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
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:
– AN ANALOGY
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
Facilitates transfer without
having to handle money
Facilitates transfer of ownership
without having to handle securities
Facilitates safekeeping of
Facilitates safekeeping of
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
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.
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
• Reduction in transaction cost;
• No odd lot problem, even one share can
• 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
• Holding investments in equity and debt
instruments in a single account.
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.
the investor have to keep any minimum balance
of securities in his account?
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
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
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.
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
if there are any discrepancies in the statement
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).
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.
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
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
odd lot shares be dematerialised?
Yes, odd lot share certificates can also be
electronic holdings be converted back into physical
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
• 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
• Depository updates accounts and downloads
details to depository participant.
• Registrar dispatches certificates to
is the procedure for selling dematerialised
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
• 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
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.
is delivery instruction slip (DIS)? What precautions
do one need to observe with respect to Delivery
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
• 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.
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.
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.
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.
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
• 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
• 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
• Every month NSDL forwards statements of account
to a random sample of investors as a counter
• 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.