Demat Operations in Thane Janta Sahakari Bank - Prats FINAL

A study of DEMAT OPERATIONS at TJSB bank --------------------------------------------------------------------------------------------------------------------------------------
Chapter 1 Introduction of the Project

1.1 Introduction A Co-operative bank, as its name indicates is an institution consisting of a number of individuals who join together to pool their surplus savings for the purpose of eliminating the profits of the bankers or moneylenders with a view to distributing the same amongst the depositors and borrowers.The Co-operative Banks Act, of 2007 (the Act) defines a cooperative bank as a co-operative registered as a co-operative bank in terms of the Act whose members 1. Are of similar occupation or profession or who are employed by a common employer or who are employed within the same business district; or 2. Have common membership in an association or organization including a business, religious, social, co-operative, labour or educational group; or 3. Have common membership in an association or organization, including a business, religious, social, co-operative, labour or educational group; or 4. Reside within the same defined community or geographical area. Co-operative bank, in a nutshell, provides financial assistance to the people with small means to protect them from the debt trap of the moneylenders. It is a part of vast and powerful structure of co-operative institutions which are engaged in tasks of production, processing, marketing, distribution, servicing and banking in India. A co-operative bank is a financial entity which belongs to its members, who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. These banks generally provide their members with a wide range of banking and financial services (loans, deposits, banking account. Co-operative banks differ from stockholder banks by their organization, their goals, their Values and their governance. The Co-operative Banking System in India is characterized by a relatively comprehensive network to the grass root level. This sector mainly focuses on the local population and micro- banking among middle and low income strata of the society. These banks operate mainly for the benefit of rural areas, particularly the agricultural sector. But today with the interest income coming under pressure, banks are urgently looking for expanding fee-based income activities such as marketing mutual funds and insurance policies, offering Demat account and services such as wealth management and equity trading. Thane Janata Sahakari Bank (TJSB Bank) is no exception. These are indeed proving to be more profitable for TJSB bank than plain vanilla lending and borrowing.
1.2 Objective and Scope of study: The main objective of study is to know about the potential of the market regarding peoples dealing in share market. To know the role of DEMAT ACCOUNT To know the procedure of opening DEMAT ACCOUNT To know the advantages of the DE MAT. To study the activities in Primary Market and Secondary Market in the context of Dematerialization To know how many people in the region of Thane are aware about benefits dematerialization and demat services offered by TJSB. To know where people have opened demat account and on what basis. To study the activities and know the services provided by of Depository Participants To study the process of Settlement
1.3 Importance of study:
The study mainly focuses on the behavior of consumers in respect to DEMAT of TJSB. To find out, in what proportion people are aware about the benefits of DEMAT and the service offered by TJSB. Since Demat is new for TJSB Bank, the study will help them to understand the consumer expectation from the Bank. TJSB Bank can work on their weaknesses and can make proper use of their strengths to attract more number of customers. As a Student this project will help me to understand the market, consumer expectation and marketing strategies of TJSB Bank.
1.4 Research Methodology:
Research Design:
Population: Respondents of the Mumbai and Thane region. many branches of the TJSB Bank was surveyed Sample Size: 100 sampling units Sampling Method: Convenience sampling
Data Sources:
Primary Source: Primary data was collected by means of the survey. Questionnaires were prepared and customers of the TJSB banks were approached to fill up these questionnaires. The filled up information was later analyzed to obtain the required information Secondary Sources: In order to have a proper understanding of DEMAT operations in TJSB Bank, depth study was done from the various Books Reports Research Papers Internet Database at TJSB BANK Internal reports of the banks Statistical Tools Used: As the objectives are study based, I have not used advanced statistical methods. I have summarized the data using tables and charts.
1.5 Limitations of the project: Every research is conducted under some constraints and this research is not an exception. Limitations of this study are as follows:-
The main limitation is that the scope of the study was restricted within the area of Thane & Mumbai region. So the population considered may not be the actual representative of the population of the nation. Further it was a convenience sampling. Another limitation is the time span available for conducting the research. The information given by the respondents regarding their income and other personal details can be biased This project has been done for academic purpose and not done as a professional researcher for the company
Chapter 2 Company profile

2.1 History: With the modest beginning in 1972 in the co-operative field, the dynamism infused by the Board of Directors, unflinching loyalties of clientele and devotion of staff has propelled the sound foundation of The TJSB Sahakari Bank Ltd (TJSB) and has emerged as one of the leading multi state scheduled co-operative Bank in the country. TJSB presently is catering to the needs of society through a close network of 64 Branches and 1 Extension Counters spread all over the city of Thane, Mumbai, Navi Mumbai, Nasik, Pune, Satara, Aurangabad, Kolhapur, Nagpur, Latur, Goa & Karnataka. All these Branches have made remarkable progress on all fronts in all these years. TJSB believes that "customer delight" is the ultimate goal and has a strong belief that Customers & all Stakeholders wholehearted support, absolute faith and their patronage has largely been responsible for its enviable growth. TJSB is committed to provide banking with speed, comfort and convenience. TJSB feels proud to acknowledge the growth of large number of successful industrialists, traders and professionals who have grown leaps & bound due to timely assistance and support of the Bank. TJSB has set before a Visionary Growth Plan focusing all business strategies solely on creation of Stakeholders value.
2.2 Technology initiatives and expansion: TJSB, a Techno-savvy Bank has implemented successfully the Core Banking Solution (CBS). This has helped the Bank to migrate the Branches from being the processing centers to marketing customer centric outfits. It will also extend the Banks reach to its customers by multiple delivery channels such as ATM, Internet, Mobile etc. This has brought the Bank on par with the leading Banks. Bank has network of 70 ATMs across Thane, Mumbai, Navi Mumbai, Pune, Nashik, Satara, Aurangabad, Kolhapur, Nagpur, Latur, Goa & Karnataka. TJSB is the first Bank in Co-operative sector to install Cheque Depository Machines at 63 branches, which are operational 24 X 7. TJSB has put in place Real Time Gross Settlement System (RTGS) transactions. With Core Banking Solution in place the Bank is Providing RTGS facility to all its customers.
TJSB has initiated process for strategic alliance with other Banks for the usage of their delivery channels by which nearly 89000 ATMs will be available to Banks customers across the country. TJSB is first Bank In the country to introduce Automated Cheque Issuance Machine which enable Customers to take Personalized Cheque Book 24 X 7
Business Process Re-engineering: With the successful implementation of Core Banking Solution TJSB has initiated Business Process Re-engineering by establishing: Specialized Credit Cell Specialized Retail Banking Cell Centralized Monitoring Cell Centralized Back office Processing Cell e-lobby Bancassurance: TJSB (License No. 1126801) is Corporate Agent for Max New York Life Insurance Co. Ltd. for Life Insurance products and with The Oriental Insurance Co. Ltd. for General Insurance. TJSBs bancassurance is recognized as one of the most successful bancassurance in the country Business Expansion Plans: TJSB has recognized the opportunity for its expansion through the Merger and Takeover of the other Banks. To step forward it has recently acquired two Pune based Co-operative Banks namely The Navjeevan Nagrik Sahakari Bank Ltd and The Sadguru Jungli Maharaj Sahakari Bank Ltd. 2.3 Special Mention: One of the very few co-operative banks to get AD1 license to deal in Foreign exchange The Indian Bank Association (IBA) have accolade TJSB with TECHNOLOGY BANK OF THE YEAR award in the Co-operative Banks category for FY 2009 TJSB has been awarded 1st Prize for the Best Co-Operative Bank in Maharashtra by Maharashtra State Urban Banks Federation Ltd. for the F.Y.2004-2005. TJSB has been awarded 1st Prize as Padmabhushan Vasantdada Patil Utkarsha Nagri Sahakari Bank for the F.Y.2003-2004 from Kokan Region for the second time consecutively. TJSB was recognized amongst top 5 Co-Operative banks in the country, during centenary celebration of Co-Operative movement by Kalupur Commercial CoOperative Bank Ltd
2.4 Profile of TJSB Co-op Bank: Professional Board and Pragmatic decision making. Consistent profit and growth for last 39 Years. Equilibrium in Growth and profits. Strong Internal Reserves and CRAR at 15.47%. Balanced Credit Portfolio & focus on Retail /SME Segment. Strong Focus on Recovery and NPA Management. One of the very few co-operative banks to get AD1 license to deal in Foreign exchange. Exclusive financial solutions for professionals under special scheme of loans "Sanjeevani". First Co-op Bank to offer Banc assurance Product in association with Max New York Life Insurance Co. Ltd. Easy solution for medical expenses through Medi claim policy especially for TJSB account holders with a very low premium in association with Oriental Insurance Co. Ltd. Providing assistance for investments in Mutual Funds with expert advice through UTI &Kotak Mahindra Mutual Fund. For receiving money from overseas in just 10 minutes through 'Money Gram'. Anywhere Any Branch Banking facility in all Branches. 58 ATMs installed in Branches at Thane, Mumbai, Pune, Nashik and Satara. 24x 7 Cheque Issuance Machine at e-Lobby at Naupada Branch. 24x 7 Cheque Depository machine at 44 branches. Value Added services for Customer
2.5 Board of Directors:
1. Shri. Vidyadhar Achyut Vaishampayan BE. (Mech), MTech (PRODN), Chartered Engineer 2. Shri. Bhalchandra Vaman Date B.Sc., Paint & Varnish Diploma 3. Mrs. Anuradha Ramchandra Apte Bsc., LLB 4. Shri. Ramakant Khushalchand Agarwal Bsc. 5. Mrs. Padma Balkrishnan Iyer B.Com., ACA 6. Shri. Ramesh Khushaldas Kanani Diploma In Mechanical Engineering 7. Shri. Madhukar Dharma Khutade 8. Shri. Namdeo Dattatray Mandge B.Sc., M.Sc., DHE 9. Shri. C. Nandgopal Menon BA, BGL 10. Shri. Vivek Manohar Patki M.Com, LLB, AICWA, FCA 11. Shri. Pradeep Dattatray Thakur B.Com, LLB 12. Shri. Vinodkumar Bansal Chartered Accountant
Chairman Vice Chairman Director Director Director Director Director Director Director Director Director Director
2.6 Organization Chart
CHAIRMAN
DIRECTORTS
CHIEF MANAGER
DIVISIONAL MANAGER
BRANCH MANAGER
STAFF OFFICER
2.7 Awards and Achievements 1. Shri Vidyadhar Vaishampayan received the BEST CHAIRMAN in UCB category. 2. The Indian Bank Association (IBA) have accolade TJSB with the TECHNOLOGY BANK OF THE YEAR award in the Co-operative Banks category for FY 2009. 3. IBA has first felicitated TJSB with Special Jury Award for
"Acknowledging Outstanding Achievements in Banking Technology" in the Year 2007. 4. Awarded by the Maharashtra Urban Co-operative Bank's Federation for 'Best Urban Co-operative Bank in Maharashtra amongst the urban Co-operative banks having Deposits over Rs. 500 crores. 5. Awarded by the Maharashtra Urban Co-operative Bank's Federation for 'Best Urban Co-operative Bank' in Maharashtra For The Year 2004-05 amongst the urban Co-operative banks having Deposits over Rs. 500 crores. 6. TJSB has been awarded 1st Prize for the Best Co-Operative Banks in Maharashtra by "Maharashtra State Urban Bank's Federation Ltd." for the F.Y.2004-2005. 7. TJSB has been awarded 1st Prize as "Padmabhushan Vasantdada Patil Utkarsha Nagari Sahakari Bank" for the F.Y.2003-2004 from Kokan Region for the second time consecutively. 8. "Banking Frontiers has conferred 5 awards to TJSB on 28/07/2008 as a. Best M&A (Merger and Acquisition) b. Innovation in CBS c. Innovation in Marketing d Innovation in Self Service e. Innovation in Branch Up-gradation in the category of big Co-operative banks having business mix more than 500 crores."
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2.8 Progress at Glance

Financial Highlights 31st March 2005 31st March 2006 31st March 2007 31st March 2008 31st March 2009 31st March 2010 31st March 2011 31st March 2012 Rs. in Crores Share Capital Reserves Own Funds Working Capital Deposits Advances Business Mix Gross NPA Net NPA CRAR (%) Capital Funds Gross Profit Net Profit Dividend (Percent) Audit Class Membership No. 10.72 141.28 152.00 12.32 157.18 169.50 14.48 178.92 220.40 18.27 250.60 268.87 27.57 281.13 308.7 40.09 290.93 331.02 55.11 334.40 389.51 72.10 424.61 496.11
1177.79 1343.12 1599.73 2596.01 2951.68 3528.69 4304.94 5345.63 938.82 1073.06 1328.50 2039.17 2347.05 2799.73 3471.58 4344.97 582.47 680.43 902.92 1285.46 1506.61 1679.08 1991.87 2640.18
1521.29 1753.49 2231.42 3324.65 3853.67 4478.81 5463.45 6985.15 8.17% 0.80% 20.29 152.00 22.02 15.94 15% A 22965 7.06% 0% 20.01 169.50 25.63 23.99 15% A 24569 4.52% 0% 17.63 220.40 41.96 27.00 15% A 26424 6.67% 0% 14.63 268.87 52.08 24.30 15% A 28975 6.36% 0% 14.74 308.7 65.47 24.35 15% A 33328 4.64% 0% 15.47 331.02 71.94 44.19 15% A 28204 3.42% 0% 15.94% 389.51 89.66 49.58 15% A 34228 2.63% 0% 15.03% 496.11 104.89 60.09 15% A 40921
Chapter 3
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Major players in Demat

3.1 Depository: A depository can be defined as an institution where the investors can keep their financial assets such as equities, bonds, mutual fund units etc in the dematerialized form and transactions could be effected on it. In India, there are two depositories namely, the National Securities Depository Limited(NSDL) promoted primarily by IDBI, the Unit Trust of India and the National Stock Exchange, and the Central Depository promoted by the Stock Exchange, Mumbai
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National Securities Depository Limited (NSDL) does the above tasks for the trades done on NSE. It is a joint venture of: IDBI (Industrial Development Bank of India Limited); NSE (National Stock Exchange); and UTI (Unit Trust of India). NSDL is the first depository to be set up in India. It was registered by SEBI on June 7, 1996. The second depository Central Depository Services Limited (CDSL) has been promoted by Bombay Stock Exchange and Bank of India. It was formed in February 1999. Both depositories have a network of Depository participants (DPs) which are further electronically connected to their clients. So, DPs act as a link between the depositories and the clients. The Depository system to some extent works like the banking system. There is a central bank and the rules and regulations related to the working of all the commercial, foreign, co-operative and other types of banks are framed by the central bank. In order to do the daily transactions, the investors open an account with the associate banks, and not with the central one. Like an investor can have a bank account with more than one bank, similarly one can have more than one Demat Account. We can further bring out the similarities as well as the differences between the two in understanding the depository system.
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Besides providing custodial facilities and dematerialization, depositories are offering various transactional services to its clients to effect buying, selling, transfer of shares etc. Through a system of paperless securities, depositories have made the going easier to other institutions as well such as Stock Exchanges and its clearing houses, stock broking firms, equity issuing companies, share transfer agents etc.
Basic Services Basic services of a depository includes maintenance of accounts of investors, dematerialization and rematerialisation of shares, settlement of market transaction through the release and receipt of securities in the investor's account ,off market transfers, interdepository transfers, distribution of non-financial benefits from corporates to its shareholders, nomination facilities, transmission of shares, hypothecation of dematerialized securities for a bank loan, freezing of account to protect one's holdings when he is temporarily out of the scene etc. Depository System: How it works A depository system carries out its activities through various associates that include depository participants (DP), issuing companies and their share transfer agents, clearing corporation of Stock Exchanges etc. The depository is electronically linked to each of these business partners via satellite links or through leased lines. The Depository is electronically linked to DPs, clearing houses of Stock Exchanges, corporates and share transfer agents that are registered under the depository to avail its services etc through VSAT. This integrated system including the electronic links as stated above and the software at NSDL and each business partners end is called the National Electronic Settlement and Transfer System(NEST) Functions of Depository: 1. Services to investors 2. Services to Participants in the capital market such as clearing members, stock exchanges, investment institution, banks and issuing corporate 3. Account opening 4. Dematerialization 5. Rematerialisation 6. Settlement of trades 7. Advanced facilities like pledging, distribution of non- cash corporate actions, distribution of securities to allot tees in case of public issues etc.
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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. 5. The capital market will be more transparent as the trading, clearing and settlement mechanism have to be highly automated and interlinked with the depository among them. 6. The market will be highly automated and efficient due to the usage of computing and telecommunication technology for the back office activities for all the capital market players. 3.2 Depository participants: In India, a Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as such with SEBI under the subsection 1A of Section 12 of the SEBI Act. As per the provisions of this Act, a DP can offer depository-related services only after obtaining a certificate of registration from SEBI. SEBI (D&P) Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers, R&T agents and non-banking finance companies (NBFC), for granting them a certificate of registration to act as DPs. If a stockbroker seeks to act as a DP in more than one depository, he should comply with the specified net worth criterion separately for each such depository. No minimum net worth criterion has been prescribed for other categories of DPs; however, depositories can fix a higher net worth criterion for their DPs. CONDITIONS TO BE A DEPOSITORY PARTICIPANT: In terms of the Depositories Act, 1996, SEBI Depositories& Participants) Regulations,1996, only the following entities are eligible to become a Depository Participant:

Public Financial Institution Banks including Foreign Banks State Financial Corporation An Institution engaged in providing financial services promoted by above mentioned jointly and severally
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A study of DEMAT OPERATIONS at TJSB bank -------------------------------------------------------------------------------------------------------------------------------------
Custodian of Securities Clearing Corporation or Clearing House of a Stock Exchange Stock Broker Non Banking Financial Company Registrar & Transfer Agents
WHAT ARE THE FUNCTIONS?

Dematerialization i.e. converting physical securities into electronic form. Rematerialisation, i.e. converting electronic securities balances in a BO account into physical form. To maintain record of holdings in the electronic form. Settlement of trades by delivering/ receiving underlying securities from/in BO accounts. Settlement of off-market trades i.e. transactions between BOs entered outside the Stock Exchange. Providing electronic credit in respect of securities allotted by issuers under IPO or otherwise.
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Chapter 4 Demat services of tjsb

4.1 Introduction: Indian investor community has undergone so many changes in the past few years. India now has a very large investor population and ever increasing volumes of trades. However, this continuous growth in activities has also increased problems associated with stock trading. Most of these problems arise due to the intrinsic nature of paper based trading and settlement, like theft or loss of share certificates. This system requires handling of huge volumes of paper leading to increased costs and inefficiencies. Risk exposure of the investor also increases due to this trading in paper. In this scenario dematerialization is certainly a welcome move. Dematerialization 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 security holder's name are surrendered to depository participant and these are sent to the respective companies who will cancel them after Dematerialization and credit security holder's depository account with the DP. The securities on Dematerialization appear as balances in customers depository account. These balances are transferable like physical shares. If at a later date, customer wish to have these Demat securities converted back into paper certificates; the Depository helps him to do this. At present there are two depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services (CDS).These depositories have appointed different Depository Participants (DP) for them. An investor can open an account with any of the depositories DP. But transfers arising out of trades on the stock exchanges can take place only amongst account-holders with NSDLs DPs. This is because only NSDL is linked to the stock exchanges Thane Janata Sahakari Bank (TJSB Bank) is an agent (DP) of the depository. It acts as intermediaries between the depository and the investors. TJSB Bank launched Demat service very recently i.e. on 10th August 2011 and within 10month around 720 Demat accounts has been opened. TJSB is late to start this service, but the growth of the demat market/requirement will ensure their strong presence as a full fledge DP.
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4.2 Benefits of TJSB DEMAT:
Desired benefits to TJSB bank: Increasing the banks CASA tremendously:For availing DEMAT services a customer should maintain some funds in their respective accounts. Thus due to this their savings and current account balances increases tremendously. Thus the total worth of customers and the banks CASA increases. If the bank CASA increases it is beneficial for banks as it shows the sound financial position of the bank. Thus offering DEMAT services is beneficial to TJSB for increasing its CASA also to showcase a sound financial of the bank. Attracting new customers:To attract new customers here is need to make them aware about the services that are provided by TJSB through proper advertisement about the service by various methods. One of the important thing will be meeting the customers of the target branches and convince them to avail the services. Provide depository services to be at par with other competitors:Various co-operative banks like NKGSB Coop Bank ltd, Punjab & Maharashtra Coop Bank ltd, The Saraswat Coop Bank ltd, offer DEMAT services to their customers. Thus as there is increase in the competition among co-operative banks with each other and challenges faced by them due to various other private banks, co-operative banks should offer services to be at par with them. Thus for customers attraction and their benefits TJSB is offering DEMAT services & now it is at par with other co-operative as well as other private banks. A source of additional non-interest income by way of custodial and transaction:TJSB charges a nominal fees for DEMAT services for its individual and corporate clients. It charges fees for transaction like pledge, lending and borrowing, DEMAT, REMAT, AMC (annual maintenance charges), clearing and settlement charges. TJSB targets 5000 DEMAT a/c in the year of commencement, also minimum 100 debit/credit transaction per month, thus rounding about 1200 transaction per year. Thus TJSB earns addition income other than their regular banking function by offering these services to their clients. TJSB's profit margin increases as it earns additional income from all these services. Thus it is benefit to the bank.
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Benefits to customer: Immediate transfer of securities (t+2 rolling settlement basis):Since April 2003 the trading settlement was reduced from T+3 rolling settlement basis to T+2. Due to this reason the settlement of funds and securities got transferred quickly and this caused liquidity in market thus it benefitted investors who could now sell the securities quickly. No stamp duty on transfer of securities:In physical shares certificate one had to pay stamp duty for its transfer, but when one uses DEMAT services for transfer of fund one need not pay stamp duty on the same. This reduces transaction cost of securities and increases the profit of investor. Elimination of risk associated with physical certificate like bad delivery, fake securities etc:One has the risk of bad delivery (tore securities, wrong beneficial owner name etc) and also fake securities. Thus the investors were in a loss because of all this. But in DEMAT i.e. electronic form of shares all this risk is eliminated thus beneficial to investors. Reduction in paper work for transfer of securities:When the era of physical certificate existed, the amount of paper work was huge. It took more than a month for transfer of the securities/funds. Not only this but also investor had the risk of bad delivery, fake securities. But with DEMAT of shares the paper work is reduced to NIL. Nomination facility available for the customer:Unlike physical shares where nomination facility dint exist. In electronic form one has the right to give 2 people as their nominee. This is beneficial in case of death of the owner of the shares. Earlier in case of death of the beneficial owner of shares a long procedure was done for transfer of it. But now due to nomination the transfer is done without any hassle. In case of death of investor the transmission process is done electronically:In the event of death of the investor all the securities that are held in the name of the deceased person can be transferred in the name of the legal heir or nominated person it is done by closing the deceased persons account and opening the new account in the name of the legal heir and transmitting all securities in the name of the legal heir with just filling transmission form along with new account opening form. Automatic credit in DEMAT ACCOUNT of shares arising out of corporate action:The corporate actions such as payment of interest, dividend, right issue, splits of securities, redemption of the securities, payment of call money, liquidation, it is easy if the investor has a Demat account linked with a bank account so that all these corporate actions can take place directly without any problem of physical work. This also helps the investors to pay taxes on the investment made without getting worried about how much to pay tax on the investment made. It all happens through ECS mode.
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4.3 Types of activities involved in TJSB DEMAT:

The lists of various activities involved are To open an account:
Any TJSB account holder can open demat account. The account can be opened with any branch of TJSB. The existing customers as well as new customer can open demat account. All branches are collecting centers of the account opening activity. A branch obtain demat account opening form fully filled in along with required KYC details. Branch has to certify in person verification of the demat account holder. After the forms are collected with the entire required documents, required verifications branch send these forms to HO - Demat section. The verification of PAN, address written and other all jobs up to account opening activity is performed by the He - Demat section. After opening of account, intimation sent to customer along with the delivery instruction slip. The rejection for documents, for form related pending activities are performed to respective branch. In case of correct form but wrong or short document situation the form will be retained at Ho Demat section. But when the forms itself is not proper in filling or missing signatures, photo's hen these forms sent back to the respective branch. Account opening activity attracts franking for agreement. It is also first sourcing of income by way of annual maintenance charges. Request for Dematerialization/Rematerialisation: The Demat account holder can forward the request of converting his physical investment in to electronic form. He/she can fill in DRF and can submit the physical instrument to the branch for the purpose of Demat. The request form has to be forwarded to the Ho-Demat section. Ho-Demat section will process the electronic request and will send the physical instrument to the issuer for the acceptance. Upon the acceptance in a stipulated the demat account will receive credit. In case of rejection the code of rejection if any will be conveyed to the account holder. Account holder has to complete the rejection reason and can re-submit the forms. Similar but reverse in the case of Rematerialisation of a demat securities. Both the request form income source to DP
Creation of Pledge: This is a facility available to a demat account holder. Client/customer will submit the request with branch with an intention of availing the loan facility against the holdings in his/her demat account. This request will be sent to Ho-demat section. Up to revocation /invocation pledge every process will be handled at the Ho - demat section.
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Government securities and bonds: A very similar process of demat/remit is required to be followed in case of Government securities and bonds. The only thing different is R&T agents here are NSDL, hence we have to forward the certificates to the NSDL instead of R&T of normal demat request Other Services: Change in address, change in nominee, changes in other account details, transmission(death claim) process, issuing account statements, issuing bills, delivery of DIS to home, etc. will be performed at Ho-demat section. Auto corporate actions: When a company issues funded/non-funded benefits to its shareholders, interest paid to lenders of the issue is termed as auto corporate actions. In this case the funded benefits are directly credited to their bank accounts and non funded benefits such as dividend reinvested, bonus shares, right shares, IPO or further issues allotments, interest coupons reinvested, SIPs are directly credited to the demat account. Billing: The income of the demat section is generated by this work station. Billing includes all charges pertaining to annual maintenance, charges for demat/remat requests, sale (debit) transactions, creation of pledge, revocation/invocation of pledge, block account request, speed -e charges, etc. all these charges are recover as per the agreement with the customer from their fund account (SB/CD). Trade transactions: When a sale or purchase is taken place in the market through the registered brokers or off market transactions, the process of settlement of securities is handled by the DP. The important function in the whole depository work is settlement timing. This is most crucial work. The DIS for sale is to be obtained before atleast 24hours before pay-in of securities on T+2 day. In case it is not submitted by the client the security auction will take place. If it is submitted and DP not acted upon it then the part of penalties borne by DP and not client. In case of purchase the credit to the client's account is automatic (when credit instruction is obtained in the time of account opening). In case of commodities demat services TJSB need to get them impaneled with MCDEX.
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4.4 Actual working style adopted by TJSB: The functioning of DP has two different working styles. Style 1: Decentralized working It is operating of DP through selective/ all branches. In this working style it allows all DP functions at branch level also. In this case the branch personnel obtain branch wise NISMDOC certification to work on DP. Benefits: At HO level very few people can manage the work of compliance officer. The time taken in completing the transaction is very less. The branch customer can be helpful with all facilities at one place. Reduces handling cost.
Disadvantages: All/ some designated branches under the audit purview of SEBI/ NSDL. Initial infrastructure cost increases. Co-ordination is time consuming.
Style 2: Centralized working platform In this style of working the DP work is fully handled at Ho-section and all the branches act as a collecting center. All the basic work is performed at Ho. Branches are allowed to collect the account opening forms, other forms required for DP services. All The work beyond this is handled at HO-DP section. Benefits: Less infrastructure cost. Better co-ordination. On the HO-section is under audit purview of NSDL/SEBI. Disadvantages: Excess time taken to complete the transactions. Branch people have every time to rely on HO-section for queries/ reports of customer. After considering positive and negative points of both working styles TJSB Bank has decided to follow centralized working platform. It has taken 25 branch user license.
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The working is as follows:
H.O Demat Section
section 1
Section 2
Section 3
Section 4
Billing, other core value added services, marketing e-services initiative & monitoring all branches
Section 5
Inword, Process Check, Account Opening
DPM, EDPM entries, upload/ download activity, DIS issue monitoring
Demat/ Remat and Transaction monitoring
House Keeping and marketing activities and MIS, stock keeping
All branches To collect account opening forms, core services request, other services. To collect transaction DIS, scanning. To handle rejection part with customer. Desk and outside marketing. Sending all the collected formats to Ho-section In this centralized working pattern TJSB has taken care of disadvantages of this style. TJSB has put in place courier service with all branches to collect the demat docket. The time of collection is 1pm for all the Mumbai, Thane region; 10.30am for outstation branches. This enables them to capture all the forms in the same day. They have to put in place outside courier service to deliver statements, billing parts and DIS. They have viewed all branches along with the scanning activity to enable branches to view balance and forward transaction instruction immediately. They also provide e-services for DIS replacement. After starting this service in centralized platform bank moved to decentralized platform
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4.5 Marketing Efforts: TJSB says, it has put lot of emphasis on the marketing of Demat accounts, it is because They started late There are growing numbers of DP's in the market, today there are more than 777 DP's and 22252 DP centers to cater these services. Many organizations provide broking and demat accounts together. The existing demat account holder with some other DP will not be ready to switch over to TJSB Demat. Therefore they have worked some marketing deliberations. Using existing account holders' data as prospective clients list. In this process to begin with some selective account holders with account balance Rs. 25000.00 for SB accounts and Rs. 100000.00 for CD accounts to start marketing work. This is very huge data to start with; it is group of over 60000 accounts. In this ground data some corrections with respect to their account details like address, contact numbers, Mail ids is required. Bank has forwarded this data to respective branches for updating the information. In first place they use this data as source of probable demat accounts. They use these email ids, mobile messages to send branches written letter and seminars. The branches also follow with them for the Demat account. At the time of account opening of CD/SB at branches the demat accounts opening form will be taken if customer is convinced. So the activity will be two in one account. From last three years TJSB has done very good selling of mutual fund. At present they are selling 7 good mutual funds from desk. These entire customers who have purchased SIP or one time fund are their prospective customers because they have not given their demat account numbers while purchase. Bank will target these accounts first to open demat account. Bank has identified some branches to focus as potential branches for demat business. 1) Thane Region: Main, Naupada, Khopat, Pokharan road no 2 and Thane East. 2) Thane outskirt: Ambarnath, Bhiwandi, Dombivali. 3) Mumbai: Ghatkopar, Vile-parle. 4) Pune: Deccan, Chinchwad, Kothrud. 5) Nasik: Sharanpur Branch For these branches bank will provide them marketing support and follow-up support.
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Some hurdle points TJSB Bank is very late to start this service. The market practice is to have 3 in 1 account style and bank does not have this practice in the beginning. The KYC is stricter and document requirement is more stringent. This has become hurdle in the initial stages.
To overcome this bank emphasis on the marketing support to the branches. Small icon advertisement in financial papers on daily basis. Branch level advertisement at the time of transaction serviced and at the time of account opening. Follow up with other co-operative banks to shift their Non-SLR portfolio or constituent general ledger accounts from their existing DP/banker to TJSB-DP. Tie -up with brokers to open CM and CD accounts with us. In the CD account they will keep balance of 10 days float and reciprocation they will provide broking services to TJSB customers online. Bank will start this option after taking into account the RBI guidelines in this regard. When RBI permits the tie-up arrangements with brokers then they will start 3 in 1 account service. In this service they will offer CASA account, demat account and the broking account will be offered by the registered broking firms regionally. Bank will first target their MF investors. Their all mutual funds investment funds can be moved to TJSB's demat account. They will reduce their monthly transaction charges to enable them maintain such account.
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Chapter 5 Legal framework of demat and deskwork

5.1 Kyc norms: Guidelines on "Know Your Customer" As part of Know Your Customer (KYC) principle, RBI has issued several guidelines relating to identification of depositors and advised the banks to put in place systems and procedures to help control financial frauds, identify money laundering and suspicious activities, and for scrutiny/monitoring of large value cash transactions. Instructions have also been issued by the RBI From time to time advising banks to be vigilant while opening accounts for new Customers to prevent misuse of the banking system for perpetration of frauds. Taking into account recent developments, both domestic and international, it has been decided to reiterate and consolidate the extant instructions on KYC norms and cash transactions. The following guidelines reinforce our earlier instructions on the subject with a view to safeguarding banks from being unwittingly used for the transfer or deposit of funds derived from criminal activity (both in respect of deposit and borrowable accounts), or for financing of terrorism. The guidelines are also applicable to foreign currency accounts/transactions. Know Your Customer" (KYC) guidelines for New accounts The following KYC guidelines will be applicable to all new accounts with immediate effect. KYC Policy (i) "Know Your Customer (KYC) procedure should be the key principle for identification of an individual/corporate opening an account. The customer identification should entail verification through an introductory reference from an existing account holder/a person known to the bank or on the basis of documents provided by the customer. (ii) The Board of Directors of the banks should have in place adequate policies that establish procedures to verify the bonafide identification of individual/corporate opening an account. The Board should also have in place policies that establish processes and procedures to monitor transactions of suspicious nature in accounts and have systems of conducting due diligence and reporting of such transactions. Customer identification The objectives of the KYC framework should be two fold, (i) To ensure appropriate customer identification and, (ii) To monitor transactions of a suspicious nature. Banks should obtain all information necessary to establish the identity/legal existence of each new customer, based preferably on disclosures by customers themselves. Typically easy means of establishing identity would be documents such as passport, driving license etc. However where such documents are not available, verification by existing account holders or introduction by a person known to the bank may suffice. It should be ensured that the procedure adopted does not lead to denial of access to the general public for banking services.
Reports on Anti Money Laundering Guidelines for Banks in India are prepared by a Working Group, set up by IBA. It may be seen the IBA Working Group has made several recommendations for strengthening KYC norms with anti money laundering focus and it also suggests formats for customer profile, account opening procedures, establishing relationship with specific categories of customers, as well as an illustrative list of suspicious activities.
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Know Your Customer" procedures for existing customers Banks are expected to have adopted due diligence and appropriate KYC norms at the time of opening of accounts in respect of existing customers However, in case of any omission, the requisite KYC procedures for customer identification should be got completed at the earliest. Record Keeping Financial intermediaries should prepare and maintain documentation on their customer relationships and transactions to meet the requirements of relevant laws and regulations, to enable any transaction effected through them to be reconstructed. In the case of wire transfer transactions, the records of electronic payments and messages must be treated in the same way as other records in support of entries in the account. All financial transactions records should be retained for at least five years after the transaction has taken place and should be available for perusal and scrutiny of audit Functionaries as well as regulators as and when required. Training of staff and management It is crucial that all the operating and management staff fully understand the need for strict adherence to KYC norms. All institutions must, therefore, have an ongoing training programme so that staff is adequately trained for their roles and responsibilities as appropriate to their hierarchical level in complying with anti-money laundering guidelines and for implementing KYC policies consistently. These guidelines are issued under Section 35 (A) of the Banking Regulation Act, 1949 and any contravention of the same will attract penalties under the relevant provisions of the Act. Banks are advised to bring the guidelines to the notice of their branches and controlling offices. Desk work: Collect all the documents which helps u to know the customers in personally Collect the PAN card details of customer Collect the Bank details of customers Collect the Proof of address Office address Electricity bill Telephone bill Bank statement Collect the proof of identity PAN card details Driving License Pass port As per guidelines of the RBI the officer also collect of the existing holder information in case if he is introducing someone new And every new holder should have the introducer which should be the existing holder for at least 6 months and more The officer should keep all the record of the customer for the reference in the future. The staff has been given the proper training of the KYC norms and the entire officer should complete the KYC norms with the customer as its mandatory to the entire bank to follow it by RBI
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5.2 Anti-money laundering: Introduction The word money laundering refers to the use of the financial system to hide the source of funds gained from illegal activity such as drug trafficking, bribery, extortion, embezzlement, theft or other criminal activity, as the criminals try to make their ill gotten gains appear genuine. Anti Money Laundering is the term used by banks and other financial institutions to describe the variety of measures they have to combat this illegal activity and to prevent criminals from using individual banks and the financial system in general as the conduit for their Proceeds of Crime. In all major jurisdictions around the world, criminal legislation and regulation make it mandatory for banks and financial institutions to have arrangements to combat Money Laundering, with harsh criminal penalties for non-compliance. The vast majority of criminal dealings are done in cash. Criminals need ways to dispose of the cash and have it reappear as part of their wealth with as little chance as possible of it being tracked back to the cash element. Criminals have to use the financial system and banks in particular to do this. Money laundering is traditionally done in three stages, called Placement, Layering and Integration. Placement is the physical depositing of the cash. Layering describes the process of transactions, some very simple, some more complicated and often involving transactions within and between banks and across borders, which seek to confuse the trail back to the original cash. Integration is the process by which the money is brought back into use by the criminal in the normal economy, often by the purchase of assets (houses, cars, works of art) but which make it appear legitimate. Anti Money Laundering processes and controls helps banks and financial institutions protect themselves and their reputation from the criminals. Key elements of a sound Anti Money Laundering programme, many of them required by law, include:

Minimum Standards and Policies, approved by Senior Management, which clearly set out your philosophy on crime prevention and business requirements. Strong "Know Your Customer" checks at customer take-on to identify and exclude known criminals but also to be sure you know the real identity of the customers you do take on. Processes (very often automated) to monitor the activities on customer accounts to identify suspicious activity and to check incoming and outgoing payments for unauthorized transactions and to enable reports to be made to relevant authorities. gives you access to a wide range of advice, systems and materials which ensure that you can develop a robust Anti Money Laundering framework in your business and a culture of crime prevention across the organization. In particular, AntiMoneyLaundering.org gives you access to comprehensive lists to enable you to screen potential customers in order to exclude known criminals and identify any high profile individuals (such as Politically Exposed Persons) among the customers you do take on. You will then be able to comply with stringent legal and regulatory requirements, keep the criminals away from your doors and protect your reputation.
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Suspicious activity: A Suspicious Activity Report (known as a SAR) is a key element of those mandatory arrangements in a financial institution. Suspicious Activity Reports help banks and financial institutions protect themselves and their reputation from the criminals and help law enforcement to track down and arrest those criminals. There is probably nothing which can damage the reputation of a financial institution more nor leave it exposed to serious regulatory sanction and fines than the suggestion that it has been used as a conduit to provide funds which have been used to finance Money Laundering or, even worse, has turned a blind eye to suspicious activity. If an employee has concerns when carrying out background identification and "Know Your Customer" checks on a new customer that their funds may be derived from criminal activity and be the Proceeds of Crime, that person is obliged by law to report their suspicions to an independent Financial Intelligence Unit (FIU), which is often run by the government or police authorities. Due diligence: The words Due Diligence in the financial sense describe the process by which a bank or financial institution checks the identity, background and other aspects of the source of wealth of potential and existing customers. High quality due diligence requires careful and persistent effort by a financial institution to find out about the background and source of wealth of a customer. This provides two key benefits for the risk-aware financial business first, comfort that the firm is not exposing itself to excessive risk of being used by criminals to launder the Proceeds of Crime; and second (and equally important), sufficiently detailed knowledge of the customer's source of wealth and financial position to be able to sell products which are appropriate and which help the customer and the firm to make money. Strict legal and regulatory requirements across the world to combat Money Laundering and other financial crime require financial institutions to "Know Your Customer" - having adequate information to make risk-based decisions at a number of stages in the customer relationship at take-on, during the annual reviews and when customer activity changes and a decision may be required to exit the relationship. Anti corruption: The word corruption in the financial sense refers to the individuals whether in politics, governments or the corporate world who choose to seek illegitimate personal gain from via a form of illegal activity. The illegal activity may take the form of bribery, extortion, embezzlement, theft or other abuse of power to gain unfair and illegal advantage. Anti Corruption refers to the efforts of banks and other financial institutions to combat this illegal activity and prevent the laundering of Proceeds of Crime at the earliest possible opportunity. In the financial world reputation is paramount. Now more than ever legislation and good business practice requires that financial institutions deploy Anti Corruption methods and systems to protect their customers and your institution's good reputation. The management of financial institutions needs to be absolutely sure that any prospective new client will bring you good, reliable income and that you can limit your risk exposure, especially with customers from new, emerging markets. Each institution will want to be sure that they are not / have not unwittingly helping a client to hide the proceeds of corruption and launder their ill28
gotten gains through the financial system. The regulatory penalties for failing to pickup corrupt individuals / institutions are significant indeed. You need to be able to find out if your prospective client could be what the financial industry calls a Politically Exposed Person a PEP someone in a position of authority, with access to funds, who might be tempted to steal some of it. And you want to be sure that you can meet the requirements of regulators and lawmakers across the globe. Terrorist financing: Here is a subtle but very important difference between terrorist financing and money laundering activities. Money Laundering is the term used to describe the use of the financial system by criminals to hide the source of funds gained from illegal activity such as drug trafficking, bribery, extortion, embezzlement, theft or other criminal activity, as the criminals try to make their ill gotten gains appear genuine. In effect, Money Laundering is about turning dirty money into clean money. Terrorist Financing can be the opposite of this clean money (often in legitimate donations to charities) misdirected by account holders to their criminal colleagues in what appear to be legitimate activities (again, often charities but it can be any form of institution). And it need only take a small amount of money to launch such an attack, so defenses need to be strong. But there are two aspects in which a financial institution can protect itself from both risks strong Know Your Customer processes and strong transaction checking processes. Know your customer describes the means by which the identity, background and other aspects of potential customers can be checked, so that known and suspected terrorists can be excluded. Legislation and regulation require firms to obtain evidence of identity of a customer at takeon and to keep a record of that evidence for as long as there is a relationship with a customer. Legislation and regulation also require a firm to keep up to date its knowledge of a customer throughout the life of the relationship, so that changes in the customer's activity can be assessed and dealt with all with the principal aim of preventing Money Laundering and Terrorist Financing. Having robust processes is all the more important when a business is looking for new clients in emerging markets, where legislation and regulation may not yet be as strong as in more developed financial markets.
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5.3 Types of Accounts: The depository is mainly divided into three which are as follows: a) Beneficiary owner b) Clearing member account c) Intermediary Account.
A Beneficiary Account is an individual account. The holder/s of securities in this type of account holds own securities for the personnel benefits. The Clearing Member Account and Intermediary Account are for the corporate accounts. The securities in these accounts are held for a commercial purpose only. A Clearing Member Account is opened by the broker An Intermediary Account can opened by a SEBI registered intermediary for the purpose of stock lending and borrowing. Beneficiary Account This is an account opened by investors to hold their physical share in the electronic form i.e. dematerialized form and to sell and purchase the security in the demat account. A beneficiary account holder gets all the benefit which are entitled on shares, debentures (i.e. equity shares, debentures, government securities, etc.) held in that account. Therefore, the account is called beneficial owner account". The beneficiary account is again sub type in Margin Account Margin Account is the account in which client have to maintained some amount of margin amount in the account to do the transaction. A beneficiary account can be in the name of an individual, corporate, Hindu Undivided Family(HUF), minor, bank, financial institution, trust, etc. or the broker himself for the purpose of his personal investments in demat form. House account: - An account opened by a DP for its personnel transaction is and it for its own investment is called as house account. Non-house account: - Non-house account referred to those account which are opened by client with DP.
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For Corporate Investors: The procedure is as same as the other account opening formalities only difference is in the documents submission the documents submitted by the corporate are as follows: (1) Memorandum & Articles of Association (MOA & AOA), Board resolution for opening demat\ account and the list of authorized signatories along with their specimen signatures and photographs, etc. (2) Introduction by an existing account holder or by the applicant's bank. (3) Proof of address of the corporate, evidenced by the document registered with Registrar of Companies or acknowledged copy of Income Tax Return or Bank Statement or Leave and License Agreement/Agreement for sale. An authorized official of the Participant shall verify the proof of address with the original documents and affix his/her signature on the documents submitted by the Client, while exercising such due diligence.
There are several client types in the depository system and different codes are allotted to them. These are listed below: 1. Resident _ Ordinary _ Hindu Undivided Family (HUF) 2. Financial Institutions (FI) _ Government-sponsored FI _ State Financial Corporation _ Others 3. Foreign Institutional Investors (FIIs) _ Mauritius-based _ Others 4. Non-resident Indian (NRI) _ Repatriable _ Non-Repatriable 5. Body Corporate _ Domestic Company _ Overseas Corporate Body (OCB) _ Government Company _ Central Government _ State Government _ Co-operative Body _ Non-Banking Finance Companies (NBFC) _ Non-NBFC _ Broker _ Foreign Bodies
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_ Group Companies _ OCB-Non Repatriable _ Foreign Venture Capital _ Limited Liability Partnership _ Others 6. Clearing Member (CM) 7. Foreign National 8. Mutual Fund 9. Trust 10. Bank _ Foreign Bank _ Co-operative bank _ Nationalized Bank _ Others 11. Intermediary Clearing Member Account: A registered member of any of the stock exchanges that have direct connectivity with the depositories holds a clearing member account or pool account. Pool account is used by the members to hold securities from clients and deliver them to clearing corporations. This account is also used to receive securities from the Clearing Corporations and onward distribution to clients. There are two types of clearing members: 1. All members of a stock exchange popularly known as brokers, are clearing members; 2. Custodians who are permitted by the stock exchange to act as a clearing member.
Intermediary Account: The intermediary is the institutions who first have to get registered by the SEBI and it should be approved according to the stock lending scheme. The intermediary can open an account with the DP as same as the corporate beneficiary owner the procedure is same. The intermediary borrows from the lenders and lends to borrow. The intermediary should be an approved intermediary. The securities may be transferred to or through as per the procedure prescribed this from the depository.
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5.4 Verification of documents and its steps: Documents for Verification Non-body Corporate Investors: For opening an demat account with DP all the noncorporate body need to submit all their documents photocopy with original for verification and document should be as per the guidelines lead down by NSDL to complete the KYC norms. And following is the list of all the document which will be going to take by the DP to open an account. (a) Proof of Identity (POI)1. Passport 2. Voter ID card 3. Driving license 4. PAN card with photograph 5. MAPIN card (SEBI vide its Circular No. MRD/DoP/Cir-08/2007 dated June 25, 2007 Has communicated its decision to discontinue with the requirement of Unique Identification Number (UIN) under the SEBI (Central Database of Market Participants) Regulations 2005 (MAPIN regulations)/circulars. 6. Identity card/document with applicant's Photo, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student), g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and h) Credit cards/Debit cards issued by Banks. (b) Proof of address (POA) I. Ration card II. Passport III. Voter ID card IV. Driving license V. Bank passbook Verified copies of a) Electricity bills (not more than two months old), b) Residence Telephone bills (not more than two months old) and c) Leave and License Agreement / Agreement for sale. 6. Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts. 7. Identity card/document with address, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student) g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.
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In case of joint holdings, POI and POA documents must be collected in respect of all account holders. Common Information The process of opening an account with a depository, nature of such an account, and various factors to be considered for opening a depository account is explained below. Some details are common to all types of accounts. These are: 1. Name of the holder 2. Date of birth (for individual accounts) 3. Occupation 4. Address & phone/fax number 5. Bank details like name of bank, type of account (current/savings), account number, branch address, MICR, etc. 6. PAN number, if applicable 7. Details of nomination (for individual accounts only) 8. Specimen signatures 9. MAPIN UIN (s) 10. E-mail address 11. Mobile number 12. Address for communication Computer generated original bank statement: DP can accept the bank statement of the client as an identity proof of the persons but that bank statement should be authorized and should have a stamp on it of the concerned bank and in case if the stamp is not attached then also DP can accept that by making a call to the concerned bank and verify the bank details of the person. Computer generated bank statement on plain paper: DP may accept the computer generated bank on the blank paper in such case the bank statement should have the valid name , address, bank transaction /holding of securities of the client for the latest quarter ending it should be signed and stamp by the authorized officer of the bank . Capturing Landmark details: Mostly people prefer to write Landmark so the delivery communication can be easy the land mark can be viz., hotel ,building, hospital , School, college, garden , railway station , bus stop, etc with the preceding words such as nearby adjacent to, behind , next to, opposite to off etc as it facilitates for the easy availability of the address. At the time of opening demat accounts: A DP should ensure that all the documents collected from client should be according to the guidelines and regulation lead down by the NSDL after completion of all the details of the documents DP can capture all the details such as signature , proof of address, proof of identifies and capture it in the DPM system. Desk Work: All the documents that are mentioned above need to be submitted by the client at the time account opening All the documents need to be verified with the original by the officers The form should be duly filled with all the information duly filled on it The officers should make sure that after authorization of documents he/she should affixed stamp and signature on those documents.
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Instructions related to nomination, are as below: The nomination can be made only by individual holding beneficiary owner account on their behalf singly or jointly. Non individual including trust, society, body corporate , partnership , Karta of Hindu undivided family , holder of power of attorney cannot be nominated. The minor can be nominated but in such case the guardian name, address of the minor shall be provided. The nominee shall not be the trust, society, HUF, partnership etc and NRI can be a nominee as per the regulation of time to time. Transfer of securities shall stand terminated nomination. Transfer of securities in favor of a Nominee shall be valid discharge by the depository against the legal heir. The cancellation of nomination can be made by individuals only holding beneficiary owner accounts on their own behalf singly or jointly by the same persons who made the original nomination. Non- individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, holder of power of attorney cannot cancel the nomination. If the beneficiary owner account is held jointly, all joint holders will sign the cancellation form. On cancellation of the nomination, the nomination shall stand rescinded and the depository shall not be under any obligation to transfer the securities in favor of the Nominee. Names of the account holder: The participants should ensure that the name of the client should be identical to that which appears on the dematerialized security In case of the joint holder the name should appear in the same line as in the share certificate to be dematerialized In case when the client go to open an account he should write his full name i.e. middle name , first name , last name, which will be helpful for the DP to verify the name properly from the original share certificate and rejection of the share certificate take place. The investor can dematerialize the entire physical shares which are in the full name, abridged name, name with initial or any other fashion in this account. In case of the minor guardian is required to sign all the forms as well as give their full name and address in the given application. Desk work: Name of the customers should be checked properly while going through the documents. In case the name has been changed ask for the application with duly reason or the PAN card which have the person changed name. Mailing and communication address (es) The client address proof can be verified by the original documents submitted by the client such as, Ration card, Passport, Voter ID card, Driving license, Bank passbook, Electricity bills (not more than two months old), Residence Telephone bills (not more than two months old), Leave and License Agreement / Agreement for sale, Selfdeclaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts. Identity card/document with address, issued by Central/State
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Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student) and Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members. For NRI accounts, proof is required for both addresses - that of the account holder as well as the holder who is operating the account on behalf of the NRI. For corporate accounts, a copy of Memorandum of Association, Articles of Association, and Board resolution permitting opening of account, the registered address of the Company as well as addresses of the person authorized to operate the account on behalf of the Company.
(c) Details of guardian in case account holder is a minor In case of the minor the guardian is the one who can open an account of demat in the name of the minor till the time minor get major. The guardian needs to submit all the documents photocopy with original for verification and should fill the form in details with the signature. (d) Foreign address and RBI approval details for NRI, FII or OCB accounts In case of the NRI, FII, or OCB registration with the SEBI and the certificate of registration from the SEBI need to be attached and power of attorney copy attested with the document and approval letter from RBI for opening an account with DP and authorization letter from SEBI. (e) Clearing member details for a clearing account: The broker can open an account with the DP only after the depository gives the approval and allot him the clearing member business partner identification number. The DP should obtain a account opening form from the broker and the necessary documents and specially the letter of the clearing corporation and the number of the CM CC ID. (f) Details of bank account: Details of the bank account holder needs to submit the branch code cheque and the 9 digit MICR number and the cheque which is send should send with a application to it. Companies use this information for printing them on Dividend/interest/ warrants etc. (g) Details of Income-tax Permanent Account Number (PAN) or GIR No: In case if the person dont have the PAN no. GIR no. or he is not a income tax assesses the DP must get the proper reason from the account holder. In case if it all the documents is there with the customer then a photocopies of the PAN with original for verification should be submitted. (h) Nomination declaration: A beneficial owner can make a nomination of his account in favor of any person by filing the nomination form with his DP. Such nomination is considered to be conclusive evidence of the account holder(s) disposition in respect of all the securities in the account for which the nomination is made. The nomination form submitted should be in the format prescribed by NSDL in its Bye-Laws and Business Rules.
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(i) Details of introduce: In case if the existing holder introduced the new client to the DP the existing holder need to give all his appropriate information about himself and his signature is compulsory in the form and if necessary den DP can ask form the application to be attached with the account opening form. Desk work: The officer should capture proper address of the customer And in case if the customer have the 2 to 3 address then ask him on which address he wants his documents should be submitted The address should be verified properly with the sum phone bill or electricity bill or any other option. The mail address of the customers should be captured to do the mailing communication.
Client-Participant Agreement: Anyone who wants to open a demat account should have to get into an agreement with the DP. The standard agreement is approved by SEBI and forms a part of NSDL bye laws. Appropriate fees and charges have to be paid both by DP and client and right and obligation of both needs to be settlement and proper transaction of the process. DP - client agreement: DP client agreement provides for: DP charges to specify in schedule A of agreement. DP may revised with minimum 30 days notice Transaction of the securities should be done on the basis of proper authorization of client Transaction statement Both parties have a right to terminate agreement DP should solve the problem if any within 30 days In case the client default in paying charges the DP should charger a maximum interest of 24% p.a. This agreement has to be made on non-judicial stamp paper of appropriate denomination and should be signed by: a) b) c) d) The depository participant, itself or through an authorized signatory; and The sole holder in case of single holding; or All the joint holders in case of joint holding, or The constituted attorney in the case of NRI/corporate/trust accounts.
A copy of the duly executed agreement has to be given to the client. FII clients, registered with SEBI and who have entered into an agreement with the DP directly or through their constituted attorney under regulation 16(1) of SEBI (Foreign Institutional Investors) Regulations 1995, need not execute this standard agreement. The FIIDP agreement authorizes the DP to act on behalf of the FII for availing depository services and it should have been filed with SEBI.
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Desk work: The officer should make sure if the client is blind/illiterate person then he should read full agreement in form of the client The officer should make sure that the agreement is duly signed by the customer. The agreement should be maintained with the DP SUPPORTING DOCUMENTS: As mentioned earlier, supporting documents, required to be submitted with the account opening form, include 1. Photograph of account holder(s)/authorized-holders/constituent attorney, etc, 2. Proof of incorporation for companies, e.g., certified copies of the memorandum of association, trust deed, etc. 3. Certified copy of the document authorizing the specified person(s) to operate the account, e.g., a copy of the board resolution etc., 4. Any other document the DP may consider necessary to establish the genuineness of the account holder(s) Transposition The process of effecting changes in the order of joint names appearing on a security certificate is called Transposition. Joint holders can request a company to transpose names by way of letter and it does not require affixing stamp duty. If the joint holders do not want to open separate accounts, they can have the sequence of names on the certificates to tally with the sequence of names in which depository account is opened. Desk work: All the valid documents need to be submitted at the time of opening an account They should captured PAN details They should captured bank details They should captured proof of Add They should captured proof of identity They should be verified by the clients properly
Signatures/Thumb Impression: The signature is a very most important aspect to verify the in - person verification. So it is very important for the DP to collect the signature on each and every part of the form where is needed. So for every case there is the need of each every person involved in this agreement. Such as mentioned below: signed by the sole holder, in case of single holding; all joint holders, in case of joint holding; authorized signatories, in the case of corporate accounts; by guardian, in case of a minor; or the constituted attorney, In the case of NRI accounts. If the signature is in any language other than those specified in the Schedule VIII to the Constitution of India or English, it should be attested by a Magistrate or a Notary Public or a Special Executive Magistrate.
In case of illiterate person the person can make a thumb impression on the opening form account everywhere a signature is needed. And it is left hand of men and right hand of the
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women all accounts opened by illiterate person(s) must be either introduced by an existing account holder or must be attested by applicants Bank. The Client(s) must come in person to open the account and submit instruction forms and affix his/her thumb impression in the presence of the official of the DP. Desk work: The signature of the client should be captured in the form were ever its necessary. The signature should be verified by doing match in the PAN card In case of change in signature duly application with a proper reason must be given by the customer The new singed PAN card details on the new PAN card should be captured. The sign should be scanned at the time of every transaction. CLIENT ACCOUNT NUMBER: After collecting all information from the client and after properly verifying the in- person verification the DP will collect the form and make an agreement with the client after making a signature on each and every form and agreement the DP will registered it and fill all the details of the client on the software and within seconds the customer will get the client number which have to be put on account opening form by DP and should authorize it by the higher authority and then that head officer will generate the account number of the client it will again come to the branch officer and give the client account number on spot to the customer. The account number has two parts, i.e., 8-digit DP-ID (identification number of Depository Participant) and 8-digit client account number. Together this number is unique across depositories. After opening the demat account, the client master list should be sent to the client at the address given in the account opening form. Desk work: As the client account is opened the intimation to the client should be given by mailing or by other communication As the document is approved from the NSDL the procedure to make account should be start. The DP should authorize it The head officer should also authorize it Standing Instructions: The standing instruction is a receipt given by the DP to the beneficial owner. It is giving at the time of opening an account. To make a transactions with the help of that and it will be useful to both the parties in this the DP can make an record of the transactions, and the client can make a record of their debit and credit of the account to avoid the confusion at the later stage. This clause enables clients to give standing instructions to DPs, at the time of opening the account itself, for receiving securities to the credit of their accounts without any further instruction from them. Desk work: The transaction should be done as the standing receipt received from customer The record should be maintained for the future reference The transaction should be DR or CR as per the client standing instruction.
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5.5 Procedure for account opening: At Head office Department Account opening : For printing authorized person makes a call and tells the printer which forms are needed and specific quantity is ordered. For the payment of the same pay note is made and authorized person approves the payment and through RTGS/NEFT is made to the printer. For branches till now the forms sent are coded as STF after commercial launch investors code will be different and as per that it would be sent to branch. Any investor who wants to open depository services must first open an account with a depository participant of NSDL. The process of opening a demat account is very similar to a bank account. The investor can open an account with any depository participant who is registered with NSDL. An investor may open an account with several DPs or he may open several accounts with a single DP. Each DP is free to fix its own fee structure. Investors have the freedom to choose a DP based on criteria like convenience, comfort, service levels, safety, reputation and charges. After exercising this choice, the investor has to enter into an agreement with the DP. The form and contents of this agreement are specified by the Business Rules of NSDL.
Inward registration: As the customer form will come with all details filled. The bank has given one inward no. which has to be note down in the registered of records maintained by GT. Check list: In this second step is to check from the check list whether all attachments required is been properly provided or not according to the check list. In the DPM system both the addresses local as well as correspondence should be entered and the local address will be default which will be used for informing about the transaction. DP should enter client signature (s) as given in the account opening form. PAN card details: DP should obtain a photo copy of PAN card and verify the same with the original and affix a PAN verified stamp. Cross checking of PAN no. using various legal ITD and NSDL websites. The details collected should be same and enter client account no. (Client ID) generated by the system. Mode of entering the details in the DPM system : DP should enter the details of clients as mentioned in the account opening form .DP can avail the facility of bulk verify and release which are system generated no manual work required to do so. Entering of bank details: Complete bank address including 9 digit MICR code is necessary for the issuer to undertake distribution of corporate benefits directly to
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the bank account of the BO. DPs are here by advice to obtain a specimen copy of cheque and capture 9 digit MICR code for all the accounts opened with them. DP should print the Client Master Report (CMR) and give it to client along the copy of the agreement. Desk work: The desk work involved in the process are as follows: The branch person should give the demat form to the to the person who is interested in opening the account The form should be duly filled by the person The documents mentioned in the check list should be submitted by the client The branch should verify it with the documents with the original ones. The forms should be submitted to the HO in the branch along with documents with the outward no. on form The HO officers will verify the documents properly ones again. That will be submitted to the head officers The head officers will verify that documents and forms pass again to the HO officers. The HO officers will do the backend entry in the computer. Then that forms will sent to the DP The DP will sent the form to the NSDL The NSDL will sent the form with the authorization within one hour to the HO At final stage the documents will be verified and intimation of the account opening is giving to the customer. Beneficiary Account - Procedure for Opening an Account An individual can open a demat account with the depository by looking every aspect and whether that aspects suits to the client or not. The client always sees the comfort zone, name, fame, charges, safety etc. Once he makes his choice he can open an account with any DP which is registered under NSDL. Client can open as many account with one DP or can open a signal account with many DP. The procedure for openings demat account is just same as of the bank account opening. No minimum balance is required for opening a depository account. Investors also have the freedom to close an account with one DP and open another one with any other DP. The type of forms needs to be filled by the customer and the list of document required depend on the type of beneficiary account whether it is NRI/ or corporate or individual. The beneficiary account can be on the single name or joint name. The clearing member or the brokers have to open a beneficiary account in case if they want to hold their securities for the personnel way.
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Procedure for opening HUF account: Open the beneficiary account in the name of Karta of HUF POI and proof of address of Karta should be obtained. PAN details of HUF should be entered in the DPM system after verification Cheques that are in the name of HUF can be collected by the Karta and vice versa. A copy of the letter received from RBI, clarifying the stand to be taken with request to bank account.
Procedure for opening a minor account: Procedure to open the minor is the same as for individual but it should be open operated by the natural guardian or appointed by the honorable court. Minor account should not be operated in joint account. POI and proof of address and photograph should be obtained of guardian. Proof of minor should also be obtained such as school leaving certificate mark sheet, passport of minor, birth certificate original or attested or notarized. PAN details of minor should be obtained. Procedure for DP on minor attaining majority: PAN details should be obtained with the changes in PAN data. Client should be communicated for opening of a new demat account if the client does not respond within one month from date of communication they should be disabled. Frozen account of minor attaining majority should be asked for PAN card photocopy and if needed more document for clarification about the same. Procedure for opening of an account in the name partnership firm: The account should be opened in the name of partners and it should be used for the partnership firm purpose only. Obtain POI and Proof of address of partners also obtains a copy of the partnership deed for verification. Obtain an undertaking in prescribed format from partners stating that they would comply with provisions of companies act, 1956. PAN details should be entered against the names of the partners in the DPM system after due verification. Enter the bank details of the partnership firm.
Procedure for opening account for NRI/FN: Obtain POI and proof of address of applicant as per the procedure. Obtain a declaration of the client that he / she have complied and will continue to comply with FEMA regulations.
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DPs are advised to obtain photocopies of proof of address of foreign address where NRI/FN is residing verify the same with the originals. In case NRI/FN has local address it is advisable to get the photocopy of the same and verify with the originals. In case in-person verification cannot be done then the documents that are submitted should be duly signed by the NRI\FN and they should be attested by the Indian embassy/ Consulate General of the country where NRI/FN is residing. The account can be operated only if it has got authenticated documents. If the person is having the photocopy of visa for verification then the attestation part can be waived off. Procedure for opening account of an illiterate person: Same process for opening of individual account. Thumb impression (right hand for women and Left hand for men) on agreement as well as the opening form. All accounts opened by them should be introduced by existing account holder or must be attested by applicants bank. Procedure for opening an account of a Blind person Same process for opening of individual account. DP should read out the contents of account opening form and DP client Agreement whenever requested by clients and in case the person is illiterate and blind account opening procedure for illiterate person should also be followed. DP should enter clients signature as given account opening form in DPM system. For issuance, reissuance and processing of delivery instruction slips of such clients DPs are advised to follow procedure laid by NSDL. Head officers desk : Second authorization: once the attachments is been done from it has to be sent to again head officer for second authorization. GT: Again the head officer will sent that form to the GT that GT will make an data entry of that form in the and authorized again. Depository participants role : Account opening form: The entry will be made in the back end softcopies depository participant In the back end office both authorizations will be done. Depository will send the same to the NSDL front office through electronic depository participants. NSDL will again authorized and send to back within 1 hour And that officer will import that form again to DP.
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Procedure for opening depository in case of trust as provident fund trust, gratuity trust, and superannuation trusts etc. (a)Registered Trust: In case the depository account is to be opened by a registered trust where a registration certificate is issued by a statutory authority under the provision of the Bombay public trust act, 1950. Requisite KYC documents, PAN card and bank details of the registered trust as per the requirement mentioned at manual as same. Notary certified true copy of the trust deed, Certified true copy of registration certificate issued by the authority. Certified copy giving the names of trustee authorized by the board of trustee to the demat account. After obtaining the documents, participants are advised to follow the below mentioned procedure. a) Open the depository account under the category and in the name of Trust. b) Capture the PAN and bank details of the registered trust after due verification. c) Capture the signature of the trustee in the DPM system.
(b)Unregistered trust: Notary certified true copy of the trust deed. If the trustee(s) are individual , then open the depository account in the individuals, then open the demat account in the individual name under the category individual by obtaining account as per the above mentioned formalities. In case of the trustee of the unregistered trust are corporation, companies or entities registered under the Bombay public trust act should open and accounts in their respective names under the Type Body- corporate and sub- type and others by obtaining documents mentioned above. Only those securities that belong to the trust can be held in such a depository account. Capture the PAN and bank details of the unregistered trust. Capture the signature of the individuals in case trustees are individuals .In case the trustee of the unregistered trust then capture the signature of the authorized signatories in the DPM system.
Opening of accounts for terminals benefits funds operated as trusts: In case of terminals benefits such as provident funds / Gratuity fund / superannuation fund that are operated as trusts and where a recognition certificate is issued by the Income tax Authorities and /Regional Provident fund
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Commissioner, as the case may be, participants are advised to obtain the following documents: Notary certified true copy of the trust deed. Only those shares which belong to trust can be held in such an account. Certified copy of trust After obtaining all this documents the procedure to be followed as below mentioned : Open depository account in the name of trust Capture PAN details and bank details in DPM system, after verification. Capture the signature of the trustee.
Opening of promoter account Separate account is been provided to the promoter of the company to hold their securities in the separate account which is been issued as Promoter of the company And the account should be for the sole purpose for holding transacting the securities held as promote and no other purpose. Opening of DR account DR means depository receipts and its mainly divided into two parts as Global depository receipts (GDR) and other one is the (ADR) American depository receipts. And this type of account is been provided to the Resident, Non- resident, Foreign Institutional investors, corporate body, Foreign National. In order if the depository receipts is been cancelled then the account holder can hold the equity in the same account. The standing instruction facilities should not be enabled for accounts with the sub - type. In this regard it is also clarified that since the client has already been identified by participants so no separate agreement is required. Procedure of opening of a commodity Account: All the procedure of the account opening is just same as the other account opening form in the commodity exchanges. Account opened under this agreement shall hold only electronic ware house receipts of respective commodity exchanges and cannot be mixed with other securities. Separate account should be open and enter into the separate agreement with the client holding warehousing receipts. Procedure for the transfer, pledge and freeze will be the same as is applicable to securities.
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For delivery of the commodity and metals the client needs to submit the Physical Delivery Request Form for the transaction and after processing the request should be executed in DPM system.
Procedure regarding operation of account through Power of Attorney: A power of attorney refers to the sell or otherwise deal with or dispose and to purchase subscribe or otherwise acquire in any manner from the market or under public or right issue or otherwise and accept the transfers of any stocks, funds, shares, debentures, government and other promissory notes , securities, bonds, debentures, annuities, or other mercantile negotiable instruments which shall or may at any time belong to client or which hereafter be transferred to me , whether solely or jointly. The participants should verify that the power attorney presented in front of them that belongs to the authorizing holder i.e. done. Power of attorney should be notarized in case of photocopy \ Depository account can be operated by both members i.e. account holder and power of attorney and both the signature should be captured in the DPM system. As the account is open on power of attorney the flag should be there. Participants should modify the power of attorney document if needed.
Procedure for opening of clearing member account: The steps undertaken to open the account are same as those of individuals, difference lies in the type of form and details to be filled in and documents to be submitted. The requirements are the same as those of opening a corporate demat account. Additional documents required are:
SEBI certificate. Stock Exchange Letter. The CM should fill the form properly as per the business rules of NSDL. Along with that agreement should submitted and it should be duly executed on the stamp paper. The documents required for opening a CM account : A copy of the letter from the Clearing Corporation / stock exchange intimating allotment of the CC- CM ID. A copy of latest SEBI registration. Board Resolution for authorized signatories. Memorandum of Association and Article of Association. Specimen copy of the cheque for capturing the 9 digit MICR code. Participants should verify the completeness of the account opening from and verify the copies submitted with the original documents. If the documents are in order then the participants will duly signed and stamped it.
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A study of DEMAT OPERATIONS at TJSB bank -------------------------------------------------------------------------------------------------------------------------------------
After this participants will submit that document to NSDL for the allotment of CM BP ID. NSDL will allot the CM BP ID and intimate to the participants electronically. Participant will then open and account by taking that ID and capturing the signatories of the holder. Opening of margin account: A new sub type viz. Margin account has been added to the client types viz.; Resident and Corporate under client maintenance Module in DPM system. The new sub type Margin Account is added to enable CMs to open an account of the beneficial owner to hold the securities in the in margin account. While opening such account the participants should obtain and authorization from CM/Brokers And client will hold this account for the margin purpose and no other securities will be hold /transacted by the holder. Procedure for opening corporate account: A Company, being an artificial person, can open a demat account, Provided its memorandum authorizes it to make investment in the securities of other companies. A demat account in the name of a company should be operated by the person(s) authorized by a resolution passed by its board of directors. The DP should obtain an attested copy of the memorandum and board resolution, authorizing the opening and mode of operation of the demat account.
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5.6 Procedure for Closure of Account: Closure on Clients Request DP can close a depository account on receipt of an application in the prescribed format. The application should be made by the account holder or by all the joint holders. An account can be closed only when there is no balance in the account. In case there is any balance in the account sought to be closed, the following steps are necessary. (a) Rematerialisation of all securities standing to the credit of the account at the time of making the application for closure; or (b) Transferring the balance to the credit of another account opened by the same account holder(s) either with the same participant or with a different participant. However, where demat request(s) are pending for disposal for a long time in a demat account and the client desires to close such an account, the following procedure maybe adopted by the Client: (a) Write a letter in the prescribed format to the Issuer (with a copy marked to its Participant and respective RTA), requesting for rejection of the pending dematerialization request(s) and send fresh physical security certificate(s) to the Client directly. (b) Enclose a copy of the dematerialization request generated from DPM system, duly signed & stamped by the Participant, along with the aforesaid letter to the Issuer. On receipt of copy of the letter from the Client, the Participant may also take up the matter with the concerned Issuer and/or its RTA for rejecting the instruction expeditiously. After the pending dematerialization request(s) is/are rejected by the Issuer and/or its RTA, the Participant can close the account of such Client. Consolidation of Accounts Some clients could have opened multiple accounts to dematerialize their shares held in multiple combination and sequence of names. However, they may not need so many accounts after they have dematerialized their shares and may want to bring all their share holdings into one or fewer accounts. This can be achieved by using normal off market transfer instruction. Closure by DP The DP may also initiate closure of a client's account if the client has defaulted in performing its obligations laid out in the client-participant agreement. The participant should give sufficient notice to the client before initiating closure of his account. The notice should clearly state the reasons for closure of account. The process of closing account in such a case is the same as that of client-initiated closure. Closure/Shifting of Clearing Account A clearing member may transfer its clearing account from one DP to another DP. As per his facility in such case a CM should make an application to the new DP of opening a new account and other to old DP to shift his account securities to other DP . On receipt of the application, the new DP forwards the application to the depository for approval and allotment of a new CM-BP-ID.
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Once the new CM-BP-ID is allotted, the new DP opens a new clearing account and intimates the depository about the new Client-ID. On receipt of intimation from the new participant, the depository advises the old DP to close the account. The old DP then closes the account and intimates the clearing member. All pay-out of securities, transaction will be done in the new DP account of the clearing member. Mass Shifting of Accounts Mass shifting means collecting number of the operation of accounts to another place. As there will be a expansion of the business DP will open a new branch to another place so it can shift its clients account to that branch and do the operation from the new branch and new DPM machine For example, a DP may start operation from Delhi and may be servicing clients of Faridabad, Agra, Mathura, etc from this DPM. When the DP finds enough business at Mathura, it may set up a direct connectivity machine at Mathura also. NSDL has given a facility to shift in mass, all the Mathura accounts from Delhi in the above example to the machine at Mathura. This facility is called mass shifting facility.
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5.7 Dematerialization: Introduction: Indian investor community has undergone sea changes in the past few years. India now has a very large investor population and ever increasing volumes of trades. However, this continuous growth in activities has also increased problems associated with stock trading. Most of these problems arise due to the intrinsic nature of paper based trading and settlement, like theft or loss of share certificates. This system requires handling of huge volumes of paper leading to increased costs and inefficiencies. Risk exposure of the investor also increases due to this trading in paper. Some of these risks are:

Delay in transfer of shares. Possibility of forgery on various documents leading to bad deliveries, legal disputes etc. Possibility of theft of share certificates. Prevalence of fake certificates in the market. Mutilation or loss of share certificates in transit. The physical form of holding and trading in securities also acts as a bottleneck for broking community in capital market operations.
The introduction of NSE and BOLT has increased the reach of capital market manifolds. The increase in 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. The increase in trade volumes lead to exponential rise in the back office operations thus limiting the growth potential of the broking members. The inconvenience faced by investors (in areas that are far flung and away from the main metros) in settlement of trade also limits the opportunity for such investors, especially in participating in auction trading. This has made the investors as well as broker wary of Indian capital market. In this scenario dematerialized trading is certainly a welcome move.
What is Dematerialization? Dematerialization or Demat is a process whereby your securities like shares, debentures etc, are converted into electronic data and stored in computers by a Depository. Securities registered in your name are surrendered to depository participant (DP) and these are sent to the respective companies who will cancel them after Dematerialization and credit your depository account with the DP. The securities on Dematerialization appear as balances in your depository account. These balances are transferable like physical shares. If at a later date, you wish to have these demat securities converted back into paper certificates; the Depository helps you to do this.
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Benefits of dematerialization: Transacting the depository way has several advantages over the traditional system of transacting using share certificates. Some of the benefits are:
Trading in demat segment completely eliminates the risk of bad deliveries, which in turn eliminates all cost and wastage of time associated with follow up for rectification. This reduction in risk associated with bad delivery has lead to reduction in brokerage to the extent of 0.5% by quite a few brokerage firms. In case of transfer of electronic shares, you save 0.5% in stamp duty. You also avoid the cost of courier/ notarization/ the need for further follow-up with your broker for shares returned for company objection In case the certificates are lost in transit or when the share certificates become mutilated or misplaced, to obtain duplicate certificates, you may have to spend at least Rs500 for indemnity bond, newspaper advertisement etc, which can be completely eliminated in the demat form. You can also receive your bonuses and rights into your depository account as a direct credit, thus eliminating risk of loss in transit. You can also expect a lower interest charge for loans taken against demat shares as compared to the interest for loan against physical shares. This could result in a saving of about 0.25% to 1.5%. Some banks have already announced this. RBI has increased the limit of loans against dematerialized securities as collateral to Rs2mn per borrower as against Rs1mn per borrower in case of loans against physical securities. RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities.
Procedure for Dematerialization: 1. DP provides dematerialization request forms (DRF) to its clients 2. The client completes the DRF in all respects and submits to DP along with the security certificates that are to be dematerialized. 3. The officer in the DP has to check the DRF for validity, completeness and correctness. The following points should be checked particularly: The security certificates sought to be dematerialized are attached to the DRF. The attached security certificates are marked (defaced) with the words "Surrendered for Dematerialization" with our name and BO ID. We must ensure that the security certificates submitted for dematerialization to the issuer or its RTA bear our name, our DP ID and Client ID. This is a precautionary measure to prevent misuse of share certificates by anyone. The certificates are mutilated by punching two holes at the top of the certificates by using normal office perforator. The certificates are not mutilated or defaced in a manner affecting any material information. The name of the client on DRF and the certificates is exactly the same as in the client's account in our system. Minor variation however in name, is permitted such as
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initials in place of first name, middle name, minor spelling mistake in name etc. The permitted variations refer to initials not being spelt out fully or put prior to after the surname. In such cases, if the signature on the DRF matches the specimen signature available with us the securities can be considered for demat. Details like security type, face value, paid-up value, pari-passu status, certificate numbers, distinctive numbers, number of certificates, total quantity of securities and lock-in status are filled-in correctly. Separate DRFs have to be submitted for: a) Free and locked-in securities; b) Each ISIN; c) Securities locked-in for different reasons; d) Securities of different paid-up value; and e) For each client account. DRF is signed by: a) The sole holder in case of single holding; b) All joint holders in case of joint holdings; c) Constituted signatories in the case of corporate accounts; The signatures of the client as appearing on DRF should match with the signatures in our records. If the signatures do not match, we should ask for the identity of the client to check. If necessary, we may insist on attestation of DRF from bankers of the client. DRF should be signed by all the holders and match with specimen signatures. If the client has a signature registered with the company which is different from the specimen signature given to us and the client may be advised / allowed to affix both the signatures on the DRF.
4. If the DRF and the accompanying security certificates are not found in order, then we should return the DRF and certificates. 5. If DRF and accompanying certificates are found in order, then we should accept the DRF and issue an acknowledgment to the client. 6. We have to enter the dematerialization request in our system after following maker checker concept. The system will generate a request number (DRN), which should be mentioned on DRF. 7. Once we receive the certificates defaced by the investor, we have to punch two holes on the name of the Company and then draw two parallel lines on the face of the certificate. We have to forward the DRF and the relevant security certificates to the Issuer or its R&T Agent for dematerialization. DRF and enclosures have to be sent at the "address to which physical certificates to be sent" communicated by the Depository. The forwarding letter should refer to the allotted DRN and should be sent within seven days of accepting it from the client.
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8. The Issuer or its R&T Agent verifies the DRF and the accompanying certificates for validity, completeness and correctness. They also match the details with the intimation received from the depository against the same DRN. 9. We have to inform the client accordingly and request removal of reasons for objection. We should remove these or provides additional information to the Issuer or its R&T Agent within 15 days of receiving the objection memo. 10. If we fail to remove the objections within 15 days, the Issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to us. We have to inform the client accordingly. We should also return the security certificates to the client and obtain an acknowledgment. 11. We if the client so requires, may generate a new dematerialization request and send the securities again to the Issuer or its R&T Agent. 12. If the Issuer or its R&T Agent finds the DRF to be in order, it informs the depository and authorizes it to create the appropriate credit balance in the client's account. Our system will automatically credit the client's accounts when DM is updated. For the purpose of income tax calculations, the date of credit of securities by dematerialization is taken as the date of acquisition of shares. 13. We on receiving confirmation of credit entry in our system will inform the client through monthly transaction statement. 14. An R&T Agent is required to confirm/ reject a demat request within 15 days from the date of receipt of physical shares. 15. After the DRF received by the R&T Agent are in proper order then these shares are converted to electronic form and are directly credited to the clients account in the DPM system and when DM is updated it shows the credit has happened in clients account.
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Diagrammatic representation of dematerialization process:
1. DRF and certificate send to DP. 2. Demat order is sent to NSDL 3. DRF, DRN and certificate sent to R&T Agent/Issue. 4. Demat request send to R&T Agent/Issuer by NSDL. 5. Issuer/R&T Agent sends confirmation or rejection to NSDL 6. The same status intimation is forwarded to DP. 7. If confirmation is done then statement of holding is given to client. 8. If rejection happens then the objection memo is given to DP from Issuer/R&T Agent.
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5.8 Rematerialisation process: It is exactly the opposite process of dematerialization. It refers to the process of issuing physical securities in place of the securities held electronically in the book entry from the depository. The beneficial owner has the right to convert the electronically held securities into physical form at any point of time till when these securities are held. For this the beneficial owner has to send a request form to the issuer or its R&T Agent through the participant in the prescribed Rematerialisation Request Form (RRF). For any government securities there is no other R&T Agent required as the NSDL itself works as R&T Agent for the government. So when the client needs to remat the securities such as warehouse receipts or G-secs that can be converted to physical form it goes to NSDL for the conversion. Pre-requisite for Rematerialisation: 1. The beneficial owner should make a request for Rematerialisation. 2. There should be sufficient free/lock-in balance of securities available in the beneficiary account to honor the Rematerialisation request. Procedure for remat: 1. The RRF should be provided to client on request. 2. The client should submit the completely filled RRF in all respects. 3. Check for the free/lock-in balance in the account of the client whether it is sufficient or not for Rematerialisation. 4. Check the following points in particular: a) The name of client on RRF is exactly the same as that in the client account. b) In case of joint holding, the order of names appearing on RRF is the same as in the client's account. c) Correctness of the details filled in such as the security type, face value, Issuer's name and lock-in status. d) The clients option whether to receive the physical certificates either in jumbo lot for the entire quantity requested or in market lot. 5. Separate RRF are submitted for: a) free and locked-in securities; b) securities locked-in for different reasons; c) each ISIN; d) securities of different paid-up value; and e) Each client account. 6. RRF is signed by a) the sole holder in case of single holding;
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b) all joint holders in case of joint holding, c) authorized signatories in the case of corporate accounts, d) constituted attorney in the case of NRI accounts; 7. If RRF is not found in order, we should return the RRF to the client for rectification. 8. If RRF is found in order then we should accept RRF and issue an acknowledgment to the client. 9. We should enter the Rematerialisation request in our system. Then system will generate a remat request number (RRN) which should be mentioned on RRF. 10. An authorized person, other than one who entered the RRF details in the system, should verify the details of RRN and release the request to the depository. 11. We should complete the authorization of RRF and forward it to the Issuer or its R&T Agent for rematerialisation. We should forward RRF to the Issuer or its R&T Agent within seven days of accepting it from the client. 12. The Issuer or its R&T Agent should verify the RRF for validity, completeness and Correctness. It should also match the details with the intimation received from the depository against the same RRN. 13. In case the Issuer or its R&T Agent finds RRF in order, it should confirm the remat request. The Issuer or its R&T Agent should then proceed to issue the physical security certificates and dispatch them to the beneficial owner. 14. In case RRF is not found to be in order, the Issuer or its R&T Agent should send an objection memo to us, with or without RRF, depending upon the reason for rejection. 15. RRFs are sent back on the following grounds: Incomplete or incorrect RRF RRF details mismatch RRF not received by registrar Rejected due to ACA
On receiving confirmation of debit entry in the DP system, should inform the client accordingly. The entire process takes a maximum of 30 days. No trading is possible on the securities sent for rematerialisation.
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5.9 Transaction in DEMAT account: Delivery instruction slip (DIS) is the instruction slips through which client gives the instruction for pay-in and pay-out for transaction of securities. These DIS are of various purposes and the various annexure explanations are given as below: The source and target details of DIS submitted by clients are in NSDL. Combined delivery instruction Slips for Account Transfer (within NSDL) & Inter-Depository Transfer Instructions. Receipt Instruction by clients/ clearing members Inter-depository Transfer delivery instructions. Inter-depository Transfer Receipt Instructions. Delivery-out Instruction submitted by clearing members for pay-in. Inter-settlement Instructions. CM pool to CM pool Delivery Instructions by Clearing Members. CM pool to CM pool Receipt Instructions by Clearing Members. Delivery Instructions by Clearing Members o Pay-out.
1. Issue and re-issue of the DIS should be done with already stamped client id and unique identification number which is also known as serial number and for illiterate person with stamp of "Thumb Impression" and for visually challenged person the stamp of "Visually Challenged" should be there. 2. Different colors of stationery should be used joint account holders and for power of attorney. 3. Re-issue of booklet should be strictly on receipt only with duly signed by the all account holders. In case of the form lost/stolen/misplaced take it in written format for the account signed by all account holders. 4. DIS issuance register should be maintained and customer complaint mechanism should be printed at the back side of the DIS. 5. If the client has a loose leaf of DIS then it can be accepted if the person comes to the participant's office or if the third party comes then by contacting the client it can be accepted. 6. Proper recording of the serial number i.e. unique identification number in the automated back office system should be checked. 7. In case if the client says in writing that the DIS has been lost/misplaced/stolen or account has been closed then the serial numbers of that client should be permanently blocked in the DPM system if it is automated back office system or in the register if it is in manual form. 8. Participant should contact the client(s) if the blocked DIS slip comes for transaction purpose.
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9. Participant should contact the client(s) if the blocked DIS slip comes for transaction purpose. 10. There should be proper system that raises alert when the blocked DIS comes for transaction. 11. On the DIS proper verification should be done for signatures of the account holders and proper unique identification number should be checked by the participant's staff members and they should cross check the client id number in there system too. 12. In case of the securities value which amounts for more than Rs. Five lakh or more than it should have two step verification i.e. it should be verified two times by the authority if it is an off market transaction. 13. In case if it is found that some suspicious transaction has happened then it should be brought to the notice of the concerned authority. 14. In case of dormant account if the transaction happens the verifying process should be done that is existing process should be done for verifying the account. However in case of active accounts this should be done for five or more ISINs and all such ISIN balance is being transferred at a time. 15. After 180 days the account will be marked as dormant account if not operated by the client. If any transaction takes place in the dormant account then it will be executed in non dormant in EOD process of that day.
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5.10 Trading and settlement process: Transfer of securities and settlement of those is one of the important functions of DP. In the system to complete the transaction transferor and transferee has to give instruction which is known as standing instruction. Transfer of securities from one account to another may be done for any of the following purposes: Transfer due to a transaction done on a person to person basis is called 'off-market' transaction. Transfer arising out of a transaction done on a stock exchange. Transfer arising out of transmission and account closure. A beneficiary account can be debited only if the beneficial owner has given the Delivery Instruction (DI) in the prescribed format. For this participant may use the old as well as new format of the DI. For off market transaction the diagram below would help to understand the procedure of the transaction
When an off market transaction takes place we should see that all the procedure has been completed or not and check the execution date mentioned in the form is correct or not. Then it should be entered in the DPM system for execution after which it would get debited from the client's account. DPM will generate the instruction number which we have to note it down on the instruction slip for future reference. It should be checked that the client's account has adequate balance in the account till the execution date and if not then the execution will fail. Exchange of money in the off market transaction should be done outside the depository system and if the receiving client has given the standing instruction then securities will into the account automatically and if not given then every time the client will have to Receipt Instruction for every expected receipt.
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For market transaction the diagram below will show how it is done:
When the client has not submitted power of attorney to his broker then for each and every transaction the standing instruction in needed and if standing instruction is also not given then for each transaction separate instruction slip should be given. Collection of delivery instruction slip: Collect the delivery instruction slip and check for the details of it The details should be checked in the delivery instruction slip include ISIN numbers of the company, signatures should be matched and all the other details in the slip should be completed If any lose leaf comes from the client it should be registered in the delivery instruction slip register and a written application should be taken from the client .In this case in person verification is a must. Collection of Transmission forms: Give the form to the client and take it back when the client fills the form completely The documents that needs to be submitted are death certificate of the deceased person and notary and all other related formalities that are given in the form In case HUF Kartas, death certificate along with no objection certificate of coparceners should be submitted. In case of nomination is not given the legal heirs should provide affidavit along with death certificate and open a new account and submit the duly filled form.
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5.11 Pledging: The Depositories Act, 1996 permits the creation of pledge and hypothecation against securities. Securities held in a depository account can be pledged or hypothecated against a loan, credit, or such other facility availed by the beneficial owner of such securities.
PROCEDURE FOR PLEDGING THE ACCOUNT:1) Both borrower (pledgors) as well as the lender (pledgee) must have depository account with the same depository but can be with different DP. 2) Borrower should initiate the pledge by submitting the details of the securities to be pledged, the agreement number, and closure date of the pledge/hypothecation, pledgee's details, etc. in a standard format to DP. 3) A pledge transaction needs an identification which may be an agreement number. There can be any number of pledge/hypothetical transactions between the same set of pledgees and pledgors. Each transaction has to be identified separately by an agreement number and a separate set of instructions has to be given for each transaction done. 4) The DP verifies the form for completeness and validity and ensures that the securities to be pledged exist in the pledgors account. If it is not found in order, it is returned to the pledgor for correction. If the form is complete, the DP accepts it for processing and issues an acknowledgment to the pledgors and releases the order to NSDL. 5) Once a pledge/hypothecation request has been created, the details of the pledge/hypothecation are electronically communicated to DPM of pledgee's DP for confirmation. The lender must confirm the request through its DP. A DP after pledging the securities should inform the lender to confirm the request. 6) On being satisfied, the DP executes the order for accepting/rejecting the pledge/ hypothecation request in DPM. In the case of rejection by the pledgee, the DP enters reason for the rejection in specified form. Confirmation of the acceptance/rejection of pledge/hypothecation is electronically communicated to DPM of the pledgors DP. 7) In case the borrower is not able to re pay the amount, the lender has full rights to take over his accounts and the securities should be collected in the CM pool a/c and should be credited to lenders account.
PROCEDURE FOR CLOSING OF PLEDGE AFTER REPAYMENT OF LOAN:The pledgor submits an instruction in the prescribed form to its DP to initiate the closure of pledge/hypothecation. The DP, upon receiving such request, verifies the form for its completeness and validity and, if not found in order, returns it to the pledgors for rectification. If it is found to be in order, the DP accepts it for processing and issues an acknowledgment to the pledgors. 1) The details of the pledge/hypothecation closure request are communicated electronically through DM to the DPM of pledgee's DP for confirmation.
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2) The lender requires to furnish the details of the pledge/hypothecation closure requests received for confirmation to the lender. The pledgee then submits his acceptance/rejection of the closure request in the prescribed form. 3) The DP verifies the form for its completeness if found satisfactory DP will close the Pledge. 4) After satisfaction for closure of loan A/c, the lender has to issue closure certificate mentioning the details of the securities to be verified by borrower and also letter of acknowledgment to be accepted from borrower. 5) And in case if incompleteness is found then the request is rejected. reasons for rejection are as follows : Closure date not accepted Pledged quantity not accepted ISIN not accepted Security details not accepted Market value of pledged ISINs insufficient ISIN delisted from trading POA not received from all holders Holders not acceptable to the pledgee Agreement number differs from that on the agreement Others
PROCEDURE FOR DISTRIBUTION OF BONUS SHARES FOR PLEDGED SHARES:1. The holding as of the record date/book closure are considered for computing bonus entitlements. 2. The system checks whether pledge is still open or closed. 3. Where pledge orders are not closed/invoked or partially closed/invoked, the bonus entitlements are credited to the pledgors account with pledge marked in favor of the pledgee. 4. If the pledge is closed/invoked fully, the bonus entitlements will be credited to the pledgors account
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5.12 Corporate Actions: Corporate actions are events, affecting the rights, obligations and/or interests of the beneficial owners of the securities held in a depository. Events in corporate actions are interest, dividend, bonus shares, rights, splits, merger, redemption, payment of call money, liquidation etc. there are two types of corporate actions 1. Cash-corporate actions: - depository merely provides information to the Issuer about the persons entitled to receive corporate benefits. 2. Non-cash corporate actions:-depository may facilitate the distribution of corporate benefits. Since corporate actions affect the beneficial owners of the securities, it is important to determine the actual beneficial owner. Thus cut-off date is announced by the Issuer for the action. Such cutoff date is called record date/ book closure. Depository provide these details of the beneficial owners on the record date/ book closure to the Issuer company or its R&T Agent to enable the company to calculate the benefits accruing to such holdings.
Procedure for Corporate Actions: R&T Agent, informs NSDL about the proposed corporate action. NSDL informs all its DPs by e-mail about the corporate action, cut-off date and the procedure to be followed by the DPs and clients. On receiving such information, DPs ensure the changes in tax status, bank details, change of address etc. in the beneficial owners' accounts are updated. SEBI has advised that companies should mandatorily use ECS facility for distribution of dividends and other cash benefits to the investors. Where ECS facility is not available, companies may use warrants for distribution of dividends. If the benefits are in form of securities, the Issuer / its R&T Agent gives an option to all shareholders (including shareholders holding shares in physical form), to get securities allotted in electronic form or physical form. Issuer / its R&T Agent allot the securities and inform NSDL about allotment to beneficial owners. NSDL makes the credit entries in the accounts of the beneficial owners on a date requested by the Issuer / its R&T Agent. A statement of transactions is sent by the DP to the beneficial owners, to indicate the updated holdings after execution of the corporate action.
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5.13 Freezing of Accounts:

An action taken by a bank or brokerage that prevents any transactions from occurring in the account. Typically, any open transactions will be cancelled, and checks presented on a frozen account will not be honored. Account freezes can be initiated by either the account holder or a third party.
It is divided into four parts: Freeze for debits only Freeze for debits as well as credits Freeze for particular ISIN in the account Freeze a specific number of securities held in ISIN in an account 1) Freeze for debits only:An account holder can freeze account only for debits by submitting freeze instructions to DP. However during the freeze period the account holder can continue to receive credits like corporate action. 2) Freeze for debit as well as credit:An account holder can freeze account for credit as well as debit. This is done in case when the account holder is not using the account. 3) Freeze a particular ISIN in the account:An account holder may freeze a particular ISIN from being debited without freezing the whole account. All the other securities can be credited and debited but the security under the ISIN number will be frozen for debit. 4) Freeze a specific number of securities held under an ISIN in an account:An account holder may freeze a specific quantity of a specific security in an account.
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Chapter 6 Data analysis and interpretation Demographic profile:
GENDER
9% 37% MALE 63% FEMALE 29%
4%
AGE
20yrs -35yrs 36yrs -50yrs 58% 51yrs -65yrs above 65yrs
OCCUPATION
13% 39% 33% 15% Self Employes Govt. Employed Pvt. Employed Professionals
Monthly Income
11% 23% 25% Rs15,001 30,000 Rs.30,001 45,000 Above 45,000 Rs 0 - 15,000
41%
The survey was conducted in the selected performing branches of TJSB in the region of thane. Hence the respondents of the survey are customers of bank. So the population considered may not represent the actual population of India.
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QUESTIONNAIRE:
1) DO YOU HAVE A DEMAT ACCOUNT?
34% YES NO
66%
INTERPRETATION From the above pie chart we can observe that 34% of the respondents are having demat account which includes respondents having demat account in TJSB as well as other banks whereas 66% of the respondents dont have demat account. 2) ARE YOU AWARE ABOUT THE BENEFITS OF HOLDING SECURITIES IN DEMATERIALIZED FORM?
44% 56%
YES NO
INTERPRETATION
The pie-chart clearly indicates that the respondents who know about the benefits of holding securities in dematerialized form consist of 44 % while the respondents having no knowledge 56 %. Here we can observe that the awareness of the benefits of dematerialization is below satisfactory as it consists of only 44 % of the total respondents under survey. The remaining 56% should be made aware regarding the benefits of dematerialization as the bank can gain huge number of customers.
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3) WHAT ARE THE CHARGES YOU PAY FOR MAINTAINING DEPOSITORY ACCOUNT?
LESS THAN 200 200-300 42% 20% 300-500 24% 500 AND ABOVE
14%
INTERPRETATION
The above Pie Chart indicates that majority of the respondents i.e. 42% prefer charges less than 200 rupees for maintaining depository account while the respondents who prefer 200-300 rupees is 24%, the other results are like 20% respondents prefer paying 300-500 rupees and only 14% respondents prefer paying rupees 500 and above for maintaining depository account.
4) WHAT IS THE CRITERIA FOR OPENING DEPOSITORY ACCOUNT?
22%
TRADING FACILITY
54% 24%
LOW COST OF MAINTAINING ACCOUNT EASY ACCESSIBILITY
INTERPRETATION The pie chart shows that maximum number of respondents i.e. 54% of the respondents has selected criteria of trading facility. Hence TJSB should start trading facility to gain more and more customers. 24% of the respondents prefer criterion of low cost of maintaining account. TJSB fulfils this condition by keeping the lowest AMC charge as compared to other banks and 22% of respondents prefer easy accessibility.
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5) ARE YOU THAT TJSB HAS STARTED DEPOSITORY SERVICES?
31% YES
NO 69%
INTERPRETATION The above pie chart indicates that only 31% of the respondents are aware that TJSB is offering depository services and the rest 69% are not aware. In this case TJSB should advertise more about the offered depository services so that more people become aware of the services offered by TJSB. 6) WOULD YOU LIKE TO OPEN A DEPOSITORY ACCOUNT WITH TJSB?
26% YES NO 74%
INTERPRETATION The above pie diagram shows that 26% of the respondents would like to open depository account with TJSB whereas 74% would not open account with TJSB.
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7) ARE YOU AWARE THAT MUTUAL FUND UNITS CAN BE HELD IN DEMAT FORM?
37% YES NO 63%
INTERPRETATION The pie chart shows that 37% of the respondents are aware that mutual funds can be held in demat form and the rest 63% are not aware. 8) WOULD YOU LIKE TO CONVERT YOUR MUTUAL FUND UNITS INTO DEMATERIALISED FORM?
41% 59%
YES NO
INTERPRETATION The above pie diagram indicates that 41% of the respondents would like to convert their mutual funds into dematerialized form whereas 59% of the respondents would not like to convert. This is because many of the people are unaware of the benefits of dematerialization.
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9) RANK THE FOLLOWING REASONS FOR SELECTING THE DEMAT ACCOUNT SERVICES PROVIDED BY TJSB BANK?
GOOD SERVICES 7% 14% 34% LOW ANNUAL MAINTENANCE COST FREE ACCOUNT OPENING 21% 24% CONVENIENCE CREDIT WORTHINESS
INTERPRETATION
The above Pie chart shows that the most preferred reasons for having Demat account with TJSB Bank are good services, free account opening and low annual maintenance cost as 79% respondents has opted for the same while convenience and creditworthiness are having 14%and 7% preference respectively.
10) IF YOU DO NOT OPT FOR DEMAT ACCOUNT SERVICES PROVIDED BY TJSB BANKS THEN WHAT IS THE REASON BEHIND IT?
17%
LACK OF AWARENESS
54% 29%
NO INVESTMENT IN STOCK MARKET AND MUTUAL FUNDS OTHERS
INTERPRETATION
The pie-chart interprets that out of the respondents who do not prefer Demat services of the banks, 29% respondents do not prefer investment in the stock market, and other 54% are not fully aware of the Market. 17% respondents have other reasons such as they already have demat accounts in other banks which gives them trading facility as well.
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Chapter 7 Swot analysis Strength:

Timely meetings resulting in bank to stay up-to-dated Strong Coordination among team. Low AMC charges as compared to other banks. Well known in Thane. No minimum balance required to open demat a/c.
Weaknesses:
Bank doesn't have permission to give trading facility to demat account holders being a co-operative bank. Lack of awareness among the customers about dematerialization. Weak advertisement policies.
Opportunities :
Large untapped market. Opportunity to educate investors about their products & inspire them to invest more &encourage other. Chances of increase in customers (especially those interested in trading) due to tie-up with KARVY. Advertisements on television will help to attract more customers. Good Opportunity to Cash its Brand Image and People Trust.
Threats :
Low risk taker which may lead to loss of high returns. All others private sector banks. Presence of very strong competitors like Angel broking, Religare, sharekhan, Etc. Aggressive marketing by competitors.
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Chapter 8 Findings
TJSB bank is well known in Thane region. In this region it is the most preferred bank by the people. Hence there is a great potential for TJSB to develop. Other than that TJSB is expanding very fast. It has a huge number of branches. As it is in the expansion stage, with the help of proper advertisement it can enjoy a good customer base. Though TJSB has started demat services very late, with the low annual maintenance charges and good services it is gaining customers. Most of the respondents in thane region are not aware of demat and its benefits. It is a great opportunity for TJSB by making those customers aware of the benefits and let them know about the services offered by the bank. If somehow bank gains the permission of trading facility it will attract huge number of customers. As from the survey conducted it has been seen that 54% of the respondents prefer demat accounts in banks which provide with trading facility. Most of the customers prefer demat account in TJSB bank for its good service, low annual maintenance cost and free account opening. By further improving it services bank can gain huge no of customers.
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Chapter 9 Suggestion and recommendation

As many people are aware of the TJSBs name but are not aware of the services provided by the bank, proper advertisement should be made to spread awareness among the people. To attract more and more customers, advertisements should be made on televisions and print adds posters should be put near railway stations. More customers should be made aware of the benefits of dematerialization by keeping seminars in the branches for the customers of the bank. If people are not finding any spare time to convert their share electronically bank should approach to such people at their door step to open their demat account. As far as people preference regarding opening demat a/c is concerned, they mainly prefer factors such as trading facility, good service, low cost of maintaining account and free account opening. Bank should take care of such factors. Proper training should be provided to the Individual staffs about the services and its objective, because they are the main source to influence the customers. TJSB has old loyal customers having saving and current account in the bank. It should convince them to open demat account in the bank and make proper use of this resource. By concentrating on these issues TJSB can increase its growth and progress.
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Chapter 10 Conclusion
TJSB bank is still a growing bank. Its efforts of trying to provide customers with more services show that it can become a tough competitor to other private sector banks. It has become an example to all other co-operative sector banks by adopting this change. Though TJSB is new in demat field it is trying all its efforts to gain good results in this field. TJSB demat is constantly looking for new and innovative ideas through which they can satisfy the expectation of customers. The weekly meetings held in the demat department makes an involvement of each and every staff for progress of demat section by asking them for new ideas. The staff of the demat section put in their full efforts by bringing in customers to open demat account in TJSB. Once in a week they visit branches to gather lead for the bank. They have started spreading awareness among the customers about demat and its benefits. Due to their efforts many of the customers have been convinced to open demat account in TJSB. TJSB staff plays a very important role in the progress and growth of the bank. For a good staff, TJSB keeps trainings for its staff. The training provided to the staff, polishes their skills and makes their work done more effective and efficient. With the help of such hard working staff, new innovative ideas and the passion of fulfilling customers expectation TJSB is moving towards success and achievement.
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Source of information Books: NISM series 6: Depository operations certification examination workbook. Websites: www.tjsb.co.in http://en.wikipedia.org/wiki/Demat_account www.investopedia.com
Others: TJSB Demat Business Model Standard Operation Procedure of TJSB Bank Bank Circulars TJSBs Other Business Channels Staff for detailed interaction
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Questionnaire
1) Do you have a demat account? a. Yes b. No 2) Are you aware about the benefits of holding securities in dematerialized form? a. Yes b. No 3) What are the charges that you pay for maintaining depository account? a. Less than 200 b. 200 300 c. 300 500 d. 500 and above. 4) What is the criterion for opening a depository account? a. Trading facility b. Low cost of maintaining account c. Easy accessibility d. Other 5) Are you aware that TJSB has started depository services? a. Yes b. No 6) Would you like to open a depository account with TJSB? a. Yes b. No 7) Are you aware that mutual fund units can be held in demat form? a. Yes b. No 8) Would you like to convert your mutual funds units into dematerialized form? a. Yes b. No 9) Rank the following reasons for selecting the demat account services provided by TJSB bank? a. Low annual maintenance cost b. Free account opening c. Good services d. Convenience e. Credit Worthiness
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10) If you do not opt for demat account services provided by TJSB banks then what is the reason behind it? a. Lack of awareness b. No investment in stock market and mutual funds c. Inappropriate services and improper management d. Bad experience in the past e. Others
Personal details
Name of the customer:

Contact no: Gender: o Male o Female Age: a) b) c) d) 20 years 35 years 36 years - 50 years s 51 years - 65 years Above 65 years
Occupation: a) Self employed b) Government employee c) Private Industry employee d) Professionals Monthly Income: a) Rs. 0 - Rs. 15,000 b) Rs. 15,001 - Rs. 30,000 c) Rs. 30,001- Rs. 45,000 d) Above Rs. 45,000
****Thank You*****
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Demat Operations in Thane Janta Sahakari Bank - Prats FINAL

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A study of DEMAT OPERATIONS at TJSB bank --------------------------------------------------------------------------------------------------------------------------------------

Chapter 1 Introduction of the Project

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1.3 Importance of study:

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1.4 Research Methodology:

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Chapter 2 Company profile

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2.5 Board of Directors:

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2.6 Organization Chart

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2.8 Progress at Glance

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Major players in Demat

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WHAT ARE THE FUNCTIONS?

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Chapter 4 Demat services of tjsb

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4.2 Benefits of TJSB DEMAT:

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4.3 Types of activities involved in TJSB DEMAT:

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The working is as follows:

H.O Demat Section

Inword, Process Check, Account Opening

DPM, EDPM entries, upload/ download activity, DIS issue monitoring

Demat/ Remat and Transaction monitoring

House Keeping and marketing activities and MIS, stock keeping

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Chapter 5 Legal framework of demat and deskwork

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A study of DEMAT OPERATIONS at TJSB bank --------------------------------------------------------------------------------------------------------------------------------------

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