Vous êtes sur la page 1sur 11

NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL) INTRODUCTION: To overcome various operational difficulties delay in transactions, increase in cost of transactions,

NSDL was established. NSDL is an organization promoted by IDB I, the UTI, and NSE of India limited. OBJECTIVE: To provide electronic depository facilities for securities traded in the equity and debt market Origin: The depository's ordinances promulgated by the government of India in September 1995 enabled the setting up of the multiple depository system. The SEBI issued the guide lines for depositories in Mayl996. The bill was passed by the parliament in July 1996. NSDL was registered by SEBI on 7th June 1996. Functions: NSDL performs the following function through its various participants. 1. Enables surrender and withdrawal of securities to and from the depositary. 2. Maintains investor's holdings in the e form 3. Effects settlement of securities traded on exchanges; 4. Carries . out settlements of traders that have not been done on

the stock exchanges.

Structure: 1. NSDL DP can be a publicity Bank, Custodian , Registered stock broker, or a NBFC subject to a approval from the depository company and the SEBI. 2. Brokers and NBFC's are required to nave a minimum net worth of Rs50 lakhs. 3. DP has to pay a security deposit of Rs 10 lakhs and admission fee of Rs25000 to NSDL. 4. NSDL operates, on two tyre structures where in it maintains accounts of its DP and DP's maintain the;, accounts of their clients. With the help of the continuous electronic connectivity reconciliation of all accounts is done on daily basis to balance the number of stock if sued and dematerialized. 5. At present the national securities clearing corporation of NSE participate in the functioning of NSDL. The SEBI has now. Made it mandatory for all the stock exchanges to have clearing corporations.

Transactions of NSDL: They generally into two categories - new issues allotees, secondary market transactions. Transfer of shares of one mode to another mode is involved. In the first case the broker has to withdraw from the account mode into, physical mode to keep the shares ready for delivery. In the second event the seller has to convert the physical mode of securities into deposit account by opening an account or by utilizing the account of another broker.

DEMAT AND REMAT SERVICE CHARGES: The stamp duty of 0.50% payable in paper based system is eliminated in the Demat environment. The DP's charge on an average 0.15% of the market price of the stock per annum as custodial charges. The DP's have to pay 0.035% to NSDL. These custodial charges vary from one DP to another. The transaction charges which range fromO.02 to 0.15% on buy transactions and from 0 to 0.12% on sell transactions. Apart from custodial charges there are account opening up to Rs 1000 charged by some DP's.

ADVANTAGES TO THE INVESTOR: 1. Depositing the securities with 1MSDL would give freedom from the worry of loss of share certificates through theft, mutilation due to careless handling, fire, etc. 2. In selling shares the paper work required is reduced to 'a minimum. Investors also prefer to buy shares that are already in the depository mode 3. The investor can become the owner of the shares-within a day of the settlement being completed, if the shares bought are in depository mode. 4. There is no need to apply to the company for registering the share in the name of investors. 5. There is no fear of any fake or stolen shares being delivered to the investor. There is no possibility of loss or theft when the share certificates are posted to the company.

REMATERIALIZATION: Sometimes the investors may like to convert his electronic holdings into physical share certificates. The process undertaken for this purpose is called dematerialization. The investor has to make request to the depository participant for dematerialization. Rematerialization is optimal on the part of investor and can be done on the request of investor, any time after the same have been rematerialized.

STEPS: 1. Investor request the DP for Rematerialization. 2. The DP informs it to the NSDL. 3. NSDL intimates the Registrar; 4. The registrar of the company prints certificates with new numbers and

informs NSDL. 5. NSDL adjusts its account and passion the details to the DP. '

6. The certificates are dispatched to the investor Rematerialization, the certificate has a new range of certificates numbers and the new folio number

DEMATERIALIZATION Dematerialization is a process in which the physical certificate of an investor is taken back by the company. The registrar destroys the shares and equivalent number of shares as credited in the electronic holdings of the investor. This is done at the request of the investor.

STEPS: 1) a.
b. c. d.

Surrendering of certificate to depository participants for dematerialization.

NSDL is informed by the DP through electronic connectivity. Original share certificates are submitted to registrar by DP. The request for dematenalization from NSDL to the registrar The registrar credits an equivalent number of shares in the account and informs NSDL.

e. f.

The "NSDL updates its own account and depository participants are informed. The depository agent credit it in the account of the investor and the same is informed to the investor.

DEPOSITORY SYSTEM Depository is an entity which holds securities in the form of electronic accounts, in same way as a bank holds money Central depository services (India) limited(CDS) was conceived of and set up as the second depository to meet the objective of the depository act(1996). CDS secured its certificate for commencement of business on 8-21999, from SEBI. It has been promoted by the BSE and Bank of India. Objectives of CDS: 1. To accelerate the growth of script less trading. 2. To make a in 3. To major thrust in the individual investor's participation

the .depository system. create a competitive environment .and is responsive to

user's interest and demands. 4. To enhance the liquidity, Functions performed by depository: a. b. c. To enable demit and remit of eligible securities To provide for disbursement of corporate benefits to the beneficial owners. To affect settlement of securities traded on the exchanges as well

as off-market trades through book entry transfers, d. e. To facilitate pledging\ hypothecation of eligible securities at a later stage. To provide for securities lending and borrowing when the legal permits.


Advantages of depository: a. b. c. It is faster, and delay in transfer of securities is eliminated . It avoids a lot of paper work There is no stamp duty on transfers so the buyer gets the exemption from stamp duty on transfer of securities. d. e. There are simultaneous payment and delivery instructions. The issuer company can at any time ascertain the principles of the share holding pattern to keep a watch on takeover threats. f. The company can substantial amount which it is spending oil printing certificates, postage expenses and legal compliances. g. The issuer company is benefited by waiver of duty on the value of securities as it is not required to affix stamps for duty on certificates. Disadvantages of depository: a. Multiple depository system rises the problem of co-ordination between

different accounts of a single individual and deduction TDS and other security dues. b. c. It may increase the number of traders It may increase the threat of corporate takeovers since the company management may not come to know of the transaction taking place at the depository.

Depository participants: a. DP is the agent of the! "Depository and the interface between the depository and the investor. (SHCl is the first DP registered with NSDL in India). b. A DP is responsible for maintaining the securities account of the investor and handling in accordance with the investor's instructions. c. The DP should carry out transaction relating to the depository only through the USER. Hardware system located at approved locations of the office of the DP. d. Each DP should have a unique identification number provided by the DP called the BP ID. e. The depository should operate on all days except Sundays and such holidays as the depository may declare from time to time. f. The depository should announce the normal working hours for every calendar year in advance Constituents of depository system:
1. Issuers or company 2. Issuer registrar 3. Depository participants 4. Clearing members 5. Stockbrokers 6. Investors 7. Clearing corporations

Legal frame work: (Depository in India) It is regulated by 1) The depositories act 1996 2) The SEBI (depositories and participants) regulations, 1996. 3) Bye laws of depository 4) Business rules of depository 5) Certain provisions of the Companies Act 1956, the Indian Stamp act 1899, SEBI Act 1992, Securities contract (regulation)Act l956, Benami transaction( prohibition ) Act l988, Income tax act 1961, Bankers books evidence act 1891.

Legal linkage:

Responsibility of DP: The participant should be accountable for the functions executed by the depository of behalf of the participants and should indemnify the depositor against any losses or costs arising out of the same.

Operational procedure: The operational procedure to followed by the issuer in the depository system are as follows.
1) Dematenalization 2) Rematerialization 3) Beneficial owner's reporting( investor) 4) Reconciliation of records.

Accounts with DP: The investor intending to hold securities in the electronic in a depository system should open an account with a DP. In-fact there are 4 categories of accounts a DP will maintain 1. Beneficiary account 2. House account 3. Clearing account 4. Own clearing account Investor-DP: The DP may advertise the services offered by them, once they registered. The investor can choose any DP of his choice and fill up an account opening form. Reasonable charges are received by the depositories for the opening of accounts and every transaction in the accounts. The investor receives a pass book or a statement of holdings, just like the bank pass book from the DP. The statements of holdings is dispatched to the investor periodically. The investor can contact the DP for any disparity in the statement of holding. If the discrepancy cannot be resolved the DP level he could approach NSDL or CDSL for clarification. There is absolutely no restriction with the number of DP's the investor can open accounts.