Depository
services
A Depository is an
organization which holds investors' securities in electronic form.
The depository also provides services related to various transactions
in such securities. A depository interfaces with its investors
through Depository Participants. Depository Participants maintain
investors' accounts (demat accounts) which are similar to Savings
Bank/Current accounts with a Bank. Purchase and sale of securities
can be done through demat account.
Benefits of Depository
System:
1. No danger of loss of
share certificates since the shares are credited to youraccount.
2. No possibility of bad
deliveries.
3. Elimination of all
rise associated with physical certificates such as loss, theft,
forgery, mutilation etc.
4. No need to affix share
transfer stamp as it is a paperless trading.
5. No postal / courier
charges.
6. Less brokerage
charges.
7. After the settlement,
pay in and pay out are on the same day for paperless trading which
means you get your securities and cash immediately.
8. Script less trading
helps allocate corporate benefits faster.
9. Facilitates pledging
and hypothecation of your securities.
10. Eliminates the
problem of odd lot shares.
11. Facility to lock your
account if you are abroad.
Services offered by
NSDL :
The following services
are offered by NSDL to the investors, through its agents
viz.Depository Participants.
1. Holding the investors’
securities in electronic form.
2. Dematerialization and
rematerialisation of securities.
3. Settlement of trades
in electronic form.
4. Electronic credit of
public offerings and non-cash corporate actions such as rights, bonus
etc.
Steps involved in
joining depository system:
There are 3 steps in
which an investor can covert his physical certificate into electronic
form.
1. Open an account with
one of the participants of NSDL (A participant is a market
intermediary through whom NSDL interacts with the investors).
2. Sign an Agreement with
the participant.
3. Submit
Dematerialization Request form along with share certificate to the
Issuer.
How do you open a
depository account?
Choose a participant from
amongst the participants (a list of participants is given in
Annexure-A) offering
depository services and registered with NSDL. Thereafter :
a. Fill up an Account
Opening Form available with the participant.
b. Sign
‘Participant-Client Agreement’.
c. Receive your account
number which should be quoted in all your correspondence.
d. Your participant will
provide you a statement of holdings and statement of transactions
(like a bank pass book) every fortnight giving details of your
holdings and transactions in your account.
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