Be A Prudent

Investor

NEW DEVELOPMENTS
RELATED TO DEMAT ACCOUNT
Indian Securities Market - Overview

Market Regulator
SEBI

Stocks and
Commodities Other
Depositories
Derivative Intermediaries
Exchanges

Stock Brokers,
NSE, BSE, MSE, RTAs, Mutual
NSDL, CDSL
MCX etc. Funds, Investment
Advisors etc.
Starting Investment in Securities Market

Accounts Required

Bank Account Trading or Broking Account Demat Account

Many DPs offer a 3-in-1 account opening facility which gives you the convenience of opening a trading, demat and bank
account – all together. Now some DPs are now offering online demat account opening. Trading or Broking account is
required only if you want to buy / sell shares through stock exchange.
 About NSDL

Established in 1996, First One of The World’s Largest Wide Network of

Depository in India Depository Depository Participants
Across The Country
NSDL’s Progress
September
2021
December
December 2020
December 2015
2010

67.56 119.30 227.51 295.92

Custody Value in ₹Lakh Crore - Total Value of All Assets held in All NSDL Demat Accounts
NSDL’s Progress

300
Bank deposits and
250 244
NSDL Custody Value

200 186
172
160
153
146
150 140
129 Aggregate Bank Deposits of All Scheduled Banks (in ₹
117
110 Lakh Crore)
100
NSDL Demat Custody Value (in ₹ Lakh Crore)

50

Bank Deposit Source : RBI Bulletins

0
Mar. 31, 2017 Mar. 31, 2018 Mar. 31, 2019 Mar. 31, 2020 Mar. 31, 2021
NSDL’s Progress
GDP and NSDL Custody Value
GDP and NSDL Custody Value
300

250 244

203 197
200 190 186
171 172 GDP at Market Price (in ₹ Lakh Crore)
154 160
146 NSDL Demat Custody Value (in ₹ Lakh Crore)
150

100

50

0 GDP Source : https://dbie.rbi.org.in/

2016-17    2017-18    2018-19    2019-20    2020-21
Indian Securities Market - Depository System

Issuer Company / RTA

Clearing Corporation (NSE Clearing Limited/

Other Depository Indian Clearing Corporation Limited)

DP 1 DP 2

Stock Broker / Stock Broker /

Trading Member 1 Investor 1 Investor 2 Clearing Member 2
 Services offered by Depository Participant
Account Opening Change in account details

Demat*, Remat of securities, Account freeze

Conversion & Redemption of (Account level, ISIN level
Mutual Fund Units and Quantity level)

Transfer of securities** Pledge and Margin Pledge of

securities

*Even unlisted shares can be dematerialized. **Transfer of securities held in physical form not allowed w. e. f. April 1, 2019. Re-lodgement of
transfer deeds which were submitted prior to this, but were rejected or returned, was allowed till March 31, 2021. Shares pending for transfer with
listed company / its RTA shall be issued only in demat.
 NSDL’s Investor Centric e-Services
• View transactions, holdings • View holdings along with
along with valuation
valuations
• Subscribe to CAS • Participate in e-Voting
• Update email ID for CAS * • Submission of delivery
• View and download 12 past
NSDL Speed - instruction
CAS •
Mobile App* Confirmation of e-DIS
• Participate in e-Voting • Register for IDeAS

• NSDL's internet facility to

enable users to submit various
Facility for shareholders to vote instructions online, including
electronically on resolution of NSDL
Margin Pledge
companies, Anytime, Anywhere e-Voting* • All features of IDeAS
• You may register at
www.nsdl.co.in
*Free for all demat account holders
Be a Prudent Investor
Keep record of documents signed, account statements, contract notes
received and payments made. Save important emails and take periodic back
up of data.

Change password of your online accounts frequently. Never share OTP and
PIN with any one.

Read SMS, emails, letters, statements, bills sent by your broker, bank, DP and
NSDL. These are sent to you to keep you updated.

Accept the DIS only if serial number is pre printed and Client ID is pre
stamped or pre printed. Keep DIS in safe custody.
Be a Prudent Investor

Inform your DP about any change in your Personal Information such as

address, bank account immediately.

Always mention your Mobile Number and email ID in account opening form
and keep them updated.

NSDL publications and presentations are available in Hindi, English and other
languages at www.nsdl.co.in  Education

Schedule of Awareness Programs, Registration and Feedback facilities are

available at www.nsdl.co.in
Be a Prudent Investor – Don’ts

Never deal with any unregistered or unauthorised market intermediary.

Check on the SEBI’s website that your stock broker / authorised person,
mutual fund distributor, investment advisor are registered with SEBI.

Do not act on Unsolicited SMS and emails providing Tips, stock

recommendations, assured returns etc.

Never invest with borrowed money. Avoid unnecessary loans and credits.
NSDL Newsletter for Investors
The Financial Kaleidoscope – Free monthly newsletter in हिंदी Hindi and English

Newsletter – The
www.nsdl.co.in Education Financial
Kaleidoscope
Grievances Redressal

1. Lodge your complaint with SEBI at

www.scores.gov.in/ or SEBI Mobile App
2. SEBI Toll free helpline - 18002667575 / 1800227575
3. NSDL Toll Free helpline - 18001020990 /
1800224430
4. Online submission of Grievances at
www.nsdl.co.in  Query Now
5. NSDL email for grievance - relations@nsdl.co.in
6. NSDL email for other information - info@nsdl.co.in
New Developments
Mandatory KYC Information
From August 1, 2021, all Clients must provide following information at the time of
account opening -
1. Name
2. Address
3. PAN (must be linked to Aadhaar)
4. Valid mobile number
5. Valid email ID
6. Income range

All Existing Clients should also verify their KYC information and update if
required, on or before December 31, 2021.
Mandatory Update of KYC Information

Mobile Number and e-mail ID -

1. Depository will send SMS and email to the account holder at the mobile number and
the email ID recorded in the demat account.

2. You will need to verify your email ID and mobile number by clicking the link
received.

3. Accounts where the mobile number or email ID cannot be verified, shall be

considered as non-complaint accounts.
OTP for off-market transfer
1. SEBI has made OTP authentication mandatory for all Off Market transfers, with effect
from November 1, 2020.
2. In case the client has a joint account, any one holder may provide such consent through
OTP.
3. On the execution date of off market transfer instruction, a link would be generated and
sent by NSDL on mobile number and e-mail ID registered in the demat account of the
client.
4. On clicking the link, client will be redirected to a web page where after authentication,
client will be displayed the details of off-market transfer instructions which are pending
for confirmation.
OTP for off-market transfer
5. On OTP confirmation, Off Market Transfer instruction(s) as selected by the client will be
processed, subject to payment of stamp duty, as applicable.

6. In case OTP confirmation is not completed till End Of Day of the execution date,
transaction will be rejected by depository.

7. Please ensure that the mobile number and email ID are correctly registered in your demat
account(s).
Bank Account Update facility for Shareholders

1. NSDL has developed a facility to update bank account details in demat account basis
request received from Issuer Companies.
2. With this facility, Issuer Companies can approach their shareholders to whom they are
unable to remit the funds.
3. A SMS will be sent by NSDL on the mobile number registered in the demat account
to those shareholders of the company whose bank details are to be updated requesting
them to update the bank account details.
4. SMS will have a link for update of bank details.
Bank Account Update facility for Shareholders

5. On clicking the link, shareholder will be redirected to NSDL’s e-Services portal,

where after PAN and OTP authentication, update in Bank account number and IFS
code will be permitted.

6. NSDL will fetch and display the name as available in the bank records by crediting
₹1/- to the bank account number provided by shareholder and after shareholder’s
confirmation, request will be accepted by the system.
Block Mechanism in Demat Account
1. SEBI has come up with a mechanism that whenever client intending to make a sale
transaction, shares will be blocked in his/her demat account in favour of Clearing
Corporation.

2. This mechanism is effective from August 1, 2021.

3. If sale transaction is not executed, shares shall continue to remain in the client’s
demat account and will be unblocked at the end of the T day.

4. Thus, this mechanism will do away with the movement of shares from client’s demat
account for early pay-in and back to client’s demat account if trade is not executed.
Block Mechanism in Demat Account
1. The securities lying in client’s demat account will be blocked either by client himself
using depository’s online system or e-DIS mandate or through depository participant
based on physical DIS given by client or Power of Attorney holder.
2. Depositories may keep block on the securities in client’s demat account in respect of
Intra or Inter depository transfer instruction till pay-in day.
3. The blocked securities will be transferred only after checking against the client level
net delivery obligation received from Clearing Corporation (CC).
4. Depositories will provide the details of transfer instructions such as Unique Client
Code (UCC), Trading Member (TM) ID, Exchange ID etc. to CCs for clients to avail
Early Payin (EPI) benefit.
5. CC will match the client level net obligations with the Block details provided by
depositories and CC will provide EPI benefit to client if the client level net
obligation exists for that client.
6. In case of matched orders, block securities will be debited from Client’s demat
account and will be credited to linked TM Pool account up to pay-in day. TM shall
further transfer such securities to CM Pool account.
Block Mechanism in Demat Account
Unblocking of Securities:

1. After receiving client level net obligations on T day from CCs, depositories will
match the Intra or Inter depository transfer instruction details with CC obligation
details based on UCC, TM ID, CM ID, Exchange ID, etc.

2. In case of unmatched orders, CCs shall upload cancellation of Block instruction on T

day so that securities are unblocked and become free in client’s demat account on T
day itself.

3. Broker or client shall not be allowed to unblock securities if EPI benefit is provided
by CC to client for the same.
Block Mechanism in Demat Account
Margining of Trades:

1. When the client intends to block securities for a sale transaction, shares will remain
blocked in favour of CC. If securities are blocked in favour of CC, then all Margin
would deemed to have been collected and penalty for short / non-collection of margin
including other margins shall not arise.

2. Blocking shall be on ‘time basis’ and would mean if the order is not executed by the
end of the T day, the block shall be released.

3. The proposed facility of block mechanism is on optional basis and Early Pay-in
mechanism shall also continue.
Nomination
1. Nomination is Not mandatory but recommended.

2. If you do not wish to nominate, you must submit a declaration for ‘No Nomination’ at
the time of account opening w.e.f. October 1, 2021.

3. Existing clients who have not given nominee details, must provide the same or a
declaration for ‘No Nomination’ on or before March 31, 2022.

4. Your demat account may be frozen if above requirement is not complied with on or
before March 31, 2022.
Online Closure of Demat Account
1. Account holder has a right to close his / her demat account.
2. Account can be closed by giving an Account Closure request to DP. It should be duly
filled and signed by all the joint holders.
3. If your DP is offering online account opening, then account closure can also be done
online through e-Sign facility.
4. A confirmation will be sought from the client by way of OTP sent on the registered
email ID and mobile number.
5. In case there is any security lying in the demat account, it must be transferred to some
other demat account. Account can not be closed until it is nil.
6. The request for closure must include target account details if there is any security in
demat account.
7. Demat account having nil balance can be closed by the DP on the basis of email
received from the registered email ID of the demat account holder.
e-Voting Simplification

1. Process of e-Voting has been simplified. Now shareholders do not need to register
with all e-Voting Service Providers (ESP).

2. Shareholders now have the option to either directly register with Depository to
access the e-voting page of various ESPs through websites of the Depository or
access various ESP’s portal directly.

3. Single registration with NSDL will enable you to participate in e-voting process of
all companies where you hold shares.
How to Dematerialise Mutual Fund Units?

1. All the existing mutual fund units issued by all the

mutual fund companies are available for conversion to
demat form.
2. All New Fund Offers have option to subscribe directly
in demat form.
3. ISIN of your mutual fund units can be seen in the
statement of account or your can find at
www.nsdl.co.in.
4. You need to submit a ‘Conversion Request Form’
along with Statement of Account received from mutual
fund company to your DP.
5. All existing mutual fund investments through SIP
mode can also be converted into demat form.
How to Dematerialise Mutual Fund Units?

6. You may submit a single request for conversion of All

the existing mutual fund units held in one folio with
any mutual fund company to demat form. This is
known as ‘Folio based’ conversion of units into demat
form.

7. You may also submit a single request for conversion of

All the existing mutual folios held with different
mutual fund companies to demat form by quoting your
NSDL CAS ID.

8. In above options, conversion request will be generated

for All the units held in a folio as per information
made available to NSDL by respective mutual fund
registrar as on end of previous month.
Stamp Duty on Transactions

As per amended Indian Stamp Act, 1899 and Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing
Corporations and Depositories) Rules, 2019, Stamp Duty is payable w.e.f. July 1, 2020.

Applicable on Transactions covered Who will pay? Collection by Payable to

Clearing
corporations,
Securities,
Derivatives and Issuance, Sale and Either by buying depositories, CCIL Concerned State / UT
client or by selling and Registrars and govt. (as per buyer
certain other Transfer client Share Transfer Agents client)
instruments
on behalf of state
govt.
Stamp Duty on Transactions

Shares, debentures, mutual fund units, stock derivatives, commodity

What securities are covered? derivatives, currency and interest rate derivatives

Government securities (prescribed rate is 0%), Debt instruments

What securities are not covered?
having original or initial maturity beyond one year
Stamp Duty on Transactions

Transaction Collection agency

Issuance of securities in demat form Depositories

Issue and sale or transfer of mutual funds units in statement
form (non demat) Mutual Fund Registrars
(Switching of mutual fund included)
Mutual Fund and AIF transactions (sale, transfer and issue of Depositories
units in demat mode)
Invocation of pledge and hypothecation in demat form Depositories
Transfer of securities in secondary market (trades in stock
Stock exchange / Clearing corporation
markets)
Off market transfers of securities in demat form Depositories
Stamp Duty on Transactions

Redemption of mutual fund units, issuance of bonus

Transactions not covered shares, off-market transfer of securities without
consideration such on gift, legacy transfer

What value should be considered for SD? Market value which is based on price or consideration
involved as disclosed by trading parties

Use NSDL stamp duty calculator available at www.nsdl.co.in to know the amount of stamp duty payable and pay the
amount online.
Stamp Duty on Transactions
Stamp duty is based on the consideration amount mentioned by the transferor demat account holder in the instruction
slip and recorded in NSDL system by DP or account holder.

It can be paid by the demat account holder directly to NSDL

or through its DP.

It must be paid before the execution of the instruction in

depository system.

Take care to mention DP ID and Client ID of transferor client

correctly at the NSDL portal while paying stamp duty online.

Stamp duty collected by depository shall be deposited in the

account of concerned state / UT government based on the
residential address (correspondence address) pin code
mentioned in the demat account of the buying client (credit side).
Margin Pledge
1. As per SEBI’s guidelines, w.e.f. August 1, 2020
Trading Members and Clearing Members (stock
brokers) can accept margin payment in form of
securities from their clients, only through a Pledge
created in depository system.

2. Earlier, either Title transfer collateral arrangements

was used for margin requirement or mere holding
of Power of Attorney in respect of client’s demat
account was considered as sufficient for collection
of margin obligations from that client.
Margin Pledge
3. W.e.f. August 1, 2020, collaterals in form of
securities can be accepted by stock brokers in form
of margin pledge created on the securities held in
client’s demat account.
4. Instruction to create margin pledge on securities can
be given by client or by the person holding the
Power of Attorney, in physical form or electronically
through SPEED-e.
5. Such margin pledge can be created in favour of a
specially designated demat account of the stock
broker (opened as TM – Client Securities Margin
Pledge Account or TM / CM – Client Securities
Margin Pledge Account).
How to Submit Margin Pledge Instruction?
There are three ways to submit Margin Pledge Instruction –
1. You may fill up, sign and submit Form 43 – Margin Pledge Form in paper form to your DP.

2. You may submit Margin Pledge Instruction electronically using NSDL SPEED-e platform, if you are
a registered user (password user or e-token user).
 If you wish to register for SPEED-e, visit www.eservices.nsdl.com and click on ‘New user registration’ and then select SPEED-e.

 Once created, margin pledge instruction will wait for pledgee’s confirmation to become effective. If
Pledgee has opted for automatic confirmation of pledge instruction, then margin pledge instruction
created as above will become effective immediately.

 Take care to
 Create Margin Pledge for securities which are approved by your stock broker for margin purpose.
 Create Margin Pledge for quantity according to value of the security and haircut applicable.
How to Submit Margin Pledge Instruction?
3. Your stock broker (Trading Member) may initiate Margin Pledge instruction on your
behalf if you have given a Power of Attorney (POA) in his favour.

 In this case, you will need to confirm the Margin Pledge instruction using OTP received on your registered mobile
number or registered email ID.

Or

 you can login to SPEED-e and confirm the instruction available.

Margin Pledge Confirmation
Confirm Pledge
Verify the information displayed and if
satisfied, confirm the instruction to
create pledge with the OTP received.
4
Receive OTP
After successful PAN authentication,
One Time Password (OTP) will be sent
to client through SMS and email.
Receive Confirmation Link
5
1
On receipt of margin pledge instruction,
NSDL shall send a link to ‘Confirm Margin
Pledge Transaction’ through SMS and email
to Client.
Click the Link
2 Client needs to Click the link received
– which will lead to a NSDL web page.
3
Authenticate With PAN
Client should authenticate the instruction
with PAN.
Margin Re-Pledge

1. A Trading Member (stock broker) can re-pledge the

securities margin pledged by its clients in his / her
account, in favour of Clearing Member (CM). A CM
can re-pledge the same securities in favour of Clearing
Corporation (CC) in respect of approved securities. Re-
pledge is possible with one time consent given by the
client for underlying securities.

2. Details of all pledge transactions and subsequent re-

pledge transactions shall be displayed in the client’s
demat account statement.
 Closure of Margin Pledge / Re-pledge

Submit Closure Instruction Confimation by Pledgee Instruction by Broker

Client can submit instruction for Closure of Pledge will be closed when it is Alternatively, stock broker can give an
Margin Pledge existing in his / her demat confirmed by the concerned stock instruction for unilateral closure of the pledge
account in physical form or electronically broker (pledgee TM)
through SPEED-e

If the securities have been re-pledged by TM in favour of CM (or by CM in favour of CC), then margin pledge closure will
need to be confirmed by concerned CM (or by CC). Alternatively, CM or CC may give an instruction for unilateral closure
of the re-pledge.
 Invocation of Margin Pledge / Re-pledge

TM SUBMITS IF RE-PLEDGED BY
SECURITIES DEBIT VALIDATION
INSTRUCTION TM

Stock Broker (TM) can Upon successful If the securities have Validation of the
submit instruction for execution of Pledge been re-pledged by TM margin pledge
Invocation of Pledge Invocation instruction in favour of CM (and by instruction will be done
existing in its favour in in NSDL system, CM to CC), then with the UCC linked in
physical form or securities will be Invocation initiated by the demat account of
electronically through debited from the TM will be effective the Client.
SPEED-e facility, in case client’s demat account when pledge is
of default in payment (Pledgor’s account) and released by the
by client. credited to TM’s demat concerned CM (and by
account (Pledgee’s concerned CC).
account).

If there is default by TM / CM then the re-pledged securities of clients who do not have any open position with CM / CC,
shall not be available to CM / CC for invocation to meet settlement default of the TM / CM.
 THANK YOU
We welcome your feedback and suggestions about this program at www.nsdl.co.in /
info@.nsdl.co.in