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    Depository System in India, Needs and Progress

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    jyoti6
    The document discusses India's depository system, including its establishment through the Depositories Act of 1996, how it allows for the electronic holding and transfer of securities to reduce costs and risks compared to physical certificates, and provides an overview of the key processes and constituents involved like depositories, depository participants, and issuers.

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    Depository System in India, Needs and Progress

    Uploaded by

    jyoti6
    6K views17 pages
    The document discusses India's depository system, including its establishment through the Depositories Act of 1996, how it allows for the electronic holding and transfer of securities to reduce costs and risks compared to physical certificates, and provides an overview of the key processes and constituents involved like depositories, depository participants, and issuers.

    Original Description:

    We have two depositories namely CDSL,NSDL.they help in dematerialisation of securities.

    Original Title

    Depository system in India,needs and progress

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    The document discusses India's depository system, including its establishment through the Depositories Act of 1996, how it allows for the electronic holding and transfer of securities to reduce costs and risks compared to physical certificates, and provides an overview of the key processes and constituents involved like depositories, depository participants, and issuers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    6K views17 pages

    Depository System in India, Needs and Progress

    Uploaded by

    jyoti6
    The document discusses India's depository system, including its establishment through the Depositories Act of 1996, how it allows for the electronic holding and transfer of securities to reduce costs and risks compared to physical certificates, and provides an overview of the key processes and constituents involved like depositories, depository participants, and issuers.

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    You are on page 1of 17

    Good Morning Everyone.

    Presenting you…..
    Depository system in India:
     Itsneed
     Process and

     Progress
    The Depositories Act,1996.
     Introduction of Depository system in India.
     Issue, hold & transact in securities through
    depositories.
     Two depositories operational i.e. NSDL & CDSL.

     Securities dematerialized at time of issue or


    subsequently.
    Need for Depository system.
     Immediate transfer of securities.
     Reduced cost of transaction.
     Elimination of risks related to physical securities.
     Reduction in paper work..
     Eliminating the need to intimating informational changes.
     Consolidation of folios & instruments.
     Faster & efficient services like transfer, transmission, receipt
    of benefits, automatic credit of shares arising out of split,
    consolidation & mergers.
    Constituents of depository system
     Depository
     NSDL
     CDSL
     Depository participants (DP)
     Banks, including foreign banks.
     Financial institutions
     Stock brokers
     R&T Agents
     Custodians
     Clearing Corporations
     Non Banking financial companies
     Issuer / R&T Agent.
     Beneficial owners.
    Bank Vs. Depository

    arities… Differences…
    ers Minimum balance requirement.
    s rendered Account holder Vs. BO.
    offices & Branches Use of Funds/ Securities.
    mer identity verification
    services
    er of (funds/ securities)
    c statements
    ation facility
    on of account.
    g of account
    ank/ depository transfers.
    Processes…..
     Dematerialization

     Rematerialization

     Initial
    public offers
     Trading & settlements.
     On Market transactions
     Off market transactions
     Inter Depository transactions
    Dematerialization Process

    Physical Securities Electronic Form.

    Pre-requisites:

    • Demat Account with any DP of the Depository.


    • ISIN for the securities available with the Depository.
    • Investor should be registered holder for the securities in the
    books of the company.
    Dematerialization Process
    (Contd.)
    1. DRF with certificates

    BO DP

    7. Statement of holding

    3. DRF with
    6. Credits 2.Electronic
    certificates
    In BO’s request
    A/c

    5.Confirms E-request.
    Depository
    Issuer/ RTA
    4. Forwards Demat (NSDL/CDSL)
    request
    Rematerialization Process

    1. RRF in duplicate

    BO DP

    3. RRF with
    other Doc.s, 2. Enters
    .Dispatch
    if any. details
    es 5.Debits
    ertificate in BO’s in system
    A/c

    4.Confirms E-request. Depository


    Issuer/ RTA (NSDL/CDSL)
    Initial Public Offer Process
    2. BO’s verification
    Depository
    Issuer / RTA 3. Verification Report (NSDL/CDSL)

    4. Details of allotment.

    5.Credit
    securities

    6. Intimation of allotment

    BO

    1.Application for allotment


    Trading & Settlements Process
    Transfer of securities in/ out of the Demat A/c can arise in the
    following instances:

    For execution of Off Market Transactions.


    For settling On Market Transactions.

    For Inter depository transactions.


    Off Market Transactions
    Transaction done on person to person basis without going
    through stock exchange mechanism.

    Pre-requisites:
    Transfer of securities from one BO A/c to another BO A/c.

    Both A/c’s are with same Depository though with different


    DPs.
    Neither buyer’s A/c nor seller’s A/c is with clearing house/
    clearing corporation.
    Off Market Transactions (Contd.)

    1. Filled delivery instruction slip (DIS)


    Seller
    BO DP
    4. Debits Securities.

    2.Enters
    Off mkt.
    3.Transaction Transaction
    5.Credits
    ID generated In depository’s
    Securities.
    System.

    Buyer Depository
    BO (NSDL/CDSL) 6.Generates
    Trade ID
    On Market Transaction
    Trades done by investors through stock exchange
    mechanism and settled using same stock exchange mechanism.
     seller as well as buyer account is with CH/CC
    Inter Depository Transactions.
     SEBI (Depository and participants) Regulations, 1996
    requires depositories to be inter connected.
     Securities available for dematerialization on both depositories.

     Debit/ credit instructions have to given on inter-depository


    delivery or receipts forms to the DP’s of seller and the buyer.
     These instructions are exchanged online for each day between
    the depositories.
    Progress So Far….

    Particulars CDSL (updated NSDL (Updated


    on 31st Aug’09)` on 29th Aug’09)
    Companies 6313 7847
    Depository 480 282
    participants
    DP service 6474 9725
    centers
    Investors A/c’s 59,21,904 1,00,33,692
    (excl.Closed
    accounts)
    Looking Forward….
     Depository services to consolidate further.
     All scrip to be issued, held, traded and settled in Demat form.
     Banks would evince interest in extending loan against Demat
    securities.
     Improved infrastructure.
     Simplification of operations & removal of barriers.
     Government securities admitted to NSDL.

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