Submitted To:

Prof. Amola Bhatt

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 Sector: About Types and Indian System
Genesis of the Institution
Organisational Structure
Products & Services
Key Financials
Major Operational Processes
Pricing Process
Regulatory Framework
Technology used
Issues faced in providing the Financial Service
The way ahead
Conclusion
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 The Depositories Act ,1996 defines a depository to mean a company
formed and registered under the Companies Act ,1956.
The Principle Function of a depository is to dematerialize securities and
enable their transactions in book entry form.
Depository in simple terms is a institution which holds your securities in a
dematerialised form. In this case a Depository is an institution which holds
your Shares, Government Bonds, Mutual funds etc on your behalf. Like a
Bank is to your Fixed Deposits, Cash and Recurring Deposits, a Depository
is to your Shares, Holdings, Government Bonds etc.
In simple terms
Bank Account with a Bank -> Keep your money
Demat Account with a Depository participant -> Keep your shares, bonds,
mutual funds, etc

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 Any of the following can promote a Depository:

A public financial institiute as defined in section 4A of a

company act 1956.

A bank included in second schedule to Reserve Bank of India

Act,1956.

A foreign bank operating in India with the approval of the

Reserve Bank of India.

A recognized stock exchange.

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 There are three types of Depositories in India

1. Credit Union are nonprofit companies highly focused on

customer services. Customers make deposits into a credit
union account, which is similar to buying shares in that credit
union. The credit union earnings are distributed in the form of
dividends to every customer.

2. Commercial Banks are for-profit companies and are the

largest type of depository institutions. These banks offer a
range of services to consumers and businesses such as
checking accounts, consumer and commercial loans, credit
cards and investment products. These institutions accept
deposits and primarily use the deposits to offer mortgage
loans, commercial loans and real estate loans

3. Saving Institutes are for-profit companies also known as

savings and loan institutions. These institutions focus primarily
on consumer mortgage lending but may also offer credit
cards and commercial loans. Customers deposit money into
an account, which buys shares in the company
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 The Indian Depository consists of four
consistuents.They are
1. The Depository
2. The Depository Participants
3. The Beneficial Owner
4. The issuer

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 The Depository :- The depository is entrusted with securities
for effecting the transfer of ownership of the securities. He
is the custodian of his clients " securities ". The depository
has no right over the security except with the transfer of it.

The Depository participants :- The depository participants

is the link between the depositor and the owner of
securities. He is deemed an agent of the depository.

The Beneficial owner :- The beneficial owner is the real

owner of the security. He lodges his securities with the
depository in the form of book entries. He has all rights and
liabilities associated with the securities.

The issuer :- It is the company, which issues the security.

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 Depository Participant is described as an agent of depository.
They are intermediatory between depository and investors.
Some of the services provided by DP are:

1. Dematerialization

2. Rematerialization

3. To maintain the record holdings and

4. Settlements

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 Mr. Utpal Shah
Manager CDSL
Ahmedabad Branch

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 Central Depository Services (India) Ltd (CDSL), is the second
Indian central securities depository based in Mumbai. It was
formed February 1999.
Its main function is the holding securities either in certificated
or uncertificated (dematerialized) form, to enable book entry
transfer of securities.
CDSL is promoted by Bombay Stock Exchange Limited (BSE)
jointly with State Bank of India, Bank of India, Bank of
Baroda, HDFC Bank, Standard Chartered Bank, Axis
Bank and Union Bank of India.
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 CDSL was set up with the objective of providing convenient,
dependable and secure depository services at affordable cost
to all market participants.

It has a wide network of DPs, who act as points of service for its
investors, operating from over 17,000 sites across the country,
offering convenience for an investor to select a DP based on its
cost structure and location convenience to engage in services.

As of April 30, 2017, CDSL had 589 DPs servicing across 29 states
and 7 union territories including two overseas centres. The
number of service centres grew at 21.35 per cent from 11877 in
FY15 to 17489 in FY17.

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 A Depository established under the Depositoriis Act can
provide any service connected with recording of allotment of
securities or transfer of ownership of Securities in the record of
a depository. Any person willing to avail the services of the
depository can do so by entering into an agreement with the
depository through any of its participants. A depository can
provide depository services only through a DP. A depository
cannot directly open accounts and provide services to clients.
Every depository in its bye-laws must state which securities are
eligible for demat holding.

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 Generally, the following securities are eligible for dematerialization:

1. Shares, scripts stocks, bonds, debentures, debenture stock or other

marketable securities of a like nature in or of any incorporated
company or other body corporate.

2. Unit of mutual funds, rights under collective investment schemes

and venture capital funds, commercial paper, certificates of
deposit, securitised debt, money market instruments, government
securities and unlisted securities.

3. Securities admitted to NSDL and CDSL depository are notified to all

DPs through circulates sent by email every day. Investors are
informed about the securities through NSDL's and CDSLs website

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Majorly they:
They Hold securities in accounts.

Transfer securities between the accounts.

Transfer without handling physical securities

Safekeeping of securitites.

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 Dematerlization: One of the primary, functions of depository is to eliminate

or minimize the movement of physical securities in the market. This is

achieved through dematerilization of securities.

Account Transfer : The depository gives effects to all transfers resulting from

the settlement of trades and other transactions between various beneficial

owners by recording entries in the accounts of such beneficial owners.

Transfer and Registration. A transfer is the legal change of ownership of a

security in the records of the issuer. For effecting a transfer, certain legal steps

have to be taken like endorsement, execution of a transfer instruments and

payment of stamp duty.

Corporate Actions: A depository may handle corporate actions in two ways.

In the first case, it merely provides information to the issuer about the persons

entitled to receive corporate benefits. In the other case, depository itself

takes the responsibility of distribution of corporate benefits. 15

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 SEBI has rationalized the cost structure for dematerialization by
removing account opening charges, transaction charges (for
credit or buy transactions of securities), custody charges and
account closing charges.
Broadly, investors are required to pay the charges towards:-
1. Dematerialization and Rematerialization of their securities
2. Annual account Maintenance Charges
3. Transactions fees (only for sell transactions)
The DP may revise the charges by giving 30 days notice in
advance.
SEBI has also advised the DPs to submit to their Depository their
tariff/charge structure every year latest by 30th April and
changes made therein.
In the event of closing of de-mat account or shifting of de-mat
account from one DP to another, the AMC collected upfront on
annual / half yearly basis by the DP, shall be refunded by the DP
to the BO for the balance of the quarter/s.
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 Following are the acts and regulations under which a
depository functions:
1. The Depositories Act, 1996.
2. SEBI (Depositories and Participant) Regulations, 1996.
3. CDSL Bye-laws and Operating Instructions which are framed
under the above two documents.
4. Prevention of Money Laundering Act (PMLA), 2002.

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 CDSL has deployed its core depository system based on a
centralized architecture database systems due to which
data is available to the user instantaneously and is current.
CDSL has deployed state-of-the-art server hardware,
enterprise flash storages and highly resilient network
infrastructure. These systems are highly scalable, reliable and
robust that continuously undertake capacity enhancement
measures.
Disaster Recovery Site (DRS): in the event of a disaster, a
robust system with multiple back-up levels including a
redundant fail-over cluster and a DRS, located at a different
seismic zone are present to carry on operations.
An effective Information Security Management System (ISMS)
protects information throughout the life span, from its initial
creation to its final disposal. CDSL has complied with ISO
27001 Standards and has been awarded the coveted ISO
27001 certificate by the leading certification body.
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 An FMI should identify, monitor, and manage its general
business risk and hold sufficient liquid net assets funded by
equity to cover potential general business losses so that it can
continue operations and services as a going concern if those
losses materialize.
Further, liquid net assets should at all times be sufficient to
ensure a recovery or orderly wind-down of critical operations
and services.
An FMI should safeguard its own and its participants assets
and minimize the risk of loss on and delay in access to these
assets. An FMIs investments should be in instruments with
minimal credit, market, and liquidity risks.
An FMI should identify the plausible sources of operational
risk, both internal and external, and mitigate their impact
through the use of appropriate systems, policies, procedures,
and controls.
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 CDSL has a stable revenue base due to repeat business in
multiple offerings in the Indian securities and financial
services.
As of April 30, 2017, CDSL had 589 DPs servicing across 29
states and 7 union territories including two overseas centers.
The number of service centers grew at 21.35 percent from
11877 in FY15 to 17489 in FY17.
CDSL enjoys high economies of scale and steady growth in
profitability resulting from fixed operating costs. The company
is India's leading securities depository with the highest share of
incremental growth of BO accounts.
Depositories help in reducing risks associated with physical
certificates, reduction in brokerage.
It also helps in immediate transfer and registration of
securities.

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