The Depository System

The Depository System

NSDL

Contents  Indian

Capital Market  Need of Depository System  The Depository System  NSDL & its business partners  Depository-Bank --an analogy  Depository-Bank --the differences  Functions of Depository System  Benefits of Depository System

Overview of Indian Capital Market Financial Market Money Market Unorganized Organized RBI as regulator

Capital Market Primary (IPO) Secondary

(NSE & BSE)

SEBI as regulator

Need of Depository System  Time

consuming trading system

 Inefficient  Risk

system of transfer of ownership

of theft, forgery & mutilation of securities

 Time

consuming & costlier settlement

The Depository System 

Operations regulated by Depository Act 1996 and SEBI rules



Solved the problems by

d.

Making securities freely transferable Dematerialization in depository mode Ownership record in book entry form

e. f.

NSDL and Its Business Partners  National

Securities Depository Limited

 Depositories  Issuers

participants

and R&T agents

 Clearing

Corporations\ Clearing House

Depository-Bank -- An Analogy Bank

Depository

Holds Funds in accounts

Holds Securities in accounts

Transfer funds between accounts

Transfer securities between accounts

Transfers without handling cash

Transfers without handling physical securities

Safekeeping of money

Safekeeping of securities

Depository- Bank --The Difference Bank

Depository

Either of holder can sign instructions

All joint holders to sign instructions

Minimum balance to be maintained

No minimum balance required

Entitled for interest

Interest can be earned only by participating in stock lending schemes

Uses balances in accounts

Does not move balances in account without account holders authorization

Nomination is kept confidential

Signature and photograph of nominee to be provided

Functions Of Depository System  Dematerialization  Account

transfer  Transfer and Registration  Corporate actions  Pledge and hypothecation  Linkages with clearing systems

Benefits of Depository System  

  

 

Elimination of bad deliveries Immediate transfer and registration of securities Faster settlement cycle Buyer is secured Reduction in rate of interest on loans Periodic status report Reduction in handling of huge volumes of paper



 





Elimination of all risks associated with physical certificate No stamp duty Reduction in transaction cost and brokerage Elimination of problems related to nomination Convenient consolidation of accounts and portfolio monitoring

PRABHASH ANAND