On
DEPOSITORY SYSTEM
BY
A PROJECT REPORT
On
DEPOSITORY SYSTEM
BY
CERTIFICATE
This is to certify that the project entitled DEPOSITORY SYSTEM submitted by Miss.
Shweta Chandrakant Sawant Roll No. 48 student of M.Com. Banking & Finance
(University of Mumbai) (IVth Semester) examination has not been submitted for any other
examination and does not form a part of any other course undergone by the candidate. It is
further certified that he has completed all required phases of the project. This project is original
to the best of our knowledge and has been accepted for Internal Assessment.
Internal Examiner
External Examiner
Co-ordinator
Principal
College seal
I further state that this work is original and not submitted anywhere else for any
examination.
Signature of student.
ACKNOWLEDGEMENT
At the beginning, I would like to thank GOD for his shower of blessing. The desire
of completing this project was given by my guide Prof. Sunil Gujaran. I am very
much thankful to him for the guidance, support and for sparing her / his precious
time from a busy schedule.
I would fail in my duty if I dont thank my parents who are pillars of my life.
Finally I would express my gratitude to all those who directly and indirectly helped
me in completing this project.
Shweta C Sawant
Executive Summary:
Depository system essentially aims at eliminating the voluminous and cumbersome paper work
involved in the scrip-based system and offers scope for paperless trading through state-of-theart technology. It is an institution which maintains an electronic record of ownership or
securities. The storage and handling of certificates is hence immediately eliminated which
generates a reduction in costs like back office cost for handling, transporting and storing
certificates. Depositary participant is an institution akin to bank for securities. When an investor
hands over securities to a depository participant, investors account is credited. The investors
depository system account will show their holdings. His account is updated for his transactions
of sale and purchase but without physical movement of scripts or transfer deeds. In depository
system, share certificates belonging to the investors are dematerialised (demats).
Dematerialisation or Demat is a process whereby investors securities like shares, debentures
etc., are converted into electronic data and stored in computers by a Depository. Securities
registered in investors name are surrendered to depository participant (DP) and these are sent to
the respective companies who will cancel them after Dematerialization and credit investors
depository account with the DP. The securities on Dematerialization appear as balances in ones
depository account. These balances are transferable like physical shares. If at a later date,
investors wish to have these demat securities converted back into paper certificates, the
Depository does this and their names are entered in the records of depository as beneficial
owners. The beneficial ownership will be with investor but legal ownership will be with the
depository. Consequently, benefits like interest, dividend, and rights: bonus and voting rights will
be with investors. Since depository is to get securities transferred in its name, the depository
name will be registered in the ownership register maintained by the company.
INDEX:
TABLE NO.
PARTICULARS
Introduction
PAGE NO.
Research Methodology
8
10
11
12
Dematerialisation Process
17
Demat Account
19
Re-materialisation Process
21
NSDL
22
CDSL
28
10
11
Legal Framework
12
Review of Literature
13
Conclusion
14
Bibliography
31
33
41
42
43
Introduction to Depository:
A significant development of the 20th century particularly in its later part is expansion of
financial market world over which mostly was driven by globalization, technology, innovations
and increasing trade volume. India has not been an exception with probably largest number of
listed companies with a very large investor population and ever increasing volumes of trades.
However, this continuous growth in activities increased problems associated with stock trading.
Most of these problems arose due to the intrinsic nature of paper based trading and settlement,
like theft or loss of share certificates. This system required handling of huge volumes of paper
leading to increased costs and inefficiencies. The process beginning from buying shares through
the stock exchanges till getting the certificates duly endorsed in the buyers name was indeed
quite complex and time-consuming and was riddled with a variety of problems. Growing number
of investors participating in the capital market has increased the possibility of being hit by a bad
delivery, The cost and time spent by the brokers for rectification of these bad deliveries tends to
be higher with the geographical spread of the clients.
Meaning of depository
A depository is an organisation which holds securities (like shares, debentures, bonds,
government securities, mutual fund units etc.) of investors in electronic form at the request of the
investors through a registered Depository Participant. It also provides services related to
transactions in securities.
Depository
Companies/issuer
Investors
History:
The first depository was set up way back in 1947 in Germany. In India it is a relatively new
concept introduced in 1996 with the enactment of Depositories Act 1996. Their operations are
carried out in accordance with regulations made by SEBI, bye-laws and rules of Depositories Act
and SEBI (Depositories and Participants) Regulations Act 1996.
Research Methodology:
Although India adopted multi-depository system model to provide competitive and healthy
depository system for surpass services to Investors. There is a chance to various entities to enter
into Depository system but only two organizations National Securities Depository Ltd (NSDL)
and Central Depository Services Ltd (CDSL) are providing depository services presently.
Primary data
Secondary data
Primary data:
In this study the questionnaire method have been used to collect primary data.
Secondary data:
Secondary data is collected from the website of NSDL (www.nsdl.co.in) and CDSL
(www.cdsl.ac.in), website of Indian central depository system (CDS), published reports of NSDL
and Govt. of India, Depository Act-1996, SEBI Act-1992, and Capital Market Services,
published books and printed material on financial services or Intermediaries.
10
To evaluate the performance of the Depository system in India with reference to NSDL.
To study the Organizational frame work, Operational policies, Problems and Prospects
of dematerialization in India.
To analyze services rendered and quality among the DPs and opinions of investors with
traded and held in custody. This facilitates faster risk free and low cost settlement. Depository is
much like a bank and performs many activities that are similar to a bank depository:
Enables surrender and withdrawal of securities to and from the depository through the
process of demat and remat,
Carries out settlement of trades not done on the stock exchanges (off market Trades).
In India a depository has to be promoted as a corporate body under Companies Act, 1956. It is
also to be registered as a depository with SEBI. It starts operations after obtaining a certificate of
commencement of business from SEBI. It has to develop automatic data processing systems to
protect against unauthorized access. A network to link up with depository participants, issuers
and issuers agent has to be created.
A bank included in the second schedule of the Reserve Bank of India Act, 1934.
A foreign bank, operating in India with the approval of Reserve Bank of India.
A state financial corporation established under the provisions of section 3 of the State
Financial Corporations Act, 1951.
ii) ISSUER / Companies: The issuer is the co. which issues the securities. It maintains a
register for recording the names of the registered owners of securities and the depositories.
13
The issuer sends a list of shareholders who opt for the depository system. And only that co.s
can issue the securities which are registered under stock exchanges
Other Services:
a) Pledging Dematerialized Shares: Dematerialized shares could be pledged; in fact, this
14
is more advantageous as compared to pledging share certificates. After loan is repaid one
can request for a closure of pledge by instructing ones DP through a standard format.
The pledgee on receiving the repayment as well as the request for closure of pledge will
instruct his DP accordingly. Even the locked-in securities can be pledged. The pledger
continues to remain the beneficiary holder of those securities even after the securities are
pledged.
b) Initial Public Offerings: Credits for public offers can be directly received into demat
account. In the public issue application form of depository eligible companies, there will
be a provision to indicate the manner in which securities should be allotted to the
applicant. One is to mention ones client account number and the name and identification
number of DP. All allotment due to investor will be credited into required account.
c) Receipt of Cash/non-cash Benefits: When any corporate event such as rights or bonus
or dividend is announced for a particular security, depository will give the details of all
the clients having electronic holdings in that security as of the record date to the registrar.
The registrar will then calculate the corporate benefits due to all the shareholders. The
disbursement of cash benefits such as dividend/ interest will be done directly by the
registrar. In case of non-cash benefits, depository will directly credit the securities
entitlements in the depository accounts of all those clients who have opted for electronic
allotment based on the information provided by the registrar.
d) Stock Lending and Borrowing: Through the depository account securities in the demat
form can be easily lent/ borrowed. Securities can be lent or borrowed in electronic form
15
through an approved intermediary, who has opened a special intermediary account with
a DP. Instructions are to be given to DP through a standard format (which is available
with DP) to deposit securities with the intermediary.
e) Transmission of Securities: Transmission of securities due to death, lunacy, bankruptcy,
insolvency or by any other lawful means other than transfer is also possible in the
depository system. In the case of transmission, the claimant will have to fill in a
transmission request form, (which is available with the DP) supported by valid
documents.
f) Freezing Account with DP: If at any time as a security measure one wishes that no
transaction should be effected in ones account, one may advise ones DP accordingly. DP
will ensure that account of such investor is totally frozen until further instructions from
him.
Benefits of Depository System:
1) This system will eliminate paper work as the book entry system does not need physical
movement of certificates for transfer process.
2) The risk of bad deliveries, fraud and misplaced, mutilated and lost share certificates will
not exist.
3) The electronic media will shorten settlement time and hence the investor can save time
and increase the velocity of security movement.
4) Investors will be able to change portfolio more frequently.
DEMATERIALISATION PROCESS:
16
NSDL
Depository
Participant
INVESTOR
REGISTRAR
1. Appointing DP:
Any investor who intends to transact through depository system has to engage one depository
participant (DP). He can approach a DP of his choice and open an account with him just like
one opens an account with a bank. Investor gets an identification number called Client ID
(just as one gets ones bank account number) which serves as a reference point for all his
transactions with D.P.
Every investor before getting his holding dematerialised has to enter into an agreement with
the depository through a participant. This step is necessary whether investor already has
securities or securities are yet to be issued in a fresh issue. The investor contracts only with
that depository which accepts his security in depository mode since it is not necessary that
all eligible securities must be in depository mode and with all the depositories.
17
4. Confirmation of Demat
The Registrar to transfer or the concerned company when satisfied with the case of demat has to
inform the depository of the completion of dematerialisation authorising an electronic credit for
that security in favour of the investor.
18
Demat Account:
Demat account is a safe and convenient means of holding securities just like a bank account is
for funds. Today, practically 99.9% settlement (of shares) takes place on demat mode only. Thus,
it is advisable to have a Beneficiary Owner (BO) account to trade at the exchanges.
A safe and convenient way of holding securities (equity and debt instruments both).
Transactions involving physical securities are costlier than those involving dematerialised
securities (just like the transactions through a bank teller are costlier than ATM
transactions). Therefore, charges applicable to an investor are lesser for each transaction.
Increased liquidity, as securities can be sold at any time during the trading hours
(between 9:55 AM to 3:30 PM on all working days), and payment can be received in a
very short period of time.
Risks like forgery, thefts, bad delivery, delays in transfer etc., associated with physical
certificates, are eliminated.
Documents to be attached
Getting started
1. Choose a DP
Telephone bill
with DOB
4. PAN card
ID).
Note:
The agreement required to be signed by the investor details the rights and duties of the
investor and DP.
DP may revise the charges by giving a 30 days prior notice. SEBI has rationalized the
cost structure for isation by removing account opening charges, transaction charges for
credit of securities and custody charges, effective from January 28, 2005.
20
Re-materialisation Process:
NSDL
Depository
Participant
INVESTOR
REGISTRAR
21
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, Unit Trust of India (UTI) - the largest Indian mutual fund and
the National Stock Exchange (NSE) - the largest stock exchange in India, sponsored the setting
up of NSDL and subscribed to the initial capital. NSDL commenced operations on November 8,
1996.
Ownership:
NSDL is a public limited company incorporated under the Companies Act, 1956. NSDL had a
paid-up equity capital of Rs. 105 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. 25 crore in the year 2000.
However, its net worth is above the Rs. 100 crore, as required by SEBI regulations.
22
Citibank N.A.
Dena Bank
Management of NSDL:
NSDL is a public limited company managed by a professional Board of Directors. The
day-today operations are conducted by the Chairman & Managing Director (CMD). To
assist the CMD in his functions, the Board appoints an Executive Committee (EC) of not
more than 15 members. The eligibility criteria and period of nomination, etc. are
Bye-Laws of NSDL:
Bye-Laws of National Securities Depository Limited have been framed under powers
conferred under section 26 of the Depositories Act, 1996 and approved by Securities and
23
Enables the surrender and withdrawal of securities to and from the depository
(dematerialisation and rematerialisation).
Carries out settlement of trades not done on the stock exchange (off-market trades).
Transfer of securities.
Dematerializations
Off-market Trades
Rematerialisation
25
their shareholders use a computer system called DPM (SHR) to connect to the NSDL central
system. DPM (SHR) may be installed by the company itself or through its R&T Agent.
Maintenance of Accounts at the Central System:
The NSDL central system known as DM maintains accounts of all account holders in the
depository system. All the transactions entered at any point in the computer system connected to
it are first effected in the central system and subsequently at these computers. Thus, the central
system of NSDL has the records of all details of every transaction conducted in the depository
system.
Distributed Database:
Each of the computer systems connected to NSDL system has its own database relating to its
clients. This helps in giving prompt and accurate service to the clients. However each of the
databases is reconciled with the data at the central system everyday in order to ensure that the
data in the distributed database tallies with the central database.
Common Software:
NSDL develops software required by depository participants, companies, R&T Agents and
clearing corporations for conducting depository operations. Thus, the computer systems used by
all the entities will have common software given by NSDL. However, depending on the business
potential, branch networks and any other specific features, DPs may develop software of their
own for co-ordination, communication and control and provide service to their clients. Such
exclusive software is called "back office software". DPM system given by NSDL gives "export
and import" facility to take out the transaction details to be used by back office software and to
27
The balances in the investors account recorded and maintained with CDSL can be obtained
through the DP. The DP is required to provide the investor, at regular intervals, a statement of
account which gives the details of the securities holdings and transactions. The depository
system has effectively eliminated paper-based certificates which were prone to be fake, forged,
counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of
securities.
CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such
as State Bank of India, Bank of India, 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:
28
CDSL received the certificate of commencement of business from SEBI in February, 1999
Honourable Union Finance Minister, Shri Yashwant Sinha flagged off the operations of
CDSL on july 15,1999.
Settlement of trades in the demat mode through BOI Shareholding Limited, the clearing
house of BSE, started in july 1999.
All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange,
Delhi stock Exchange, The Stock Exchange, Ahmedabad, etc have established
connectivity with CDSL.
As at the end of Dec 2007, over 5000 issuers have admitted their securities (equities,
bonds, debentures, commercial papers), units of mutual funds, certificate of deposits etc.
into the CDSL system.
4.25
4.50
5.00
29
5.50
CDSL
NIL
5.50 (INR)**
Custody Charges
NIL
Demat Charges
NIL
Remat
Fee of Rs.10/- for every 100 securities or part thereof; subject to
maximum fee of Rs. 5,00,000 or a flat fee of Rs.10/- per certificate,
whichever is higher
Restat - SOA/ Redemption
A flat fee of Rs. 5.50 per transaction for conversion of MF units into
SOA (Statement of Account) and Redemption of MF units
Pledge/Hypothecation Charges
50,000 (INR) one time for registration and 2,250 (INR) for obtaining
Digital Signature Certificate from CDSL
For Main DPs: 5,000 (INR) per month or the amount of the actual bill for a given month
whichever is higher.
For DP-Branches: 5,000 (INR) per month or the amount of the actual bill for a given month
whichever is higher.
30
Promoted by reputed persons and institutions: Both bank and depository are Promoted by
persons and institutions of repute and good standing. For e.g.-HDFC bank was promoted
by housing Development Corporation Ltd. and similarly NSDL is promoted by Industrial
Development Bank of India Limited (IDBI), Unit Trust of India (UTI) and National Stock
Exchange of India Limited (NSE).
Renders safe keeping services: Both banks and depository provide safe keeping services.
Banks provides safe custody of cash and locker facility for keeping valuable articles to its
clients. Depositories also provide safe keeping of shares, debentures, bonds, government
securities, mutual fund units to its clients.
Central office and branches: Like bank every depository has one central office which is
the main office and other branch offices which are situated in different cities and follow
the guidelines of central office.
Charge of fees- banks charge fees for locker facilities to its clients, similarly depository
charges fees for safe keep of share certificates in electronic form.
Transfer of funds and securities : Funds/securities are transferred only at the instruction
of the account holder
Account is operated by power of attorney: a person under power of attorney can operate
the account.
Nomination facility: in case of bank accounts customer can nominate any person to
whom account will be transferred in case of death of the person similarly in case of
depository, a customer can nominate a person to whom the shares will be transferred.
Currencies (in case of banks ) and shares (in case of depositories) when held do not have
31
Differentiation:
Bank Account Vs. Demat Account
A Bank
interest to them.
use.
A bank account can be operated upon
JOINTLY, at present.
LEGAL FRAMEWORK:
The depositories in India are regulated under the following legal framework:
Apart from the above-mentioned Acts and Regulations, following govern the business and
operations of a depository.
33
The Depositories Act, 1996 gives power to depositories to make bye-laws but such bye laws
should be consistent with the provisions of this Act and the SEBI Regulations. Such bye-laws
shall provide for:
The eligibility criteria for admission and removal of securities in the depository;
The manner in which securities shall be dealt with or withdrawn from a depository;
The procedure for ensuring safeguards to protect the interests of participants and
beneficial owners;
The conditions of admission into and withdrawal from a participant by beneficial owner;
The procedure for conveying information to the participants and beneficial owners on
dividend declaration, shareholder meetings and other matters of interest to the beneficial
owners;
The manner of distribution of dividends, interest and monetary benefits received from the
company among beneficial owners;
Inter se rights and obligations among the depository, issuer, participants, and beneficial
owners;
The manner and the periodicity of furnishing information to the Board, issuer and other
persons;
34
The procedure for proceeding against the participant committing breach of the
regulations and provisions for suspension and expulsion of participants from the
depository and cancellation of agreements entered with the depository;
The depository shall pay the registration fee specified within fifteen days of receipt of
intimation from the Board;
The depository shall comply with the provisions of the Act, the Depositories Ordinance,
the bye-laws, agreements and these regulations;
The depository shall not carryon any activity other than that of a depository unless the
activity is incidental to the activity of the depository;
the sponsor shall, at all times, hold at least fifty one per cent of the equity capital of the
depository and the balance of the equity capital of the depository shall be held by its
participants;
No participant shall at any time, hold more than five per cent of the equity capital of the
depository;
If any information previously submitted by the depository or the sponsor to the Board is
found to be false or misleading in any material particular, or if there is any change in such
information, the depository shall forthwith inform the Board in writing;
The depository shall redress the grievances of the participants and the beneficial owners
within thirty days of the date of receipt of any complaint from a
Participant or a beneficial owner and keep the Board informed about the number and the
nature of redressals:
regulation 14 within one year from the date of grant of certificate of registration under
this regulation; and
The depository has a net worth of not less than rupees one hundred crore;
The automatic data processing systems of the depository have been protected against
unauthorized access, alteration, destruction, disclosure or dissemination of records and
data:
The depository has established standard transmission and encryption formats for
electronic communications of data between the depository, participants, issuers and
issuers agents;
the physical or electronic access to the premises, facilities, automatic data processing
systems, data storage sites and facilities including back up sites and facilities and to the
electronic data communication network connecting the depository, participants, issuers
and issuers agents is controlled, monitored and recorded;
the depository has a detailed operations manual explaining all aspects of its functioning,
including the interface and method of transmission of information between the
depository,- issuers, issuers agents, participants and beneficial owners;
the depository has established adequate procedures and facilities to ensure that its records
are protected against loss or destruction and arrangements have been made for
maintaining back up facilities at a location different from that of the depository;
36
the depository has made adequate arrangements including insurance for indemnifying the
beneficial owners for any loss that may be caused to suchbeneficial owners by the
wrongful act, negligence or default of the depository orits participants or of any employee
of the depository or participant; and
Types of records:
Every participant shall maintain the following records and documents, namely:
Records of all the transactions entered into with a depository and with a beneficial owner;
Every participant shall make available for the inspection of the depository in which it is a
participant all records referred above. Every participant shall allow persons authorised by the
depository in which it is a participant to enter its premises during normal office hours and inspect
its records.
Every participant shall intimate the Board the place where the records and documents are
maintained.
37
The participant shall preserve records and documents for a minimum period of five years.
Where records are kept electronically by the participant, it shall ensure that the integrity
of the data processing systems is maintained at all times and take all precautions
necessary to ensure that the records are not lost.
If a participant enters into an agreement with more than one depository, it shall maintain
the specified records separately in respect of each depository.
Agreement by Issuer:
Every issuer whose securities have been declared as eligible to be held in dematerialised form in
a depository shall enter into an agreement with the depository.
Records to be maintained by Depository:
Every depository shall maintain the following records and documents, namely:
The names of the transferor, transferee, and the dates of transfer of securities;
Records of instructions received from and sent to participants, Issuers, issuers agents and
beneficial owners;
38
Market regulator SEBI is looking to overhaul its norms for depository systems with an aim to
strengthen its oversight mechanism and to safeguard against any systemic risks posed by singlepoint failures.
The depositories work as safe-keepers of various kinds of securities issued by the companies as well
as other entities and these entities are regulated by the Securities and Exchange Board of India
(SEBI).
The depositories have the mandate to help the companies convert their physical shares or securities
into dematerialised or demat form and thereafter maintain those shares, and also supervise proper
conversion and reconciliation of their total share capital by the companies.
A Depository System Review Committee constituted by SEBI has been asked to conduct an overall
assessment/adequacy of existing depository framework and identify potential areas for review, a
senior official said.
39
The move comes at a time when efforts are on to expand the ambit of depositories by allowing them
to hold new asset classes in demat format.
SEBI has received suggestions from the government to expand the list of asset classes to be held by a
depository.
It has been suggested that there are many assets/records such as warehouse receipts, fixed deposits
with banks and corporates, insurance policies, Post Office investments and University degree
certificates that can be held in demat form.
To begin with, depositories may be be first allowed to hold only those financial assets for which there
exists a sectoral regulator, as it might require legal amendments in relevant Acts before SEBI might
notify records such as degree certificates as securities, the official said.
SEBIs Depository System Review Committee, which comprises outside experts as also a member
secretary from the regulator, would assess the existing depository system to benchmark it against the
global best practices.
Besides, it will also identify the areas for continuous improvement of systems, procedures and
practices and make the required recommendations.
The mandate to the SEBI panel also includes identifying systemically important market
infrastructure providers/ institutions/depository participants and their inter-linkages and identify
areas and suggest safeguards to prevent single point failures and denial of depository service.
It would also review the existing system of inspection by depositories and suggest changes for
strengthening monitoring and oversight of depository participants, the official added.
40
SEBIs Depository System Review Committee would also study the relevant principles of IOSCO, a
global body of market regulators from across the world, and European Central Bank
recommendations for Central Securities Depositories.
Review of Literature:
M.T. Raja and Varsha marathe conducted study on Transaction cost for equity shares in India
.The main objectives of the study was to analyse the cost of equity shares transaction in physical
mode and demat mode. He found that the average cost for the FII in India is lower than stock
market like Singapore, china, and Thailand. Due to dematerialization the transaction cost of FII
have comedown by 60 % and for mutual funds by 75%.
Malabika deo conducted a study on depository ordinance: a new dimension of capital market
reform. The objective of the study deals with operations, functions and benefits of depository
system. She concluded that introduction of depository system would take away of the ailments
facing the present style, making the trading in scrips fool proof, would serve as a panacea and
will ultimately pave the way for emergence of highly efficient capital market. However
improved banking system, adequate infrastructure and fast information technology are all going
to play a crucial role in the success of depository system in India.
41
Chikodikar studies undertaking dematerialization and the objectives framed was demat process
and have detailed discussion on demat system-its meaning advantages, demat charges (price)
depository and depository participants. He found that the electronic trading and trading of
securities is a step in the right direction, paperless trading will prove to be boon to the stock
market in the years to come.
C.R. Ramana conducted study on join in band of electronic trading in securities .He puts vision
at the electronic system of security demat and remat its features and protocol. He explained the
procedure to sell and buy technique of securities in the demat form.
Conclusion:
Since dematerialization has a great bearing on the creation and protection of wealth and
investment earnings of an investor, DPs must increase their efforts in promoting enhanced
services in general, and in those involving security and safety in particular to encourage the
existing and prospective shareholders, all efforts should be made to ensure good returns, in
addition to providing greater security and safety. Since the investors expect better service form
depository participants, it should provide them value-added services. The processing of the
DEMAT account opening should be made fast and non-tedious. The DEMAT a/c holder should
be given basic information about NSDL, CDSL and Depositaries Act 1996. Clear picture of the
deductions made by depository participant or the charges levied on the customers should be
provided in black and white. Bank should expand its network by opening its more branches and
franchise and there should be easy accessibility of services rendered by this system. The
processing of the demat account opening should be made fast.
To conclude, it can be said that the demat account opening is same as bank account, i.e, single or
42
joint accounts or with nominee. The growth rates of demat account holder in increasing over
years. The Indian system of capital market is a two tire system. Indian government allows
holding securities in any form i.e either in physical securities or in demat form. The transaction
of securities is completely done through electronic form. Investors are not aware of the services
offered by depositories. Most of the speculators do no utilize demat account in day-to-day online
trading. They trade through broker pool account. Dematerialization process can be done through
online trading by utilizing computers.
BIBLIOGRAPHY
1 BOOKS
Dematerialisation in the Indian Capital Market
By P.V Nishanth
Security analysis and portfolio management
By Prasanna Chandra
Securities Laws and Compliances
By Institute of Company Secretaries of India
2 WEBSITES
www.indiabulls.com
www.moneycontrol.com
www.nseindia.com
www.bseindia.com
43
www.wikipedia.com
www.sebi.com
www.google.com
44