an agent of NSDL and is liable to the clients for all the acts and deeds performed by him. 2. Separate accounts: The DP shall open a separate account in the name of each beneficial owners account only on receipt of instructions from beneficial owner. 3. Statement of account: The OP should provide statements of accounts to the beneficial owner as laid in the agreement with the beneficial owner. It should be done fortnightly if any transactions are made and at least quarterly if no transactions are done, It can be provided through internet. 4. Transfer or withdrawal by beneficial owner: The DP should allow a beneficial owner to withdraw or transfer securities from its accounts in such manner as specified in the agreement with beneficial owner.

5. Connectivity:

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The DP should maintain continuous electronic communication with each P0SItory in which it is participant. 6. Monitoring, reviewing & evaluating internet systems & controls: DP should have an adequate mechanism for the purposes of reviewing monitoring and evaluating its internal accounting controls and systems. It has to get an audit done on quarterly basis. 7. Reconciliation: The DP shot reconcile its records with every depository in which it is participant on a daily basis. The NSDL system is designed to do this automatically every day at the end of the day (EOD). 8. Returns: The DP should submit periodic returns to SEBI and to every depository in which it is a participant. 9. DP to indemnify depository: A DP has to indemnify the depository, its officers and employees for all costs, fees, expenses, liabilities, taxes, actual losses and damages of any nature what so ever suffered like failure to comply with laws, failure to deliver eligible securities etc. 10. Prohibition of Assignment: No DP can assign or delegate its functions as a participant to any other person without prior approval of NSDL. 11. Insurance: DPs should take appropriate insurance cover to insure against losses arising from any possible business risk and system failure. 12. Record of services: The DP should maintain and preserve the documents for all transactions for a minimum period of 5 years. 13. DP to ensure integrity and back-up of data:

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Where DPs maintain electronic records, they should ensure the integrity of the data processing system. All necessary precautions should be taken to ensure that the records are not lost, destroyed or tampered with sufficient back-up of records should be taken and made available at all times at different places. SEBI at any time may cancel the registration of DP if they are not in complying with the rules laid by the depositories act. Like guilty of fraud, repeated defaults. DR may sometimes choose to terminate its participation in the depository by giving notice of less than 30 days. GOVERNING BODIES OF DEPOSITORY PARTICIPANT National Securities Depository Limited (NSDL) National securities depository limited is the first depository to be set up in India. It was incorporated on December 12, 1995. The Industrial Development Bank of India (IDBI) the largest development bank in India, UTI the largest Indian mutual fund and the National Stock Exchange in India sponsored the setting up of NSDL and subscribed to the initial capital. NSDL commenced operations on November 8, 1996. Following organizations are share holders of NSDL as on march 31, 2001: a) INDUSTRIAL DEVELOPMENT BANK OF INDIA b) UNITED TRUST OF INDIA c) NATIONAL STOCK EXCHANGE d) STATE BANK OF INDIA e) GLOBAL TRUST BANK f) CITIBANK g) STANDARD CHARTED BANK h) HDFC BANK i) HSBC j) DEUTSCHE BANK k) DENA BANK

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l) CANARA BANK Ownership: NSDL is a public limited company incorporated under the companies act, 1956. NSDL had a paid up equity capital of Rs.10 crore. The paid-up capital has been reduced to Rs.80 crore since NSDL has bought back its shares of the face value of Rs.4.2 crore in the year 2000. However, its network is above Rs.100 crore as required by SEBI regulations. Management of NSDL: NSDL is managed by professional board of director. The managing director conducts the day to day operations. To assist the MD in his functions, the board appoints an executive committee of not more than 16 members. The eligibility criteria and period of nomination of the members of EC etc. are governed by the bye-laws of NSDL in this regard. Bye-laws of NSDL: The bye-laws approved by SEBI which contain 14 chapters they are: a) Short title and commencement b) Definitions c) Board of directors d) Executive committee e) Business rules f) Participates g) Safeguards to protect interest of clients and participants h) Securities i) Accounts by book entry j) Reconciliation accounts and audit k) Disciplinary action appeal

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l) Appeals m) Conciliation n) Arbitration Function of NSDL: NSDL performs the following functions through Depository participants (DP) Enables the surrender and withdrawal of securities to and from the depository (dematerialisation and rematerialisation). Maintains investor holdings in the electronic form. Effects settlement of trades not done on the stock-exchange (off-market trades). Transfer of securities. Pledging I hypothecation of companies or corporate. Receipt of non-cash corporate benefits like bonus rights r electronic form. Stock lending and borrowing.

The investors interact with a depository participant (DP) of NSDL. A DP can be a bank, financial institution, a custodian or a broker. Just as one opens a bank account to avail of the services of a bank, an investor has to open an account with a DP in order to avail of the depository facilities. Central Depository Services Of India Limited (CDSL) Central depository services of India ltd were the second depository to be granted the commencement certificate by SEBI on 8 February 1999, inaugurated on 15 July 1999. It is promoted by the Bombay stock exchange, in association of bank of India. Both NSDL and CDSL interface with investors through their service providers known as DP. The depository is interconnected. It is possible to transfer shares from one depository to another.

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CDSL was promoted by The Stock Exchange, Mumbai (BSE) jointly with leading banks such as State Bank of India, Bank of India, and Bank of Baroda HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank. CDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. Some of the important milestones of CDSL system are: . CDSL received the certificate of commencement of business from SEBI in February 1999. Honorable union finance minister, Shri Yashwanth Sinha flagged off the operations of CDSL on July 15 1999. All leading stock exchanges like national stock exchange, Calcutta stock exchange, Delhi stock exchange, stock exchange Ahmedabad, etc have established Connectivity with CDSL. At the end of December, 2007, over 5000 issuers have admitted their securities (equities, bonds, debentures, and commercial papers), units of mutual funds, certificate of deposits, etc. into the CDSL system. BENEFITS AND SAFETY OF DEPOSITORY SYSTEM In the depository system the ownership and transfer of securities take place by means of electronic book entries. At the outset, this system capital market of the dangers related to handling of paper. The benefits that are accrued by this system are: > Elimination of bad deliveries: Once the holdings of investors are dematerialized, the question of bad deliveries doesnt arise because both transfer deed and share certificate are eliminated in depository system. > Elimination of all risks associated with physical certificate: Dealing fl physical securities have the associated risks of loss of certificates during movements to and from the registrars. These expose the investor to cost of obtaining

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duplicate certificates, advertisement etc., such problems dont arise in the depository environment. > No stamp duty: No stamp duty for transfer of equity instruments and units of mutual funds in this system. > Immediate transfer and registration of certificate: Once the securities are credited, to the investors account on payout, he becomes the legal owner of the securities. > Faster settlement cycle: The exclusive demat segment follow rolling settlement of T+2 days which enables faster turnover of stock and enhance liquidity with the investor. > Buyer is secured: In physical environment, the buyer is not secured since the shares purchased may not be transferred. This is not the case with depository system. > Faster disbursement of non-cash corporate benefits: NSDL provides for direct credit of non-cash corporate entitlements like rights, bonus etc., to an investors account ensuring faster disbursement. > Reduction in rate of interest on loan: Some banks provide these benefits against pledge of departmentalized securities. > Increase in maximum limit of advances: This increases from Rs.l0 lakh to Rs.20 Lakh per borrower. There is also a reduction in minimum margin from 50% to 25% by banks to advances against demat securities. > Reduction in brokerage: Brokers may provide a reduction in the brokerage of 0.25% to 0.5% for trading in dematerialised securities as it reduces their back office cost of handling paper. > Reduction in handling huge volumes of paper:

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In the physical environment every entity involved in purchase or sale of securities was to handle paper and pass on the paper to the next entity. But in the depository system only the delivery instruction to be given by the client is in the form of paper. > Periodic status reports: DPs need to provide periodic reports to investors on their holding and transactions. >Elimination of problems related to change of address of investors, transmission etc: Investors have to inform the change of address to the OF which will be reflected in the database of all the companies where the investor is a registered holder of securities. Many safety measures like investor grievances, insurances cover, computer and communication infrastructure, periodic review, certificate of registration were made necessary to protect investors.

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Company profile

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COMPANY PROFILE STOCK HOLDING CORPORATION OF INDIA LIMITED


1.1 Introduction to the company: Flagged off at the initiative of the Government of India, SHCIL enjoys an enviable parentage that very few organizations can boast of, including leading Indian Financial Institutions and the Insurance majors. It has been jointly promoted by IDBI, ICICI, IFCI, IIBI, UTI, LIC, and GIC and its subsidiaries. It is headed by luminaries from its promoter institutions who constitute its Board of Directors and take policy decisions pertinent to the affairs of the corporation. A senior management team that reports to the Managing Director and the CEO aids, assists and strategies business lines for the Corporation. The primary focus of the corporation was specific to set up custodial services of international standards in India and in the process to manage the entire array of post trade activities of Financial Institutions and Foreign Institutional Investors with dedicated client relationship teams and state-of-the-art reporting systems. The corporation quickly garnered nearly 70% market share of the domestic custodial business and the financial figures shot up impressively for the first decade of its existence. With sustained market leadership, the biggest investing body of the country in its client list, SHCIL ensures that its technology support not only holds enormous databases together but also makes sense and service out of it too. The Smithsonian Institutes Award for Innovative Use of Technology in the Field of Finance in1996 and Computer Society of India Award were affirmations of its efforts, long before information technology started leapfrogging across the country. SHCIL has also received No Action Letter from Securities Exchange Commission (SEC) of USA, which renders it an eligible institution to hold assets of US-based funds.

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1.2 Vision of the Company: To become one stop shop for all financial services . This vision of the company is slowly being achieved with the foray of the company into new financial services and products into its portfolio the latest to be the Insurance product, which would be soon distributed. 1.3 Mission of the Company: To spread Quality Service through the innovative use of technology . 1.4 Objectives of the Company: To retain the No. 1 position in the DP industry by being ahead of all other DP service providers with the innovative use of technology. To provide justified service to every rupee the client pays. To ensure security and convenience of transaction to its clients at reasonable price. To channel technology to make convenient products for financial market that give quantum benefits to investors, corporate houses and brokers. To reach 37 million Internet users in the years to come with e-commerce projection scaling USD 1.7 billion. To move with speed and ease, diversifying into new areas, considerably on others and sharpening its focus and paradigms. To increase its customer base, this at present is 7 lakh. To evolve a new strategy to emerge as a broad based financial powerhouse in the years to come. To expand to the South-East Asia, with the aim of becoming the leader.

1.5 Basic facts about SHCIL SHCIL is Indias largest depository participant. SHCIL has around 20% market share i.e. over 8 lakhs demat accounts.

SHCIL has approx, 50% market share of delivery- based transaction which amount to 1.33 crore transaction.

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1. Short title and commencement 2. Definitions 3. Board of directors 4. Executive committee 5. Business rules 6. Participates 7. Safeguards to protect interest of clients and participants 8. Securities 9. Accounts/transactions by book entry 10. Reconciliation, accounts and audit

Our Values
Safety and Efficiency of operations is a hallmark of SHCIL Professionalism and Integrity Customer First Relationship Building Commitment to Quality irrespective of asset size

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HIERARCHICAL STRUCTURE OF SHCIL

BOARD OF DIRECTORS

MANAGING DIRECTOR & CEO

JOINT MANAGING DIRECTOR

Sr V P ( BUS. DEV)

Sr VP (FINANCE)

VPs (FUNCTIONAL)

ASSISTANT VPs

DIVISIONAL MANAGERS

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Product and services

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PRODUCT PROFILE

1. ADDSHARES INTRODUCTION SHCIL arranges loan against DEMAT shares. Tie-up with reputed banks which offer you the most competitive interest rates the market. You can use the shares in your free account as collateral and take a loan from any of our empanelled banks. SHCIL completes your documentation and processing and gives you a cheque within 48 hours of application. Add shares are available at SHCIL centers in all the major cities. FEATURES Loan against DEMAT shares held in the DP account with SHCIL. Competitive interest rates from a range of banks SHCIL has tied up with. SHCIL processes the entire paperwork required with the bank. The service is available at any of over 100 branches of SHCIL. ADVANTAGES Our tie ups with banks give you a wider range of banks to choose from. This leads to a wider range of specified and non-specified shares to get loan against. This is a resultant of their tie up with a wide range of banks. Add shares simplify long-winded loan procedures for you and facilitates early disbursements of funds. Add shares are available at any of our branches numbering over 120 in

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2. EQUIBUY
Even after payments have been made we have to wait patiently to see those shares reflected in the DEMAT account. With the odd surprise of not seeing them at all which you cannot discount! As your depository participant SHCIL assures you safe delivery of shares every time you buy on the exchange. We have lined up a panel of reputed brokers who process your orders on priority. Go through the detailed EQUIBUY procedure and you will see how EQUIBUY in a one stop shop for your share purchases. FEATURES An EQUIBUY instruction from you gets the shares credited into your account the next day of payout. Payment for your purchase made from a running account called purchase advance into which you remit an initial advance of Rs. 1000 and maintain a minimum balance of Rs.250 at all times. Choose one or more brokers from a list of 77 brokers empanelled with SHCIL. Registration with broker is not necessary if you are already registered under any of our other product schemes. Purchase on BSE or NSE. ADVANTAGES Buy shares with a single instruction and get an assured credit of shares into your account the next day of payout. Leave the settlement procedures and broker interaction to us. Affect a faster turnaround of your portfolio. EQUIBUY has a very nominal charge attached to it. An initial advance of Rs. 1000 in the purchase advance account and replenishments, as and when necessary, take care of payment for your purchases. Choose the exchange you want to buy from- BSE or NSE.

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EQUIBUY from the SHCIL center closest to you. Select from 200 plus SHCIL centers across the country. TARIFF On Delivery Basis 0.55% on the value of transaction on delivery basis with a minimum of Rs.50 per client per broker settlement.

3. FUNDINVEST
Introduction Fund Invest is a basket of financial products, ranging from fixed income securities like fixed deposits, Infrastructure bonds and Capital Gain Bonds to variable income securities like Initial Public Offers (IPOs) of Equities and Mutual Funds. An effort to guide the investor to a product portfolio that best suits his risk- returns profile. Applications for investments can be source from any of the SHCIL offices. Apart from guiding our investor to pick up the right combination of investment instruments, we help them 'after-sales' service, by acting as an interlocutor between the investor and the issuer of the securities. SHCIL is an AMFI Registered Mutual Fund Advisor (ARMFA). Features At present, we are distributing schemes of 25 different Mutual Funds All these Funds offer wide varieties of investment option depending on the risk appetite of the investor. Some of the major categories are: Debt Funds: The Debt Funds have the mandate of investing primarily in Debt papers Equity Funds: The Equity Funds have the mandate of investing primarily in Equities Balanced Funds: The Balanced Funds have the mandate of investing both in Equities as well as Debt papers. Capital Gains Bonds come under 54 EC Capital Gains Bonds, where investors get exemption from Capital Gain tax. These are 'on -tap ' issues. At present, SHCIL is distributing Capital Gain Bonds of Rural Electrification Corporation, National Housing Bank, Small Industries Development Bank of India and National Highway Authority of India.

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Infrastructure Bonds are issued by ICICI Bank and IDBI, with Section 88 as the main feature Private Placements: Debt papers issued for Private Placement with Structural Obligations by the State and Central Government typically targeted for Trusts and Provident Funds are distributed by Stock Holding. Fixed Deposits: Fixed Deposits with high investment rating and issued by blue- chip corporate are distributed by us. These papers generally offer 50 to 100 basis points more than bank fixed deposits of comparable period. At present, we are distributing PNB Housing Finance Ltd, Shriram Transport Finance Company Ltd, Tata Motors Ltd. Initial Public Offer: IPOs offered from blue-chip corporate can be subscribed from Stock Holding. Issues recently distributed by us are Power Finance Corporation of India. List of Mutual Funds HDFC Mutual Fund Principal Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fund UTI Mutual Fund

4. GOI BONDS
Savings Bonds are issued by RBI on behalf of Government of India in the following series. 8.0% taxable bonds These Bonds are held in electronic form in an account called Bond Ledger Account (BLA). Bond Ledger Accounts can be opened and operated with RBI designated Receiving Offices. SHCIL has been designated as one of the Receiving Offices by

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RBI for this purpose. Subscriptions for Savings Bonds can be submitted at any of our branches. Savings Bonds being sovereign in nature are absolutely safe and an attractive investment option in the current volatile market situation. The following categories can subscribe to Savings Bonds: Category of Investor 8.0% (Taxable) 1. Individual His or her individual capacity. Individual capacity on joint basis. Individual capacity on anyone or survivor basis. On behalf of a minor as father/mother/legal guardian. 2. HUF (Hindu Undivided Family) 3. Charitable Institution Charitable Institution to mean a Company registered under Section 25 of the Indian Companies Act 1956 An Institution which has obtained a Certificate of Registration as a Charitable Institution in accordance with a law in force Any institution which has obtained a certificate from Income tax Authority for the purposes of Section 80G of the Income Tax Act, 1961 4. University University means a University established or incorporated by a Central, State or Provincial Act and includes an Institution declared under section 3 of the University Grants Commission Act, 1956 to be a University for the purposes of that Act Features The salient features of the Bonds are listed below:

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1. Investment Limit Minimum investment is Rs.1000 and there is no maximum limit 2. Interest Option Payable half yearly on 1st Feb, 1st Aug or cumulative on maturity. 3. Tax Benefits Interest is taxable under IT Act 1961. Exempt from Wealth Tax under Wealth Tax Act 1957 4. Transferability : Non-transferable, non-tradable and cannot be used as collateral for borrowings 5. Nomination : Only sole holder or surviving holder can nominate 6. Repayment: Repayable on expiry of 6 years from date of issue. No interest would accrue after maturity 7. Premature Encashment is not available. Advantages Hassle free maintenance: The GOI Bonds are held in electronic form in an account called Bond Ledger Account. This ensures smooth investing minus paperwork. Electronic Clearing Services: You can avail of Electronic Clearing System (ECS) services. This ensures automatic credit of benefits and redemptions when they accrue. Easy access: You can apply for subscriptions into these Bonds in any SHCIL center across the country. Dispatch: Certificate of Holdings is dispatched to the client through courier on realization of subscription. Documents required ECS Mandate Documents

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Power of Attorney Documents (If appointed HUF Declaration (for HUF investors only) Certificate of Identity - for address change and nominee claims Minor - Birth certificate, Legal or Natural guardian certificate Form 60 or PAN for investments above Rs.50,000 Charitable Institutions - TDS exemption certificate from IT Department, Board resolution, Trust Deed Form 15H (Individuals Claiming Exemption of TDS) Universities - Incorporation Certificate under Section 3 of the University Grants Commission Act, 1956

5. INSURANCE

Introduction SHCIL, a company promoted by Insurance majors & Financial Institutions, is a Corporate Agent of LIC for Life Insurance products and NIA for General Insurance products. SHCIL has a dedicated team of IRDA Certified Insurance Advisors to provide all services relating to Insurance. We also provide Free Professional advice to clients on need base insurance. SHCIL has 200 plus odd Branches all over India to take care of all your Insurance related queries and needs.

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Features An insurance policy compensates you against the financial impact that can arise following loss, damage or destruction of your property (such as home or vehicle) or your health or life. A fundamental principle of insurance is to put you in the same financial position after a loss or accident that you enjoyed before the loss. This is relatively easy with repair or replacement of (say) a car, but is much more difficult with the loss of a life. The insurance policy is a contract and like any contract contains clauses and conditions. Claims are settled in accordance with the conditions detailed in the policy. SHCIL distributes Life insurance policies of LIC and Non-Life insurance policies of NIA. The service is available at any of over 100 branches of SHCIL.

LIC products 1. KEY MAN INSURANCE 2. CHILDRENS POLICY Jeewan kishore plan102 Jeewan Chayya plan103 3. ENDOWMENT POLICY Endowment with profits plan14 Jeewan Mitra plan 149 Join life (Jeewan Sathi) policy plan 89 4. RETIREMENT PLAN (G) PENSION FUNDS

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SHCIL offers pension fund administration services to pension fund trusts. The pension fund scheme administered by the trust could be a defined benefit or a defined contribution scheme. For both the scheme types, SHCIL offers the entire range of services that include design, development and maintenance of a customized pension.

SERVICE PROFILE Depository participants


Introduction Our Depository Participant services address your individual investment needs. With a parentage of leading financial institutions and insurance majors and a proven track record in the Custodian business, we have reiterated our past success by establishing ourselves as the first ever and largest Depository Participant in India. From a tentative foray in 1998 into the individual investor arena to servicing around seven lakh accounts, we have endeavored to constantly add and innovate to make business a pleasure for you. Across the country, fourteen Depository Participant Machines (DPMs) connected to NSDL and seven connected to CDSL ensure fast and direct processing of your instructions. Our customer-centric account schemes have been designed keeping in mind the investment psyche of our clients. Your DP account with us takes care of your Depository needs like dematerialisation, rematerialisation and pledging of shares. Matching of your scanned signature on every debit instruction with a digitally scanned original in our system makes all your trading transactions absolutely secure. Proactive backup of your instructions prior to execution in the Depository makes us oblivious to system crashes.

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Open account Before you open your account You can collect your account opening form from any of our branches or download it from our site itself. As prescribed by Depository bye-laws, accounts have to be opened in the exact order in which the name(s) appear on the share certificate. Remember that Holding pattern A B is not the same as BA. However, minor differences like abbreviations, spelling mistakes can be ignored provided signatures recorded with the registrar / company is the same. Get your account opening from details: Bank account number with complete address and 9 digit MICR numbers are filled correctly. This will facilitate effective disbursement of monetary corporate actions into your account. Signature of account holders are always in black. In case of Power of Attorney, Power of attorney holder has to sign at all places in lieu of the holder. Certified copy of the POA has to be provided along with the account opening forms. If you would like to receive credit of shares purchased directly into your account, mark standing instruction as 'Yes'. Your account is opened. Once your account is opened, you will be allotted a client identity number. You will be sent an operating kit containing: Details of your account as recorded by SHCIL. Copy of the agreement entered into with SHCIL.

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"Delivery instruction by client" booklet allotted to your demat account. This booklet helps you transfer shares from your account to broker account and other accounts. Now you are ready to operate your DP account.

Maintenance Change in permanent/correspondence address

A request letter ( format available on the site) signed by all the holders is required Along with this Photocopy of proof of identification and proof of new address is required. Please also bring the originals with you for verification purpose. Client or the authorized bearer can visit our branch for the same. Copy of the latest transaction statement received from SHCIL is also required. Change in signature Request letter (format available) signed by the client. The new signature to be attested by the bank. The request may be submitted along with the copy of POI and the photocopy of the latest transaction statement received from SHCIL. Addition of PAN/Mapin

Request letter signed by the client giving the PAN/Mapin number. Accounts with Power of Attorney

These accounts can be operated by both the client and the POA Holder. In case the client has given the POA in favour of 2 or more persons, then the mode of operation of the POA holders is also to be mentioned. In case the power of attorney is to be revoked, a letter signed by the client is required.

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Death of Beneficiary account holder(s) - Transmission of account

Transmission of account takes place in the event of death of the beneficiary account holder(s). There can be three situations in transmission of account. See which category you fit into and follow the relevant procedure: When the account has joint holders and one of the holder dies. When the account has a sole holder with a nominee. When the account has a sole holder without a nominee.

If the shares are transmitted to beneficiary accounts of surviving holders and this beneficiary account is in a DP other than SHCIL. Classify the transmission case into the above categories. Over and above the documents explained above, the client master list from the target DP has to be submitted. Freezing of account

An account is frozen/ suspended Only on your instruction. By competent authority i.e. by the Depository / SEBI. On receipt of court order.

Defreezing of account

Defreezing of an account takes place, Only on your instruction. For defreezing pledge accounts, your instruction has to be accompanied by bank authorization. Demat

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Dematerialization is the process of conversion of shares from physical form to the electronic mode. Our dedicated demat team enable you to convert your physical holdings into electronic mode in a quick and hassle-free manner. As per SEBI, scrips can be divided as: Scrips eligible for demat.

These scrips can be traded either in physical or electronic form. Scrips falling under compulsory demat.

These scrips can be traded only in electronic form. Scrips falling under transfer cum demat.

In this category, the shares purchased by you in the physical form can be sent to the Registrar / Company for transfer and dematerialisation at the same time. Submit Demat Request Form

Once your demat account is opened with us and you have received your client identity number, you can start dematerializing your shares. You can submit the shares over the counter at any of our branches. Do go through the tips given on filling up the DRF to avoid rejection. Your shares are dematerialized When the company gives you credit, these shares will reflect under "free" column. Now you can sell these shares. In case the company is not satisfied with the details furnished, it will reject the shares. If your shares have been rejected by the company, SHCIL will forward the shares to you on receiving them from the company.

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Pledge You can pledge or hypothecate your dematerialised shares against loan or credit facilities extended by a pledgee who also has an account with a DP The pledge procedure Pledgor fills in a form requesting the DP to pledge shares and hands it over to the DP If the form is complete in all respects, the DP processes the form and generates a pledge / hypothecation instruction number for the request Securities to the extent of the instruction are debited from the free or locked-in balances and credited as pledged balances of the pledgor so that they cannot be used for any transactions The pledgee will submit a form to its DP to accept / reject the pledge / hypothecation request If the pledgee accepts the request by the pledgor, the acceptance is communicated electronically to the pledgor's DP. Once the pledgee's DP confirms the acceptance of the pledge, the pledgor cannot cancel the pledge / hypothecation order. The pledgee's DP executes the pledge / hypothecation request as per the instructions given In case the pledgee rejects the pledge request, the pledgor's DP is intimated electronically. Now the securities which were earlier credited as pledged balances will be credited to free / locked-in balances Once the loan is repaid by the pledgor, the pledgor initiates the closure of the plegde. The request for closure is transmitted electronically to the pledgee's DP. The pledgee's acceptance / rejection of the request for closure of pledge is transmitted electronically to the pledgor's DP If the pledge is closed, the securities will be reflected as free / locked-in balances

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In case the pledgor defaults in repaying the loan to the pledgee, the pledgee instructs his DP to invoke the pledge / hypothecation.

Reports You get the following information at your doorstep: Transaction cum billing and holding statement if there has been a transaction in the account o Weekly for traders o Monthly for others The transaction cum billing and holding statement will have the following details : o Details of transfers executed o Confirmation of dematerialisation / rematerialisation requests o Rejection of dematerialisation / rematerialisation requests o Movement of securities Tariff 1 2 3 4 5 6 7 8 9 Annual membership charge Purchase (market and off market) Sale (market and off market) Custody charges Dematerialisation Postage per demat request Rematerialisation Postage per remat request Creation/confirmation of creation of pledge Rs. 500/Nil 0.05% (min. Rs.25/-) plus NSDL/CDSL charges NIL Rs.3/- per certificate Rs. 25/Rs. 25/- per certificate Rs. 25/0.02% plus NSDL / CDSL Movement of securities on account of pledge creation / closure / invocation. Information of allotment details in case of primary market issues Quarterly holding statement if there is no transaction in the account.

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10 11 12

Closure/confirmation of closure of pledge Invocation of pledge Late transaction charges (per txn.)

charges 0.02% plus NSDL / CDSL charges Rs. 50/- per txn. Rs. 10/-

Clearing member (CM)


Introduction SHCIL's long-standing association with Clearing Members has enabled it to develop services based on an understanding of their working and their requirement for timely and accurate information. We accept deposits of base capital and Additional base capital requirements stipulated by NSE for clearing members trading on its capital market segment. Clearing members stand to earn a steady income from our product transactions and new adds to their client-base, while we capitalize on their rapport with the market. We currently offer Depository services to more than 680 clearing members of various exchanges connected with NSDL and CDSL. Our Customer Care lines answer all your DP queries while the Interactive Voice Response (IVR) system gives you information on your account and other valuable data like CC calendar details, tariff, ISIN information, etc. via telephone, fax and e-mail. Advantages For Institutional & Retail clearing members We have customized tariff for clearing members benefiting o brokers having very high average trade value o brokers with big retail clientele Special tariffs for :

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o o o

CM Principal Accounts NSCCL CM Accounts Unified Settlement Pool Accounts on CDSL.

Our Customer Care help lines give timely and accurate information to CMs. The Interactive Voice Response (IVR) system at SHCIL gives round the clock information on holdings & transactions Pay in / Pay out details, overdue cum holding details, etc. via telephone, fax or e-mail. Updated Transaction Statements are available on the website FREE of any charge whatsoever. Members have a choice of accessing their statements datewise for the last one month or settlement-wise for the same period. Current trading day transactions are also made available, updated to the hour. Besides the transaction statements, the Delivery-Out report, which is an extremely critical report for Clearing Members, is also made available on the website, updated to the hour.

Open an account Requirements In case of Proprietor's account, if authorized signatory is a person other than the account holder, then Power Of Attorney is to be submitted by Proprietor giving authority to that person If you are shifting from another DP If you are opening a fresh Pool to SHCIL Account opening form Board resolution Memorandum Association Authorized Signatories (for corporate) SEBI Registration Certificate clearly SEBI Registration Certificate clearly Of account . Account opening form Board resolution Memorandum Association Authorized (for corporate) Signatories Of

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indicating that it is for stockbroker. indicating that it is for stockbroker. Closure Letter addressed to Letter from Stock old DP duly stamped and acknowledged by old DP. Closure letter and Shifting letter has to be on the letterhead of CM Closure letter should be duly stamped and acknowledged by old DP. Subject : Allotment of CC CM ID Exchange stating CC CM ID. In case of ISE mention on the letter :

Shifting Letter addressed to NSDL stating : CM Name old CM BP ID old DP Name New DP name.

Custodial services Custodial services for Base Capital / Additional Capital requirements We accept deposits of Base Minimum Capital (Base Capital) and Additional Base Capital as stipulated by NSE for clearing members to be able to trade on its capital market segment. The securities being deposited shall be subject to legal and beneficial ownership of: TM clearing member / spouse in case of individuals Any of the partners / their spouses in case of partnership.

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Any of the directors in case of corporate TM clearing member. margin Equity shares of Approved companies in demat form subject to 15% margin (Nifty Scrips) and 25% margin (30 other scrips pertaining to Junior Nifty group) Listed units of mutual funds subject to 15% margin Unlisted units of mutual funds subject to 15% margin of the Listed PSU bonds subject to 15% margin Other debt securities admitted for trading on Wholesale debt Listed GOI / Treasury bills subject to 10% margin Units under Unit Scheme 1964 of UTI to be valued at the The following securities can be deposited to qualify as deposit Listed equity shares of approved companies subject to 15%

NAV of the units prevalent on the last day of the preceding month

market segment of NSE subject to 15% margin

lowest of the repurchase prices prevalent in the preceding 12 months Deposit of Fixed Deposit Receipts (FDRs) issued by approved Banks. In case of FDRs, the members have to submit the following: A Letter from the Bank in a specified format. A Letter from the Member in a specified format SHCIL Charges upfront National Savings Certificate and Kisan Vikas Patra issued by Post office, SGL Securities, Certificate of Deposits (CDs) issued by Banks / Institution. NSE members may also pledge dematerialised shares in favour of NSCCL for security Base Capital and additional base capital requirements. The demat shares pledged by a member as additional base capital will be considered for

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the purpose of gross exposure computation. In case of demat scrips, the following conditions apply: Reporting Among the host of reporting features offered by SHCIL, the notable ones are Online Transaction updates during the day. Online date-wise transaction reports, settlement number wise reports etc Online redresses of queries through email Intimation of failed trades Settlement wise holding statements after payout Faxes / Emails on specific request DO Reporting

Some of these highly specialized reports are provided to you ONLINE and FREE only by SHCIL.

Derivatives
Introduction SHCIL is a Custodian/Professional Clearing Member of derivative segment at the Bombay Stock Exchange and at the Futures & Options Segment of the NSEIL respectively. We have developed in-house Back Office systems and procedures to cater to the needs of various entities in the segment. A dedicated team of professionals handle derivative operations and assist its clients. As a professional clearing member, SHCIL performs the following functions: Clearing - Computing obligations of all his TMs i.e. determining positions to settle. Settlement - Performing actual settlement.

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Collateral Management - Collection of collateral (cash/cash equivalents and securities), valuation on a regular basis (as per J. R. Varma recommendations) and setting up exposure limits for TMs and Institutional clients. Risk Management - Setting position limits based on upfront deposits/margins for each TM and monitoring positions on a continuous basis.

Advantages SHCIL has always been a pioneer in clearing and settlement services in the cash segment at both the exchanges. SHCIL has the capability to handle large volumes of business with greatest accuracy, keeping customer interests as the top priority. SHCIL in its endeavor to serve various entities in the derivatives segment has developed indigenous solution keeping in view the strict regulatory requirements. Privacy of each TMs operations strictly maintained: SHCIL being a professional clearing member has no trading interests in the derivatives segment. There is strictly no dissemination of information on trading or any other operation of any of its clients. In built checks and controls: SHCIL has indigenously designed systems that take care of the stringent regulatory requirements for derivatives trading in India. Collateral Management: SHCIL has excellent system to manage cash/cash equivalents/securities deposited as collateral for derivatives trading. Clients are informed as and when expiry of any instrument approaches. Securities are transferred in minimum possible time. Corporate actions on securities are monitored and clients are being informed accordingly.

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Confidentiality of Trades: Since SHCIL has no trading rights, the business details of a trading member are not likely to be misused .There is no overlapping of business interests. Focus: Due to highly competitive nature of the market, SHCILs service charges are normally very low and it makes more business sense for a TM to outsource the clearing and settlement activities and focus on the core business of trading.

Open an account Requirements Agreement: The TM has to sign an agreement with SHCIL to clear his trade in the format prescribed by NSE/BSE and suitably modified by SHCIL. The agreement has to be signed before the TM begins his trading. A copy of the CM-TM agreement will be forwarded to NSCCL/BSE along with the agreement the trading member should also submit : o Board Resolution appointing SHCIL as clearing member o Attested copy of Memorandum & Articles of Association o Copy of SEBI registration certificate Consent: At the application stage, a TM must mention that Stock Holding Corporation of India Ltd. (SHCIL) will clear his trades. o Letter of consent from SHCIL can be obtained, which the TM

has to forward to BSE/NSE as the case may be. Application Form: An application form provided by SHCIL, to be filled by TM, giving details of addresses, phones, accounts etc. Approved e-mail addresses should be mentioned in the application for receiving daily bills.

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MARGINS: Trading Members have to deposit margins with the Clearing Member for the purpose of taking Exposure on the Exchange and for daily settlement. At SHCIL, there are two components of

Margins i.e. initial margin (IM) for exposure and maintenance margin (MM) for daily settlement. Initial Margin (IM) Minimum Rs. 10 lakh as initial margin (IM) in either of the following ways: Entire Rs. 10 lakh in cash OR Rs. 2 lakh in cash and Rs. 8 lakh as cash equivalent * OR Rs 2 lakh in cash, balance Rs. 8 lakh as a combination of cash equivalent * and specified demat securities (subject to maximum of Rs. 5 lakh after valuation) Note: The above proportion is valid for NSE. For BSE minimum cash requirements are Rs.2.5 lakh. BSE Members can start trading with Rs 7.50 lakh(Rs.2.5 lakh in cash, balance Rs. 5.00 lakhs as a combination of cash equivalent and specified demat securities (subject to maximum of Rs. 2.50 lakhs after valuation) Maintenance Margin (MM) A trading member has to deposit a certain percentage of initial margin (IM) in cash only towards his daily settlement of marked-to-market margins, premiums or any other charges payable by the TM. Initial Margin(IM) ** Maintenance Margin (MM) More than or equal to Rs. 50 lakh 10% of initial margin in cash only *** Less than Rs. 50 lakh 20% of initial margin in cash only * Cash equivalent includes Bank guarantee, fixed deposit receipts or govt. securities (As per J R Varma Committee report on derivatives)

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** The specified initial margin range should be for a period of at least one continuous month ** Subject to bank operating powers and bankers certificate on credit limits for the bank account Reporting SHCIL provides various reports relating to the trading and settlement of its clients on its website .These reports can be downloaded by the client by using a unique PIN number and password. The main reports that are provided are : Daily trades reports Marked-to-market profit/loss reports Collateral margin reports Account statements Outstanding position reports Span margins requirement report three times during the day based on the parameters specified by the exchange Monthly ledger reports and any other relevant report required by a client is also provided.

Non-resident Indian
Introduction Over the years, SHCIL has grown to become a major player in the capital market. With a network of more than 120 offices operating across the country and franchisees operating abroad, SHCIL provides Depository Participant and related services close to 0.7 million satisfied investors out of which over 6000 are NRI Clientele.

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SHCIL has a fully fledged NRI cell operating specifically to cater needs pertaining to Depository account opening and maintenance. NRI cell co-ordinates with prospective NRI customers, collects and assists in obtaining the relevant documents and ensures the Depository Account is opened hassle free. NRI Cell collects physical certificates to be sent for demat and ensures that the certificates are in order and can be sent for dematerialisation under the existing guidelines issued by the depositories. Instructions for trade are accepted by fax on request by NRI Cell to ensure timely settlement of trades. In this case later on the client needs to regularize by sending the original trade delivery instruction. Any tariff and billing related query are addressed by NRI Cell. In short NRI Cell is a single point contact for any matter relating to NRI Depository operations. Open account Before you open your account. Ascertain your NRI Depository Account status as per guidelines issued by RBI from time to time. In case of Joint Account, status of the first holder is reckoned for all purposes. If scrip is held by three holders of whom the first is a NRI and the other two or residents, then the account falls under NRI category. Accounts have to be opened in the exact order in which the names appear on the certificate. Holding pattern A B is not the same as B A. Get your account opening form details right. All columns are filled in. Write NA wherever not applicable. Specify status as Non Repatriable (NRO) or repatriable (NRE). Status cannot be changed once account is opened. Bank account details should be compulsorily provided along with 9 digit MICR code Ensure that the account status and bank details are as below :

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- If the status is NRE, bank details can be "NRE' or 'NRO'. - If the status is NRO, bank details can be 'NRO' only. Copy of RBI approval is not mandatory and the standing instruction for automatic credits may be marked as 'Y' without furnishing RBI approval. However, the onus of reporting to RBI is on the client. Proof of identity by way of Copy of your Passport and Bank Account attestation is compulsory. Initial the agreement on the front side and sign in the order of holders in the backside of the agreement Where the account is being opened by POA(proof of address) i. ii. iii. The POA shall sign at all places in lieu of the original holder(s). However, the photographs will be those of the original holder(s) only. A certified true copy of the POA has to be provided with the account opening form along with the signature and photograph of the POA. The account may be operated either by the original holder or by the POA. Nomination i. ii. iii. iv. v. Nominee may be any person other than the account holders. Photograph of the nominee has to be affixed on the nomination form. The nominee must sign across the photograph and in the space provided below. If the nominee is a minor, the guardian shall sign at all places where the nominee is supposed to sign. Photograph of the guardian also has to be affixed on the nomination form.

Custodial

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Introduction Since its commencement in 1988 as the first dedicated Custodian in the country, SHCIL has been providing Custodial Services of international standards to Domestic Mutual Funds, Financial Institutions and Foreign Institutional Investors. With almost 70% of the Institutional business in its fold, SHCIL has evolved over the times to meet the changing requirements of dynamic markets and demanding clients. A dedicated pool of trained and highly experienced professionals work literally round the clock on state of the art computer systems, dedicated communication channels, well connected to Client institutions, Stock Exchanges, Clearing houses, Depositories and leading Institutional brokers. In terms of collective man-years, SHCIL has the most experienced team in the entire Industry. Trade processing services SHCIL has specially trained personnel handling thousands of trade instructions involving large values on sophisticated systems using digital signature on STP (Straight through Processing) systems, ensuring smooth trade confirmations to Stock Exchanges, reporting and resolution of mismatches with Clients, etc. Physical custody services The transferred physical securities, when received, are held in state-of-the-art, highsecurity vaults on behalf of the clients. A pioneer in introducing the bar-coding system to track certificates, SHCIL ensures the availability of each and every share certificate at a moments notice. Institutional DP services SHCIL has installed dedicated DPMs (Depository Participant Modules) on both the Depositories, viz. NSDL (National Securities Depository Ltd) and CDSL (Central

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Depository Services Ltd). A dedicated Institutional DP team at SHCIL addresses your need for all core DP services like conversion of physical holdings into electronic form, settlement of trade instructions, rematerialisation, repurchase and pledge instructions, providing of holding and transaction statements and daily reconciliation of client holdings. SHCIL also provides special services like providing dematerialisation and corporate action follow-up, saleable holding reports used by many fund managers, monitoring of CP Redemptions, prepayments and providing customized reports like put/call forecasts and non equity holding reports.

Swot analysis

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Stock Holding Corporation of India Limited

SWOT ANALYSIS STRENGTHS:


1. Wide coverage throughout the country. 2. Promoted by 7 financial institutions. 3. Largest account holders 4. Largest custodian. 5. Catering to Indians as well as NRIs and FIIs. 6. One stop shop for all financial solutions. 7. Advanced system network. 8. SHCIL is the first depository participant. It has the opportunity of holding more than 7000000 accounts at all centers. 9. Multiple products and services: SHCIL provides a variety of services under the same roof. 10. It is the member of both NSDL and CDSL. 11. The company has highly computerized, state of art technology to facilitate the business and minimize the risk from automated operations. .

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12. Since the main business of the company is providing DP services, unlike the service provided by banks it leads in specialization. 13. The variety of services offered has enabled SHCIL to have a much more competitive edge about financial services than its competitors.

WEAKNESS
1. Lack of aggressive marketing. 2. Improper billings. 3. Expensive. (Because separate account has to be opened according to holdings). 4. Less investment in advertising. 5. The clients are not provided any incentives or motivations, which would encourage them to make timely payment. 6. The company has not undertaken sufficient steps to create awareness among the clients about SHCIL. The only procedure adopted is the Internet. 7. The HR department is placed in Mumbai. So the newly recruited employees lack sufficient training facilities.

OPPORTUNITIES
1. E Broking. 2. Acquisition of smaller DPs. 3. Collaboration with banks. 4. New products. thereby increase the business. 6. The company can attract more number of franchises. 5. The company can take steps to increase the awareness among the clients and

THREATS
1. Increased cost as perceived by customers. 2. Fluctuating market conditions affect the business.

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3. The number of competitors is increasing at a higher rate. Their charges are also low when compared to the charges of SHCIL. The nearest competitors are banks providing DP services along with their regular services. 4. The company does not charge any amount for closing the account. Since retaining the customer is very important and most of the customers will not think of closing the account at time of opening the account the company can charge some for closure. 5. The discounts and offers given by other DPs when compared to offers of SHCIL are leading to reduction in the number of clients.

Methodology

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Methodology
Type of research Sampling technique Sampling size Sample description Instrumentation technique Sources of data collection Descriptive and Exploratory research. Non probability sampling. 50 Delhi stock exchange, ICICI, IL&FS, UTI, SHCIL. Interview, questionnaire Primary data was collected by conducting Interview and secondary data was collected from magazines, Software used for data analysis books, and internet. MS excel

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It is a survey method. The questionnaire and interview schedule, personal interview will be relied upon for gathering primary data. An aggregate of 40 respondents from various Depository Participants responded to the questionnaire. For the purpose of secondary data books, articles, reports, annual reports of the stock exchanges, news papers, CD-ROM, Internet, Nifty, BSE, BGSE, are planned to be used.

Analysis & Interpretation

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ANALYSIS
I used a structured questionnaire for eliciting the required responses relating to Depository Services at SHCIL. 50 respondents were approached for this purpose, out of which 40 respondents cooperated with the researcher in filling the questionnaire. The various responses were classified, and tabulated. A simple statistical analysis was made by the researcher. An attempt is made to present the analysis covering different aspects of Depository Services at Stock Holding Corporation of India Limited. 1. Table showing the age group of respondents Age (In years) 20-30 30-40 40-50 50 & above Total Frequency 8 12 16 4 40 % 20 30 40 10 100

Table No: 1 Graph showing age group of Depository Holders

ondents

4 5 4 0 3 5 3 0 Institute For Integrated And Learning Management 2 5

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Graph No: 1

Analysis: From the above table we can see that the normal range of Depository Holders age varies between 20-50 yrs, with the highest 40% falling between 40-60 followed by 30% falling between 30-40 and 20% between the age group 20-30 and the lowest is 60 & above. Inference: 40% of brokers and investors fall in the age group 40-60yrs. 2. Table showing the number of respondents investing in shares Particulars Yes No Total Frequency 32 8 40 % 80 20 100

Table No: 2 Graph showing the Number of share holders

2 0 ye s n o 8 0

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Graph No: 2 Analysis: From the above Graph it can be analyzed that 80% of the respondents are Stock Holders. Remaining 20% of the respondents are not. Inference: 80% of the respondents are the stock holders.

3. Table showing the No. of years holding & trading in SHCIL. Years 0-5 5-10 10-15 15-20 Total Frequency 16 12 8 4 40 Table No: 3 Graph showing the No. of years the respondents holding and trading in SHCIL % 40 30 20 10 100

40 35
Graph No: 3

Responde nts

30 25 20 15 10

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Analysis: From the above it can be analyzed that the company has been grown well from past 5 to 10 yrs. 30% of the people are trading from 5-10 years & 40% from 0-5 years. Inference: 40% of the Depository Holders are trading between 0-5 years.

4. Table showing how secure the securities in opting the demat. Particulars Excellent Very Good Good Average Total Frequency 24 8 6 2 40 Table No: 4 Graph showing the degree of securities in Demat Account Percentage 60 20 15 5 100

60 50 40 30 20 10
Graph No: 4

60

20
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Analysis: From the above table survey inferred that 60% of the Depository Holders are giving their consent as excellent about Demat. That is the securities of the shareholders in electronic form are more safe and secured. Inference: Dematerialization plays a major role in providing safety and security to the holders.

5. Table showing the most preferred DP Product Particulars Broking/Internet Trading Mutual Funds Government Bonds Insurance Total Frequency 8 16 8 8 40 Table No: 5 Graph showing the most preferred DP Product
4 0 3 0 2 0 ernet Trading 1 0 0 2 0 Broking/Interne 2 0 Mutual Funds 2 0 4 0

Percentage 20 40 20 20 100

Govt.Bonds

Graph No: 5

Insurance

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Analysis: The above survey reveals that 40% of the holders are interested to invest their savings in Mutual funds because they are less risky. The Government bonds, Broking, & Insurance constitute the next preferred DP product. Inference: Majority of 40% of holders are interested in Mutual Funds. 6. Table showing the source in which the information is available regarding SHCIL Particulars Newspaper Magazines Word of mouth Internet Total Frequency 4 4 16 16 40 Table No: 6 Graph showing the source in which the information is available Percentage 10 10 40 40 100

10 40

10

Newspapers Magazins Word of mouth Internet

40

Graph No: 6

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Analysis: From the above survey it is revealed that the information about the SHCIL is more effective through Internet and Word of mouth, i.e. the 40% from Internet & 40% from Word of mouth, 10% is followed by Newspapers & 10% by Magazines Inference: Internet constitute the largest source of SHCIL related information..

7. Table showing the selection of stock exchange to traded by both shareholders and brokers. Particulars NSE BSE TOTAL Frequency 20 20 40 Table No: 7 Graph showing the selection of stock exchange to trade by the shareholders Percentage 50 50 100

50 50 40 30 20 10 0 BSE

50

NSE

Graph No: 7

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Analysis: From the above survey it is clearly inferred that 50% of shareholders are using BSE for trading and also remaining 50% are trading in NSE. Inference: Both NSE & BSE are equally preferred for trading purpose, accounting for 50% each of the responses.

8. Table showing the attribute of services expected by the investor Particulars Quality of Service Market Updates Returns Provided Safety & Security Total Frequency 8 8 12 12 40 Table No: 8 Graph showing the attribute of services influences the investors Percentage 20 20 30 30 100

30 25 20 15 10
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Stock Holding Corporation of India Limited

Analysis: From the above table it can be inferred that equal number of respondents i.e. 30% each consider Returns and Safety as important attributes followed by other attributes such as 20% each consider Quality of service and Market updates. Inference: Safety & Security, Returns constitute the most preferred attributes. 9. Table showing areas of investment that most investors prefer in SHCIL Particulars Equity Shares Mutual Funds Bonds Others Total Graph showing areas Frequency 16 12 8 4 40 Table No: 9 of investment that Percentage 40 30 20 10 100 the most investors

40 35 30 25 20 15 10 5 0

40 30 20 10

Equity Shares

Mutual Funds

Bonds

Others

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Graph No: 9 Analysis: Majority 40% of the investors are having the habit of investing in the Equity shares, 30% of them have invested in Mutual funds and 20% are invested in Bonds & 10% in others. Inference: Equity shares are the best options for investment in which investors are preferring it first. 10. Table showing whether SHCIL provide Tailor made services Particulars Yes No Total Frequency 16 24 40 Percentage 40 60 100

Table No: 10 Graph showing the Services provide are Tailor made or not

Graph No: 10

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Analysis: From the above table we can analyze that 60% of the Depository holders are not satisfied with the services. Out of 100 only 40% of investors are accepted as Tailor made services. Inference: From the above analysis we can infer that majority of investors will expect better service. 11. Table showing through which SHCIL provides the Value-added services to clients Particulars Online transaction updates Faxes / E-mails Portfolio updates Daily updates (Website) Total Frequency 16 8 4 12 40 Table No: 11 Graph showing the Value-added services provided by SHCIL Percentage 40 20 10 30 100

4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0

4 0

2 0

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Graph No: 11 Analysis: From the above table we can analyze that the 40% of the respondents says that the value-added services provided by SHCIL is through online transaction, 30% by website, 20% E-mails, 10% portfolio updates. Inference: Majority of the respondents accept that the value-added services are through online transaction updates. 12. Table showing how satisfying is SHCIL in terms of Infrastructure & the hardware, software installed for serving clients Particulars Excellent Very Good Good Average Total Frequency 12 20 6 2 40 Table No: 12 Graph showing how satisfying SHCIL is in terms of Infrastructure, software etc Percentage 30 50 15 5 100

50 40 30 20
Graph No: 12

50

30
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Analysis: The above survey reveals that the Depository holders are satisfied in terms of infrastructure and software with the result of 30% as excellent, 50% as Very good followed by 15% as Good and 5% as Average. Inference: Majority of the DP holders are satisfied.

13. Table showing how efficient & effective the DP services of SHCIL compared to other financial institutions Particulars Excellent Very Good Good Average Total Frequency 20 16 4 0 40 Percentage 50 40 10 0 100

Table No: 13 Graph showing how efficient & effective the DP services of SHCIL compared to other financial institutions

60 50 40 30 20
Graph No: 13

50

40

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Analysis: From the above table it is analyzed that 50% of respondents are agreed as excellent & more effective DP services in SHCIL when compare to other institution. 40% of respondents agreed as Very good, 10% as Good & 0% as average. Inference: DP services of SHCIL are excellent when compare to other financial institutions. 14. Table showing how satisfactory are the interest rates in terms of loan against demat held in DP. Particulars Yes No Total Frequency 16 24 40 Percentage 40 60 100

Table No: 14 Graph showing the interest rates in terms of loan against demat.

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Graph No: 14 Analysis: From the above table it is analyzed that 60% of respondents are not satisfied with interest rates in terms of loan against demat. Inference: Through the graph we can say that the interest rates are high. 15. Table showing how safe & secure the demat is Particulars Yes No Total Frequency 36 4 40 Table No: 15 Graph showing how safe the demat is Percentage 90 10 100

10
Graph No: 15 Analysis: From the table it is analyzed that 90% of Depository holders are feeling that demat is safe & secure, whereas only 10% are feeling unsatisfied. Inference: Majority of respondents are safe with demat.

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16. Table showing service charges charged by SHCIL. Particulars High Reasonable Low Total Frequency 24 16 0 40 Percentage 60 40 0 100

Table No: 16 Graph showing service charges charged by SHCIL.

70 60 50 40 30
Graph No: 16

60

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Analysis: From the above survey it has inferred that 60% of respondents are feeling that the service charges charged by SHCIL is high, and 40% as reasonable, 0% as low. Inference: Majority that is 60% of respondents are not satisfied with service charges.

17. Table showing how effective the SHCIL in settling the stock. Particulars Fast Slow Total Frequency 20 20 40 Percentage 50 50 100

Table No: 17 Graph showing how effective the SHCIL in settling the stock.

60 50 40 30 20 10

50

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Graph No: 17 Analysis: From the above table it can be interred that 50% of the respondents are telling fast in settling the stock & other 50% are telling slow in settling. Inference: The respondents are equally responding for the effectiveness in settling the stock. 18. Table showing how satisfactory is the on-line trading Particulars Excellent Very Good Good Average Total Frequency 20 8 12 0 40 Table No: 18 Graph showing how satisfactory is the on-line trading Percentage 50 20 30 0 100

60 50 40 30 20
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50

Graph No: 18

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Stock Holding Corporation of India Limited

Analysis: Excellent.

The responses to the On-line trading ranges between Good and

Excellent, 100% of the respondents record their responses between Good and

Inference: It is inferred that the number of respondents are very much satisfied with the on-line trading in SHCIL.

Summary of Findings

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FINDINGS
Based on the data analysis and interpretation, the following findings noted: 20% of the respondents, who are not stock holders, are under the age group of 20-30 and 50 and above. Out of the entire DP holders 10% of them trading in 15-20 years, 20% are 1015 years, 30% are 5-10 years, and 40% are 0-5 years. This indicates the popularity of the organization in the last 10 years, during which time 70% of the existing members are trading from 0-5 years, whereas the previous 10 years the total percentage is only 30%. This indicates a healthy trend form last 10 years. From the analysis part it shows the most preferred DP product is Mutual Funds. It shows that the Interest of the investors would be funds which have less risk and high returns. This is substantiated the fact that 40% of the holders are interested to invest in Mutual Funds and other investments are distributed as Bonds, Broking and Insurance.

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From the survey it is noted that the best method of spreading information seems to be Internet, which draws the interest of investors better than any other media.

The survey indicates the trading is equally shared between BSE and NSE. The respondents gave equal interest to Safety and Security, Returns provided and quality of service, only 10% as Market updates. Therefore it is essential for the company to give more priority about Safety and Security and returns.

Though the Equity shares have got the highest risk, the investors are willing to take risk by investing in Equity shares for higher returns since the SHCIL is doing well.

It is also noted that 60% of the investors expect Tailor-made services. It is noted from the survey the Value-added services provided by SHCIL is through Online updates.

The survey indicates majority of respondents are satisfied in terms of Infrastructure, hardware and software installed for serving clients.

The services provided by the SHCIL are better when compared to other financial institutions.

The investors feel that the Interest rates provided or charged by SHCIL is high against demat held in DP.

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The survey indicates that the investors are more safe and secured from the demat in SHCIL

Recommendations & Conclusion

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RECOMMENDATIONS
Since the interest and web based communication is getting popular SHCIL should update their website at least on a weekly basis so that the major percentage of the remaining i.e. 20% can be brought in. Since Dematerialization plays a major role in influencing DP holders there must be increased effort in promoting enhanced services involving security and safety. To encourage the existing and prospective shareholders good returns must be ensured in addition to security and safety. Since the Investors expect better service form SHCIL, it should provide valueadded services. It is necessary for the organization to sustain their primary position as compare to other Financial Institutions as innovative and useful services.

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It is necessary to reduce the service charges charged by SHCIL It is also necessary to reduce the Interest rates on loans against demat. The online trading efforts must be made more scientific and effective.

Conclusion
On the whole, my project at SHCIL was worthwhile as I got the opportunity to learn a lot about the capital market. It was a wonderful experience interacting with employees of the organization and simultaneously enhancing my knowledge and skills about stock market operations. I got to know about the process of dematerialization, account opening and how the trades department settles the various transactions etc. Working at SHCIL and preparing this project report was a learning experience and I shall make immense use of it in my career.

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BIBLIOGRAPHY
BOOKS:
AUTHOR OF PUBLICATION TITLE OF THE BOOK PUBLISHERS NAME PLACE

GORDEN AND NATRAJ AVADHANI

Financial Markets and Services

Himalaya

Delhi

Investment and Securities Markets in India

Himalaya

Delhi

PRASSANNA CHANDRA IM PANDEY MAGAZINES: Dalal Street

Financial Management Financial management

Tata McGraw Hill Vikas

Delhi Delhi

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Business today Money Business India.

NEWS PAPERS: The Economic Times Business standard Outlook money INTERNET / WEBSITE www.google.com www.online.stockholding.com www.Sharekhan.com www.businessweek.com

ANNEXURE.1 STUDY ON DESCRIPTIVE ANLYSIS OF THE DEPOSITORY PARTICIPANTS


QUESTIONNAIRE 1. Name of the Respondent 2. Address and Phone No. 3. Sex Male 4. Occupation 5. Age Group (in years) 20-30 30-40 Female . ...........

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40.50 6. Are you a Share holder? Yes

50-60

No

7. Since how long are you holding and trading the securities in SHCIL? 0-5yrs 10-15yrs 5-10yrs 15-20yrs

8. How secure do you feel by opting your securities in demat form? Excellent Good Very Good Average

9. Which DP Product do you prefer? Broking/Internet trading MF Mobilization Government Bonds Insurance

10. Through which source do you avail information regarding SHCIL? Newspaper Magazines Word of mouth Internet

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11. What is the most preferred area of avenues of investment? Mutual Funds Government Bonds Equity Shares Others Specify

12. Does SHCIL provide Tailor- made services? Yes No

13. What are the attribute of services expected by the investor? Quality of Service Market Updates Returns Provided Safety and Security

14. The SHCIL provide Value-added services to client by 15. Online transaction updates Faxes / E-mails Portfolio updates Daily updates How satisfying is SHCIL in terms of Infrastructure and the hardware and

software installed for serving its clients?

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Excellent Good

Very Good Average

16. How efficient and effective is the DP services of SHCIL when compared to other financial institution?

Excellent Good

Very Good Average

17. The loan against demat shares held in the DP a/c with SHCIL is satisfactory in terms of interest rates Yes 18. Do you think demat is safe and secure? Yes 19. The service charges charged by SHCIL? High Reasonable Low No No

20. How often the stocks are settled?

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Fast

Slow

21. How satisfying is the On-line trading for you? Excellent Very Good

Good

Average

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