Custodial Services

Custodial A financial institution that has the

legal responsibility for a customer's securities.
This implies management as well as
safekeeping. 
Also known as "custody".
• The custody business provides a range of
security services, including safekeeping
and settlement, reporting, corporate
actions, dividends collection and
distribution, proxy voting, tax reclaim
services, fund administration and providing
market news and information.
• Foreign banks like HSBC, Citi, Deutsche and
Stan Chart are the major players in the
business. They bring their overseas
relationships into the country. Compared to
Indian players, foreign players have the reach.
Most of the business comes from foreign
institutional investors (FIIs) who have business
relations with the international offices of these
banks. Most of these players have strong
domestic as well as international businesses.
 WHO CAN BE CUSTODIAL
• Corporate Agent usually a commercial bank, that holds
securities under a written agreement for a corporate
client and buys or sells securities when instructed.
Custody services include securities safekeeping, and
collection of dividends and interest. Custodian banks,
and their agents in various countries called sub custody
banks, also buy, sell, and deliver securities when
instructed by a bank's corporate clients. The bank acts
only as transfer agent and makes no buy-sell
recommendations.
 Custodian bank

• A Custodian bank, or simply custodian,

is a specialized financial institution
 responsible for safeguarding a firm's or
individual's financial assets and is not
likely to engage in "traditional" commercial
or consumer/retail banking such as 
mortgage or personal lending, 
branch banking, personal accounts, ATMs
 and so forth. The role of a custodian in
such a case would be to:
• NSDL, the first and largest depository in
India, established in August 1996 and
promoted by institutions of national stature
responsible for economic development of
the country has since established a
national infrastructure of international
standards that handles most of the
securities held and settled in
dematerialised form in the Indian capital
market.
• National Securities Depository Limited (NSDL), India's
first and the largest depository has crossed 1,00,00,000
(one crore) demat accounts. These accounts have more
than 80% of securities held and settled in dematerialised
form in India, indicating preference and trust the
investors have in maintaining their assets with NSDL.
Over the period of last two years, more than 40 lakh new
demat accounts were opened with NSDL. These
accountholders are serviced by 281 Depository
Participants through more than 9,600 service centres
across about 1,000 cities/towns in the country.
• hold in safekeeping assets/securities such as 
stocks, bonds, commodities such as 
precious metals and currency (cash), domestic
and foreign
• arrange settlement of any purchases and sales
and deliveries in/out of such securities and
currency
• collect information on and income from such
assets (dividends in the case of stocks/equities
and coupons (interest payments) in the case of
bonds) and administer related tax withholding
documents and foreign tax reclamation
• administer voluntary and involuntary corporate actions on securities
held such as stock dividends, splits, business combinations (
mergers), tender offers, bond calls, etc.
• provide information on the securities and their issuers such as
annual general meetings and related proxies
• maintain currency/cash bank accounts, effect deposits and
withdrawals and manage other cash transactions
• perform foreign exchange transactions
• often perform additional services for particular clients such as
mutual funds; examples include fund accounting, administration,
legal, compliance and tax support services
• provide regular and special reporting on any or all their activities to
their clients or authorized third parties such as MAIC Trust Account
services for mergers & acquisitions payments.
• Custodian banks are often referred to as global
custodians if they safekeep assets for their clients in
multiple jurisdictions around the world, using their own
local branches or other local custodian banks with which
they contract to be in their "global network" in each
market to hold accounts for their respective clients.
Assets held in such a manner are typically owned by
larger institutional firms with a considerable amount of
investments such as MAIC Trust services & (QI)
Qualified Intermediary services banks, 
insurance companies, mutual funds, hedge
funds and pension funds
• a local custodian bank (also known as a
sub-custodian or agent bank) is a bank in
a country outside the United States that
holds the corresponding amount of shares
of stock trading on the home stock market
 Mutual Fund Custodian

• What Is a Mutual Fund Custodian? It refers typically to a

custodian bank or trust company (a special type of
financial institution regulated like a "bank"), or similar
financial institution responsible for holding and
safeguarding the securities owned by a mutual fund. A
mutual fund's custodian may also act as one or more
service agents for the mutual fund such as being
the fund accountant, administrator and/or transfer
agent which maintains shareholder records and
disburses periodic dividends or capital gains, if any,
distributed by the fund