THE DEPOSITORIES ACT 1996

Lasnic Lakshman
1st Mcom
Depositories Act. 1996

The Depositories Act, 1996 was enacted to provide for

regulation of depositories in securities and for matters
connected therewith or incidental thereto. It came into
force from 20th September, 1995.
Parties to depository

In a depository system, the following parties are involved

• the depository
• the beneficial owner
• the participant
• the issuer
• Depository

“Depository” means a company, formed and registered

under the Companies Act, 1956 and which has been
granted a certificate of registration under sub-section
(1A) of section 12 of the SEBI Act, 1992.
 It holds securities of investors in an electronic form. It has
been held mandatory to hold securities in demat form.
Demat (Dematerialized) format of securities means that
these are held in electronic form, and without any actual
paper document involved, and the details of trading are
all entered on the electronic document.
Beneficial Owner
“Beneficial owner” means a person whose name is
recorded as such with a depository.
Issuer
“Issuer” means any person making an issue of
securities.
Participant
“Participant” means a person registered as such
under sub-section (1A) of section 12 of the SEBI Act,
1992.
BENEFITS OF DEPOSITORIES

• Less risk of loss or wear and tear·

• Easier for safekeeping·
• Easier transfer·
• Better monitoring by SEBI·
• Reduced transaction costs
Types of Depositories

• In India, there are two depositories namely National

Securities Depository Limited (NSDL) or Central
Depository Services (India) Limited (CDSL) that are
registered with SEBI.
• Both NSDL ans CDSL, facilitate dematerialization of
shares i.e. held the shares in electronic form. So, in a
way depository is held accountable for safe-keeping of
your portfolio of securities.
NSDL

• National Securities Depository Limited (NSDL) is an

Indian central securities depository based in Mumbai.
• It was established in August 1996 as the first electronic
securities depository in India with national coverage.
• It was established based on a suggestion by a national
institution responsible for the economic development
of India.
• CEO&MD-G V.Nageswara Rao
• Chairman-Mr.B A. Prabhakar
CDSL

• Central Depository Services (India) Ltd (CDSL), is the

first listed Indian securities depository based in
Mumbai.
• Central Depository Services (India) Limited (CDSL) was
initially promoted by the BSE Ltd.
• Founded on February 1999
• Chairperson-Shri Balkrishna V Chaubal
• CEO&MD-Shri Nehal Vora
Certificate of commencement of business by
depositories
(1) No depository shall act as a depository unless it
obtains a certificate of commencement of business
from the Board.
(2) A certificate granted under sub-section (1) shall be in
such form as may be specified by the regulations.
(3) The Board shall not grant a certificate under sub-
section (1) unless it is satisfied that the depository has
adequate systems and safeguards to prevent
manipulation of records and transactions
THANKYOU