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What is a Depository?
How is a depository similar to a bank?

How many Depositories are registered with SEBI?
Who is a Depository Participant?
What are the benefits of availing depository services?
Can multiple accounts be opened?
Does the investor have to keep any minimum balance of securities in his account?

Is it necessary to have account with the same DP as broker has?
What is required to be done if one has physical certificates with the same combination of names, but the sequence of names is different i.e. some certificates with ‘A’ as first holder and ‘B’ as second holder and other set of certificates with ‘B’ as first holder and ‘A’ as the second holder?
Can an investor operate a joint account on "either or survivor" basis just like a bank account?

Can an investor close his demat account with one DP and transfer all securities to another account with another DP?
What if there are any discrepancies in the statement of holdings?
What is dematerialisation?

How can one convert physical holding into electronic holding i.e. how can one dematerialise securities?
What is an ISIN?
Can odd lot shares be dematerialised?
Can electronic holdings be converted back into physical certificates?

What is the procedure for selling dematerialised securities?
What is delivery instruction slip (DIS)? What precautions do one need to observe with respect to Delivery Instruction Slips?
Who can nominate?

Who can be a nominee?
In the event of death of the sole holder, how the successors should claim the securities lying in the demat account?
HOW SAFE ARE YOUR SHARES IN DEMAT ACCOUNT WITH US?




What is a Depository?


A depository is an organisation which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities.

How is a depository similar to a bank?

It can be compared with a bank, which holds the funds for depositors. A Bank – Depository analogy is given in the following table:

BANK-DEPOSITORY – AN ANALOGY
BANK
DEPOSITORY
Holds funds in an account
Holds securities in an account
Transfers funds between accounts on the instruction of the account holder Transfers securities between accounts on the instruction of the BO account holder
Facilitates transfer without having to handle money Facilitates transfer of ownership without having to handle securities
Facilitates safekeeping of money Facilitates safekeeping of securities




How many Depositories are registered with SEBI?

At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI.

Who is a Depository Participant?

A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services. Public financial institutions, scheduled commercial banks, foreign banks operating in India with the approval of the Reserve Bank of India, state financial corporations, custodians, stock-brokers, clearing corporations /clearing houses, NBFCs and Registrar to an Issue or Share Transfer Agent complying with the requirements prescribed by SEBI can be registered as DP. Banking services can be availed through a branch whereas depository services can be availed through a DP.


What are the benefits of availing depository services?

The benefits are enumerated below:-


• A safe and convenient way to hold securities;
• Immediate transfer of securities;
• No stamp duty on transfer of securities;
• Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.
• Reduction in paperwork involved in transfer of securities;
• Reduction in transaction cost;
• No odd lot problem, even one share can be traded;
• Nomination facility;
• Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;
• Transmission of securities is done by DP eliminating correspondence with companies;
• Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.
• Holding investments in equity and debt instruments in a single account.

Can multiple accounts be opened?

Yes. An investor can open more than one account in the same name with the same DP and also with different DPs. For all the accounts, investor has to strictly comply with KYC norms including Proof of Identity, Proof of Address requirements as stipulated by SEBI and also provide PAN number. The investor has to show the original PAN card at the time of opening of demat account.


Does the investor have to keep any minimum balance of securities in his account?

No.


Is it necessary to have account with the same DP as broker has?

No. Depository / DP can be chosen by investor as per convenience irrespective of the DP of the broker.



What is required to be done if one has physical certificates with the same combination of names, but the sequence of names is different i.e. some certificates with ‘A’ as first holder and ‘B’ as second holder and other set of certificates with ‘B’ as first holder and ‘A’ as the second holder?

In this case the investor may open only one account with ‘A’ & ‘B’ as the account holders and lodge the security certificates with different order of names for dematerialisation in the same account. An additional form called "Transposition cum Demat" form will have to be filled in. This would help you to effect change in the order of names as well as dematerialise the securities.



Can an investor operate a joint account on "either or survivor" basis just like a bank account?

No. The demat account cannot be operated on "either or survivor" basis like the bank account.

Can an investor close his demat account with one DP and transfer all securities to another account with another DP?

Yes. The investor can submit account closure request to his DP in the prescribed form. The DP will transfer all the securities lying in the account, as per the instruction, and close the demat account.

What if there are any discrepancies in the statement of holdings?

In case of any discrepancy in the statement of holdings, investor can contact his DP and in case of discrepancies in corporate benefits, one can approach the company / its Registrar and Transfer Agent. If the discrepancy is not resolved, the investor may approach concerned Depository (NSDL or CDSL).

What is dematerialisation?

Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited into the BO’s account with his DP.


How can one convert physical holding into electronic holding i.e. how can one dematerialise securities?

In order to dematerialise physical securities one has to fill in a DRF (Demat Request Form) which is available with the DP and submit the same along with physical certificates that are to be dematerialised. Separate DRF has to be filled for each ISIN. The complete process of dematerialisation is outlined below:


• Surrender certificates for dematerialisation to your DP.
• DP intimates to the Depository regarding the request through the system.
• DP submits the certificates to the registrar of the Issuer Company.
• Registrar confirms the dematerialisation request from depository.
• After dematerialising the certificates, Registrar updates accounts and informs depository regarding completion of dematerialisation.
• Depository updates its accounts and informs the DP.
• DP updates the demat account of the investor.

What is an ISIN?

ISIN (International Securities Identification Number) is a unique 12 digit alpha-numeric identification number allotted for a security (E.g.- INE383C01018). Equity-fully paid up, equity-partly paid up, equity with differential voting /dividend rights issued by the same issuer will have different ISINs.

Can odd lot shares be dematerialised?

Yes, odd lot share certificates can also be dematerialised.


Can electronic holdings be converted back into physical certificates?

Yes. The process is called rematerialisation. If one wishes to get back his securities in the physical form he has to fill in the RRF (Remat Request Form) and request his DP for rematerialisation of the balances in his securities account. The process of rematerialisation is outlined below:


• Make a request for rematerialisation.
• Depository participant intimates depository regarding the request through the system.
• Depository confirms rematerialisation request to the registrar.
• Registrar updates accounts and prints certificates.
• Depository updates accounts and downloads details to depository participant.
• Registrar dispatches certificates to investor.



What is the procedure for selling dematerialised securities?

The procedure for buying and selling dematerialised securities is similar to the procedure for buying and selling physical securities. The difference lies in the process of delivery (in case of sale) and receipt (in case of purchase) of securities.

In case of purchase:-
•The broker will receive the securities in his account on the payout day.
• The broker will give instruction to its DP to debit his account and credit BO's account.
• BO will give ‘Receipt Instruction’ to DP for receiving credit by filling appropriate form. However BO can give standing instruction for credit to his account that will obviate the need of giving Receipt Instruction every time.

In case of sale:-
BO will give delivery instruction through Delivery Instruction Slip (DIS) to DP to debit his account and credit the broker’s account. Such instruction should reach the DP’s office at least 24 hours before the pay-in, failing which, DP will accept the instruction only at the BO’s risk.




What is delivery instruction slip (DIS)? What precautions do one need to observe with respect to Delivery Instruction Slips?

To give the delivery one has to fill a form called Delivery Instruction Slip (DIS). DIS may be compared to cheque book of a bank account. The following precautions are to be taken in respect of DIS:-


• Ensure and insist with DP to issue DIS book.
• Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the DIS booklet issued to investor.
• Ensure that your account number [client id] is pre-stamped.
• If the account is a joint account, all the joint holders have to sign the instruction slips. Instruction cannot be executed if all joint holders have not signed.
• Avoid using loose slips.
• Do not leave signed blank DIS with anyone viz., broker/sub-broker, DPs or any other person/entity.
• Keep the DIS book under lock and key when not in use.
• If only one entry is made in the DIS book, strike out remaining space to prevent misuse by any one.
• BO should personally fill in target account-id and all details in the DIS.
• If the DIS booklet is lost / stolen / not traceable, the same must be intimated to the DP immediately in writing. On receipt of such intimation, the DP will cancel the unused DIS of the said booklet.

Who can nominate?

Nomination can be made only by individuals holding beneficial accounts either singly or jointly. Non-individuals including society, trust, body corporate, karta of Hindu Undivided Family, holder of power of attorney cannot nominate.

Who can be a nominee?

Only an individual can be a nominee. A nominee shall not be a society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family or a power of attorney holder.

In the event of death of the sole holder, how the successors should claim the securities lying in the demat account?

The claimant should submit to the concerned DP an application Transmission Request Form (TRF) along with the following supporting documents


1. In case of death of sole holder; where the sole holder has appointed a nominee
   • Notarised copy of the death certificate
2. In case of death of the sole holder; where the sole holder has not appointed a nominee
   • Notarised copy of the death certificate

And anyone of the below mentioned documents -
   • Succession certificate
   • Copy of probated will
   • Letter of Administration

The DP, after ensuring that the application is genuine, will transfer securities to the account of the claimant.

The major advantage in case of dematerialised holdings is that the transmission formalities for all securities held with a DP can be completed by interaction with the DP alone, unlike in the case of physical share certificates, where the claimant will have to interact with each Issuing company or its Registrar separately.




HOW SAFE ARE YOUR SHARES IN DEMAT ACCOUNT WITH US?

You may be worrying about the safety of your shares in your Demat Account maintained with us. There is no reason to worry.

Some of the security measures taken by NSDL / SEBI to ensure safety of your Demat holdings are :

• NSDL requires every Depository Participant (DP) to maintain a minimum net worth and does not allow it to hold, in aggregate, more than 100 times in value of shares/securities with it.
• DPs cannot effect any debit and/or credit or any other change to your account without a written instruction from you.
• All DPs are subject to periodic inspections of their activities by NSDL.
• Your shares remain in the safe custody of NSDL and not with the DPs. DPs are just an interface to enable you to operate your Demat Accounts.
• All transactions are recorded in the Central System of NSDL as well as in the databases of DPs. In case of failure of a DP’s database the same can always be recovered from the NSDL Central System.
• Every month NSDL forwards statements of account to a random sample of investors as a counter check measure.
• In the Depository System, the depository holds the securities of investors on trust. Thus, even if the DP goes bankrupt, chances of which are very remote, creditors of the DP will have no access to the investors’ holdings maintained with the DP. Investors, in such a case, can transfer their holdings to an account held with another DP, free of cost.
• NSDL requires each and every DP to have personnel who are qualified in the Depository Operations module. This ensures that investors get the best quality of services.
• DPs are required to resolve grievances of investors promptly, failing which the investors can approach NSDL itself.
• The whole Depository System is insured. Thus if a DP fails to compensate the investor for any fault of the DP, the investor gets itself compensated by NSDL.
• The hardware, software and communication systems used by NSDL and its business partners conform to industry standards and are subjected to rigorous testing before being accepted, thus minimizing the chances of any error or failure.

All the above measures, and there are many more, are stipulated / undertaken by NSDL to protect the interests of its investors. The aforesaid are equally applicable to all the DPs under NSDL irrespective of whether they are being managed by banks or private bodies. NSDL assures you the safety and integrity of your holdings with it.

 

 

 


 

 


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