Good Morning Everyone.

Presenting you..
Depository system in India:
Its need
Process and

Progress
The Depositories Act,1996.
Introduction of Depository system in India.
Issue, hold & transact in securities through
depositories.
Two depositories operational i.e. NSDL & CDSL.
Securities dematerialized at time of issue or
subsequently.
Need for Depository system.
Immediate transfer of securities.
Reduced cost of transaction.
Elimination of risks related to physical securities.
Reduction in paper work..
Eliminating the need to intimating informational changes.
Consolidation of folios & instruments.
Faster & efficient services like transfer, transmission, receipt
of benefits, automatic credit of shares arising out of split,
consolidation & mergers.
Constituents of depository system
Depository
NSDL
CDSL
Depository participants (DP)
Banks, including foreign banks.
Financial institutions
Stock brokers
R&T Agents
Custodians
Clearing Corporations
Non Banking financial companies
Issuer / R&T Agent.
Beneficial owners.
 Bank Vs. Depository

Similarities Differences
Promoters Minimum balance requirement.
Services rendered Account holder Vs. BO.
Central offices & Branches Use of Funds/ Securities.
Customer identity verification
Fee for services
Transfer of (funds/ securities)
Periodic statements
Nomination facility
Operation of account.
Debiting of account
Inter Bank/ depository transfers.
Processes..
Dematerialization
Rematerialization
Initial public offers
Trading & settlements.
On Market transactions
Off market transactions
Inter Depository transactions
Dematerialization Process

Physical Securities Electronic Form.

Pre-requisites:

Demat Account with any DP of the Depository.

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

BO DP
7. Statement of holding

3. DRF with
6. Credits 2.Electronic
certificates
In BOs request
A/c

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

1. RRF in duplicate

BO DP

3. RRF with
other Doc.s, 2. Enters
6.Dispatch
if any. details
-es 5.Debits
certificate in BOs in system
A/c

4.Confirms E-request. Depository

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

4. Details of allotment.

5.Credit
securities

6. Intimation of allotment

BO

1.Application for allotment

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

For execution of Off Market Transactions.

For settling On Market Transactions.
For Inter depository transactions.
Off Market Transactions
Transaction done on person to person basis without going
through stock exchange mechanism.

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

Both A/cs are with same Depository though with different

DPs.
Neither buyers A/c nor sellers A/c is with clearing house/
clearing corporation.
Off Market Transactions (Contd.)

1. Filled delivery instruction slip (DIS)

Seller
BO DP
4. Debits Securities.

2.Enters
Off mkt.
3.Transaction Transaction
5.Credits
Securities. ID generated In depositorys
System.

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

Debit/ credit instructions have to given on inter-depository

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

Particulars CDSL (updated NSDL (Updated

on 31st Aug09)` on 29th Aug09)
Companies 6313 7847
Depository 480 282
participants
DP service 6474 9725
centers
Investors A/cs 59,21,904 1,00,33,692
(excl.Closed
accounts)
Looking Forward.
Depository services to consolidate further.
All scrip to be issued, held, traded and settled in Demat form.
Banks would evince interest in extending loan against Demat
securities.
Improved infrastructure.
Simplification of operations & removal of barriers.
Government securities admitted to NSDL.