A Project Report on Customer Satisfaction towards Depository Participants at Karvy

A Study of Customer Satisfaction towards Depository Participants

EXECUTIVE SUMMARY

Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals in shares. Apart

from security broking Karvy is in to Demat services, Mutual fund and Insurance services.

It offers a wide range of financial services in order to meet different individuals financial

planning.

The project emphasizes on “Customer satisfaction towards depository participants”

Objectives of the Study:

To know the function of DP.

To know the percentage of have satisfied the service of DP.

To know how demat account is helping in the trading

To know the exception of the customer.

To know the loops and draw backs of DP.

Research Methodology:

Data source:

Primary Data: Through Questionnaire

Secondary Data: Karvy’s Record & Report, Magazine & Websites. Sample size: 100 customers of Karvy Stock Broking Ltd.

Area Covered for research: Only Dharwad KARVY customers.

Sampling Procedure: Random sampling method from available database.

In the present scenario the service industry has given an utmost importance of doing a

particular task at a fastest time in order to satisfy the customer and to attract new customer.

In this project we can find out the customer of Karvy Consultant have satisfied with demat

Babasabpatilfreepptmba.com Page. No1

http://www.karvy.com/bottom.asp


service and this DP is overcoming the disadvantages of the physical trading of the

securities in the stock exchange.

Findings:

Findings:

1) I have carried out this exercise on Dematerlisation. So in my studies I have tried to see

whether the customer have satisfied the service given by depository participants.

2) I have also seen that awareness of KARVY service given by Karvy finical consultant is

from mainly through Agents is less than friends .

3) It is also find that more than 84% of the respondent have satisfied with the service of

demat.

4) It is also find that more than 55% to 60% of the respondent has satisfied with the service

of Freezing/ Defreezing and loan against share. More than not aware abut these services.

5) Also found that nearly 2% of the respondents are dissatisfied with bill Acceptance.

6) 5% Improper format of Holding/Transaction statement and 4% Frequently reminders are

given to karvy consultant ltd., for update the information Are Dissatisfied .

7).38% of respondent feel tariff structure of Karvy Stock Broking Ltd charged is high and

very high.

8) Also find that 53% respondent have satisfied 80% of the service

9). 35% of respondent prefer Karvy Stock Broking Ltd as DP to other DP because of

Quality service. And 40% for safety service.




Introduction

India has two hundred years old tradition in Securities. Infact that first India stock

exchange established in Bombay is the oldest in Asia. The earliest security dealings were

Transactions in loan securities of East India Company, the dominant institution of those

days. Corporate Shares came into the picture by 1830’s and assumed significance with the

Companies Act of 1956. In 1887 the broker community gave birth to the “Native share and

stock brokers Association” which is now known as the Bombay Stock Exchange.

The Indian Capital grew at a very moderate rate from 1951 to 1980. However it registered

an impressive growth in 1980s. the process of liberalization and the transparency in

operation has raised the interest of foreign investors in India. Till 1978 there were only 8

recognized exchanges in India. Initially the exchange operated on an outcry system i.e.

manual system of trading Due to increase in the trading volumes, the number of issuer

increased substantially, and the birth of NSES highly transparent automated system come

into existence Even then there was an increase in paper work causing a gridlock at every

stage in the stock market This delays the clearance and settlement of traders, registration of

securities in the shareholder name and due this it increased the back office paper work

intermediaries These outdated systems have increased settlement risks and have rendered

the implementation of a delivery of a versus payment system impossible. National Stock

Exchange of India Limited to provide electronic depository facilities for securities traded

in the equity and the debt market. NSDL commenced its operations in the year 1996 and is

the first depository in India.




Design of the studyTile of the project:

“Service Analysis & Customer satisfaction towards Depositary participants”.

Statement of the Problem: KARVY STOCK BROKING Ltd is providing the Demat

service. Hence in this report an attempt is made to know the present customer satisfaction

towards depository participants.

RESEARCH OBJECTIVES:

To know the function of DP.

To know the percentage of have satisfied the service of DP.

To know how demat account is helping in the trading

To know the exception of the customer.

To know the loops and draw backs of DP.

.

Methods and Methodology

Sampling Design:

Sampling since segment wise investors in KARVY STOCK BROKING Ltd were

available the overall customers were considered for the study. Hundred Percent

coveraged.. Hence random sampling survey method was adopted for the purpose of

the study.

Sampling Size: A sample of 100 was chosen for the purpose of the study. Sample

consisted of small investor, large investors and traders of KARVY STOCK

BROKING Ltd.




Sampling Procedure: From large number of customer of KARVY STOCK

BROKING Ltd. Were randomly selected from the available customer database.

Field Study: Directly approached respondents.

DATA COLLECTION METHOD:

1. PRIMARY DATA: For a study of this nature primary data is collected

through Questionnaire.

2. SECOUNDARY DATA: This is been is collected through Karvy’s

Record & Report, Magazine & Websites.

MEASUREMENT TECHNIQUE:

For this purpose measurement technique used for survey is questionnaire

to collect information from the respondent

ANALYTICAL TECHNIQUE:

Statistical technique used for measuring the response is in terms of

percentage.

Limitation of study

Since Sample size is only 100 all Hundred customers are approached .

Since segment wise investor is available in KARVY STOCK BROKING Ltd.

Overall concept is taken for the study.

Information is partly based on secondary data and hence the authenticity of the

study can be visualized and is measurable.

Level of accuracy of the results of research is restricted to the accuracy level with

which the customers have given their answers and the accuracy level of the answers

cannot be predicted.




BACKGROUND

Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows

freely towards attaining diverse goals of the customer through varied services. Creating a

plethora of opportunities for the customer by opening up investment vistas backed by

research-based advisory services. Here, growth knows no limits and success recognizes no

boundaries. Helping the customer create waves in his portfolio and empowering the

investor completely is the ultimate goal.

KARVY, is a premier integrated financial services provider, and ranked among the

top five in the country in all its business segments, services over 16 million individual

investors in various capacities, and provides investor services to over 300 corporate,

comprising the who is who of Corporate India. KARVY covers the entire spectrum of

financial services such as Stock broking, Depository Participants, Distribution of financial

products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities

Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance,

placement of equity, IPOs, among others. Karvy has a professional management team and

ranks among the best in technology, operations and research of various industrial

segments.

The birth of Karvy was on a modest scale in 1981. It began with the vision and

enterprise of a small group of practicing Chartered Accountants who founded the flagship

company…Karvy Consultants Limited. We started with consulting and financial




accounting automation, and carved inroads into the field of registry and share accounting

by 1985. Since then, we have utilized our experience and superlative expertise to go from

strength to strength…to better our services, to provide new ones, to innovate, diversify and

in the process, evolved Karvy as one of India’s premier integrated financial service

enterprise.

Thus over the last 20 years Karvy has traveled the success route, towards building a

reputation as an integrated financial services provider, offering a wide spectrum of

services. And we have made this journey by taking the route of quality service, path

breaking innovations in service, versatility in service and finally…totality in service.

Our highly qualified manpower, cutting-edge technology, comprehensive infrastructure

and total customer-focus has secured for us the position of an emerging financial services

giant enjoying the confidence and support of an enviable clientele across diverse fields in

the financial world.

Over the years we have ensured that the trust of our customers is our biggest

returns. Factors such as our success in the Electronic custody business has helped build on

our tradition of trust even more. Consequentially our retail client base expanded very fast.

Our values and vision of attaining total competence in our servicing has served as the

building block for creating a great financial enterprise, which stands solid on our fortresses

of financial strength - our various companies.

With the experience of years of holistic financial servicing behind us and years of

complete expertise in the industry to look forward to, we have now emerged as a premier

integrated financial services provider.




And today, we can look with pride at the fruits of our mastery and experience –

comprehensive financial services that are competently segregated to service and manage a

diverse range of customer requirements.

GROUP OF COMPANIES

KARVY SECURITY LTD

Deals in distribution of various investment products, viz, equities,

Mutual fund, bounds debenture fixed deposits, insurance policies & other financial

products

Member –Hyderabad stock Exchange (HSF)

KARVY STOCK BROKING LTD.

Deals in buying & selling equity shares & debenture &on the national stock

exchange (NSE), the Hyderabad stock exchange & over the counter exchange of

India (OTCEI)

Member-national stock exchange (NSE)

KARVY CONSULTANTS LTD

Transfer agency services for corporate & mutual funds

Registrar for IPO\book building

Depositary participant services

Registered with both NSDL/CDSL

It enable services –MT/call center /data classification

Karvy .com comprehensive financial advisory site




KARVY INVESTER SERVICES LTD.

Deals in issue management, investor banking & merchant banking of fixed

income & other financial products.

Trading through BSE

DEPOSITARY SEVICES

Registered as DP both with NSDL & CDSL

Serving over 2 lac investors

Online connectivity at Hyderabad, Lucknow &Bangalore

Ranked among the top 5 DPS in the country

High synergy with registry & broking activities for higher services levels to

the customer information

Web based customer information

Provision of service in over 75 locations

IT SERVICES GROUP

1.Medical transcription

First strategic initiative into global processing

Among the top MT companies in India

2.E-BUSINESS GROUP

Strategic intent: to develop a comprehensive financial services portal

which includes

Investor servicing: mutual funds, corporate shareholders & depository

clients.

Distribution of financial products




Net trading

Insurance distribution

1. Call center

2. Started with a 30 agent e-call center

MISSION

Our mission is to be a leading, preferred service provider to our customers, and we aim to

achieve this leadership position by building an innovative, enterprising and technology

driven organization which will set the highest standards of service and business ethics.

QUALITY POLICY

To achieve and retain leadership, Karvy shall aim foe complete

customers satisfaction, by combining its human and Technological resources, to provide

superior quality financial Services. In the process, Karvy will strive to exceed Customer’s

expectations.

QUALITY OBJECTIVES

As per the Quality Policy, Karvy will:

1. Build in- house process that will ensure transparent and harmonious

relationship with its clients and investors to provide high quality of

services.

2. Establish a partner relationship with its investor service agents and

vendors that will help in keeping up its commitments to the customers.

3. Provide high quality of work life for all its employees and equip them

with adequate knowledge &skills so as to respond to customer’s need.




4. Continue to uphold the values of honesty & integrity and strive to

establish unparalleled standards in business ethics.

5. Use state –of – the art information technology in developing new and

innovative financial products and services to meet the changing needs of

investors and clients.

6. Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions in making a

judicious choice of it. Strive to keep all stake- holders (shareholders,

clients, investors and regulatory authorities) proud and satisfied.

Achievements

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

ISO 9002 certified operations by DNV

Among top 10 Investment bankers

Largest Distributor of Financial Products

Adjudged as one of the top 50 IT uses in India by MIS Asia

Full Fledged IT driven operations




Milestone




ORGANISATION CHART

Managing Director

Chief Managing Director

Vice-President Vice-President Vice-President Vice-President

Karvy Karvy Karvy Karvy Securities Stock Broking Consultants Investors Services Ltd. Ltd. Ltd. Ltd.

Deputy Deputy Deputy Deputy General General General GeneralManager Manager Manager Manager

Senior Senior Senior SeniorManager Manager Manager Manager

Branch Manager

N number of Team Leaders

N number of Executives




INTRODUCTIONDematerialization or "Demat" is a process whereby your securities like shares,

debentures etc, are converted into electronic data and stored in computers by a Depository.

Securities registered in your name are surrendered to depository participant (DP) and these

are sent to the respective companies who will cancel them after "Dematerialization" and

credit your depository account with the DP. The securities on Dematerialization appear as

balances in your depository account. These balances are transferable like physical shares.

If at a later date, you wish to have these "Demat" securities converted back into paper

certificates, the Depose Depository functions like a securities bank, where the

dematerialized physical securities are traded and held in custody. This facilitates faster,

risk free and low cost settlement.

In order to dematerialize certificates; an investor will have to first open an account

with a DP & then request for the dematerialization of certificate by filling up a

dematerialization request form (DRF), which is available with DP & submitting the same

along with the physical certificates. The investor has to ensure that before the certificate

are handled over to the DP For demat, they are defaced by marking “Surrendered for

dematerialisation” on the face of the certificates. Depository is much like a bank and

perform many activities that are similar to a bank.




Just as one opens a bank account in order to avail of the services of a bank, an

investor opens a depository account with a depository participant in order to avail of

depository facilities.

Following table compares the two.

Bank Depository

Holds funds in accounts Holds securities in account

Transfers funds between accounts Transfers securities between accounts

Transfers without handling money Transfers without handling securities

Safekeeping of money Safekeeping of securities

Transacting the depository way has several advantages over the traditional system of

transacting using share certificates. Some of the benefits are:

Trading in demat segment completely eliminates the risk of bad deliveries, which

in turn eliminates all cost and wastage of time associated with follow up for

rectification. This reduction in risk associated with bad delivery has lead to

reduction in brokerage to the extent of 0.5% by quite a few brokerage firms.

In case of transfer of electronic shares, you save 0.5% in stamp duty.

You also avoid the cost of courier/ notarization/ the need for further follow-up with

your broker for shares returned for company objection




In case the certificates are lost in transit or when the share certificates become

mutilated or misplaced, to obtain duplicate certificates, you may have to spend at

least Rs500 for indemnity bond, newspaper advertisement etc, which can be

completely eliminated in the demat form.

You can also receive your bonuses and rights into your depository account as a

direct credit, thus eliminating risk of loss in transit.

You can also expect a lower interest charge for loans taken against demat shares as

compared to the interest for loan against physical shares. This could result in a

saving of about 0.25% to 1.5%. Some banks have already announced this.

RBI has increased the limit of loans against dematerialized securities as collateral

to Rs2mn per borrower as against Rs1mn per borrower in case of loans against

physical securities.

RBI has also reduced the minimum margin to 25% for loans against dematerialized

securities as against 50% for loans against physical securities.

In short the advantages of opening a demat account are

Shorter settlements thereby enhancing liquidity

No stamp duties on transfer of securities held in demat form.

Elimination of risk associated with physical certificated such as bad

delivery, fake securities.

Reduction in handling large volume of paper;

Nomination facility




Transmission of securities (such as shares, debentures, bonds and units) is

done by DP eliminating the need to correspond with each company

separately.

Change of name, address, dividend mandate, registration of power of

attorney, transmission etc. can be effected across companies held in demat

form by a single instruction to the DP

Though under the Depositories Act, 1996, there is no compulsion and the investor

can hold shares either in physical or in dematerialized form. But according to Sebi’s

directive certain shares have to be traded compulsorily in dematerialized form where the

seller cannot sell in physical form. However, after he has bought the shares the investor

can ask for rematerialization of the shares.

The Depository Account must be opened with a Depository Participant. NSDL

interfaces with investor trough Depository Participants (DPS). A list of names and

addresses of all Authorized DP’s is available with the NSDL and CDSL and one can meet

any of these DP’s place and make a choice at your based on your comfort and

convenience. Opening a depository account is as simple as opening a bank account. One

can open a depository account with any DP.

To open a Depository Account, you have to submit the duly filled in Account

Opening form along with the following documents:

Fill up the account opening form, which is available with the DP.




Residential Proof - Copy of Ration Card, Passport, Driving License, Telephone

Bill, Electricity Bill or Rental Agreement.

Sign the DP-client agreement, which defines the rights and duties of the DP and the

person wishing to open the account.

Receive your client account number (client ID).

This client ID along with your DP ID gives you a unique identification in the

depository system.

There is no restriction on the number of depository accounts a person can open.

However, if your existing physical shares are in joint names, you have to open the account

in the same order of names before you submit your share certificates for demat. A sole

holder of the share certificates cannot add more names as joint holders at the time of

dematerializing his share certificates.

However, if the investor wants to transfer the ownership from his individual name

to a joint name, he should first open an account as the sole holder (account A) and

dematerialize the share certificates. He should then open another depository account

(account B) in which he is the first holder and the other person is the second holder and

make an off market transfer of the shares from the account A to account B. The investor

will incur a charge on this transaction. Alternatively, the certificates can be transferred to

the joint ownership and then sent for Dematerialization.

Right now, as per the Companies Act, there is no nomination facility for shares

(whether in the physical or in the electronic form). The nomination facility for shares can




be availed of only when the relevant provisions in the Companies Act are amended. NSDL

captures the details of the nominee when the account is opened so as to offer the facility as

soon as the relevant amendments are effected in the Law.

A client can choose to open more than one account with same DP. In addition to

this, he has a choice of opening accounts with more than one DP. However a broker can

open just one Clearing Member account per card/ stock exchange for clearing purpose, but

he can still open multiple beneficiary accounts Beneficiary is the personal account wherein

brokers can keep their personal holdings.

Account opening

Any investor who wishes to avail depository services must first open an account

with a depository participant of NSDL The process of opening a Demat account is very

similar to a bank account The investor can open an account with any depository participant

of NSDL An investor may open an account with several DPs or he may open several

account with single There are several DPs offering various depositary related services.

Each DP is free to fix its own fee structure Investors have the freedom to choose a DP

based on criteria like convenience , comfort has to enter into an agreement with the DP

The form and contents of this agreement are specified by the business rules of NSLD

Types of depositary account depends on the operation to be performed There are three

types of Demat accounts which can be opened with a depositary participant viz

(a) Beneficiary Account (b) Clearing member Accounts and (c) intermediary account

Types of accounts




Beneficial owner Clearing member Intermediary

Account Account Account

House Non-House

A DP may be required to open three categories of accounts for client –beneficiary

account, clearing member account and intermediary account

A beneficiary account is an ownership account The holder/s of securities in this

type of account own those securities

The clearing member account and intermediary account are transitory account The

securities in these are held for commercial purpose only

A clearing member account is opened by a broker or a clearing member for the

purpose of settlement of trades

An intermediary account can opened by a SEBI registered intermediary for the

purpose of stock leading and borrowing

Beneficiary account

This is an account opened by investor to hold their securities in

dematerialized from with a depository and to carry out the transactions of sale purchase

of such securities in book entry form through the depositary system A beneficiary

account holder is legally entitled for all rights and liabilities attached to the securities

held in that account Therefore, the account is called “beneficial owner account” a

beneficial account can be in the name of individual, corporate, HUF, minor, bank,




financial institution , trust etc or the broker himself for the purpose of his personal

investments in demat form . The account is opened with a DP

House account vs. non –house account opened by a DP for the custody of

and transactions in its own investment is referred to as a house account DPS Are

required to open house accounts for their own investments to prevent co-mingling of

asset with that of their clients

Neither the depositories ACT nor the regulations made under the act lay

down any specifications about who can open a beneficiary account since all beneficial

owners are deemed to be member of a company (under section 41 (3) of the companies

act) only those who are eligible to become members of a company act can open a

beneficiary account with a depository Thus all legal entities with the exception of

partnership firms can open an account in the depository system

Documents for verification: For the purpose of verification, all investors have to submit

the following documents along with the prescribed account opening form

Proof of identity- a beneficiary account must be opened only after obtaining a

proof of identity of the applicant The applicants signature and photograph must be

authenticated by an existing account holder or by the applicant bank or after due

verification made with the original of the applicants valid passport , voter id , driving

license or PAN card with photograph and further

Proof of address- The account opening form should be supported with proof of address

such as verified copies of ration card/ passport/ voter ID/ PAN card/driving license / bank

passbook an authorized official of the participant, under his signature, shall verify the

original documents




In case any account holder fails o produce the original documents for verification

within the foreside period of 30 days, it must be immediately brought to the notice of

NSDL Failure to produce the original within the prescribed time would invite appropriate

action against such account holder, which could even include freezing of their accounts

Common information: The process of opening an account with a depository, nature

of such an account, and various factors to be considered for opening a depository account

are explained below. Some details are common to all types of accounts. These are:

1. Name of the holder

2. Date of birth (for individual accounts)

3. Occupation

4. Address & phone / fax number

5. Bank details like name of the bank, type of the account (current/savings), accounts

number, branch address, MICR, etc

6. PAN number, if applicable

7. Details of nomination

8. Specimen signatures

Beneficiary account- procedure for opening an account

Investor have the choice of selecting a DP based on their convenience ,

comfort ,service, levels , safety, reputation charges , etc they have flexibility to have

more than one account with the same DP or any other DPS No minimum balance is

required for opening a depository account Investor also have the freedom to close an

account with one DP and open another one with any other DP




The type of the account opening from to field by an investor and the list of documents

required depend on the type of beneficiary account to be opened –whether it is for

NRI’s or corporate or individual Further, the individual account can be in a signal

name or joint name clearing members and brokers have to open in a beneficiary

account if they have to deal with their own holdings

There are several client types in the depository system and different codes are

allotted to them. These are listed below

1. Resident

Ordinary

HUF

2. Financial institutions

Government –sponsored FI

State financial corporation

Other

3. FIIS

Mauritius –based

Others

4. NRI

Repatriable

Non-Repatriable

Depository receipt

5. Body corporate

Domestic company




Overseas corporate body Repatriable

Government company

Central government

State government

Co-operative body

NBFC

Non –NBFC

Broker

Foreign bodies

Group companies

Others

OCB-Nonrepatriable

Depository receipt

6. CM (clearing member)

7. Foreign national – national /depository receipt

8. Mutual fund –depository receipt

9. Trust, Bank

10. Intermediary

Clearing Member Account

The entities that are authorized to pay out from a clearing corporation/ clearing

house against traders done by them or their clients are known as clearing members. CMs

are identified in the system through their CM-BP ID. All pay-in and pay-out transactions

are carried out through their accounts.




There are two types of clearing members:

1. All members of a stock exchange popularly know as brokers, are clearing

members;

2. Custodians who are permitted by the stock exchange to act as a clearing members.

Procedure to open a clearing member Account

The steps undertaken to open the account are same as those of the individuals,

difference lies in the type of the clearing members has to first register itself with the

depository and obtain a business partner identification number (CM-BP-ID). The clearing

member is identified by the combination of CC-CM-ID given by the DP.

Immediately after opening a clearing account, the DP should inform the depository

the details of clearing members name, CM-BP-ID, client-ID, and date of the opening the

account in DPM system.

The clearing account should only be for clearing and settlement purpose and nit for

any other purpose, e.g., holding of securities received in a settlement received in a

settlement account should be transferred to the transferred to respective beneficial accounts

as soon as possible, but in no case later than the time prescribed by the depository/ stock

exchange/ SEBI in this regard. The opening of clearing members account constitutes a

“standing instruction” to receive credits from the clearing corporation when there is a pay-

out.

The Clearing House deals with ONLY ONE designated account for pay-in and

pay-out with the Broker. This single account allows you to know to which account




securities must be delivered and received from. One Clearing Member Pool Account is

opened per card / Stock Exchange to settle trades in the Dematerialised form.

STRUCTURE OF CLEARING ACCOUNT

The clearing account is identified in the depository system by its CM-BP-ID. The

internal structure of the Clearing Account consists of three parts to facilitate easy book

keeping.

Arrangement of clearing account

Pool Account

Delivery Account

Receipt Account

Clearing Corporation (CC)/Clearing House (CH)

Clearing Account

Delivery Account Pool AccountReceipt Account

a) Pool Account: It has two roles in clearing of Securities, viz., before pay-in, the

selling client of the clearing member transfers securities from his client Account to

the Clearing Account. After receiving pay-out, the clearing member transfers

securities from his Clearing Account to the account of the buying client.


Selling client

BuyingClient



b) Delivery Account: The securities before pay-in, the securities move from the Pool

Account To the Delivery Account. The movement will be automatic if clearing

member has given such an undertaking to its Clearing If the Clearing Corporation.

It will be effected on the basis of instruction received from the Clearing house/

Clearing Corporation. If the clearing house/ Clearing Corporation has not taken

such undertaking, the clearing member to its DP must submit a delivery instruction

form. At the time of pay-in, NSDL flushes out the securities in the Delivery

Account & transfers the same to the Clearing house/ Clearing Corporation.

c) Receipt Account: On pay-out day, the Clearing house/ Clearing Corporation

transfers securities to the Pool Account (to The extent of net receipt) through the

Receipt Account. This account can be used to trace details of settlement-wise

receipt of the clearing member.

Market Type & Settlements Number : A clearing account can be broken into

compartment and sub-compartments. Each compartment can be called as market

type and be as settlement number. Hence, if securities are moved from any clearing

account, apart from the CM-BP-ID, the combination of market type and settlement

number must be provided. A diagrammatic illustration of the internal structure of a

clearing account is depicted below


Physical Rolling Action Rolling

2000014Delivery Pool Receipt









Clearing Account(IN503265)



Settlement calendar: Settlement calendar is decided by the stock exchange. It contains

details for each market type & settlement number. The detail for each settlement consists

of the date of trading, pay-in time, pay-out date, settlement number etc. Clearing member

can obtain the settlement calendar from its own stock exchange. This is also available in

the depository software of the DP.

MARKET TRANSFERS: Any trade, which is cleared & settled by the clearing

house/ Clearing Corporation of the stock exchange, is considered as a market trade

in the depository. Consequently, the transfers routed through the clearing account.

Typically, a market trade has the following legs of transactions.

a. Receiving securities for pay-in from clients (client to clearing members)

b. Delivering securities to the clearing house/clearing corporation for pay-in. (clearing

house/clearing corporation)

c. Receiving pay-out from the clearing house/clearing corporation. (Clearing

House/clearing Corporation to clearing member)

d. Distribution of pay-out to clients. (Clearing member to client)

A diagrammatic illustration of the settlement of a market trade in a depository is

depicted below:




D C

A B

Receiving securities for pay-in from clients (client to clearing member)

A selling client of a clearing member (broker) would transfer securities

from his beneficial owner account to the clearing account of the clearing member

for onwards delivery to the clearing house/clearing corporation. This transfer is

effected by his DP on the basis of a delivery instruction provided by the selling

client. A diagrammatic Illustration for securities received for pay-in from clients is

depicted below:


DP of Seller’s CM

DP of Buyer’s CM

DP of Seller

NSDL CH/CC

DP of buyer

NSDL

DP1 DP2

Seller A

AAAller A

Clearing MemberSeller

CSeller

B



Indicates flow of securities

Indicates paper /electronic instruction given.

OFF MARKET TRANSFERS: Any trade, which is not cleared and settled by the

clearing house/clearing corporation of the stock exchange, is considered as an off-

market trade in the depository. Consequently, the transfer is not routed through the

clearing account. Such transfers take place directly between two beneficiary

accounts. Both buyer and seller may open account either with the same DP or with

different DPs. The buyer and seller will trade amongst themselves and later on will

exchange money, i.e., settle funds amongst themselves. The selling client would

deliver securities from its beneficiary account to the beneficiary account of the

buying client. This transfer is effected by the DP of the selling client on the basis of

a delivery instruction provided by the selling clients. A diagrammatic illustration of

the settlement of an off-market trade in depository is depicted below:




Indicates flow of securities

Indicates paper /electronic instruction given.

Depository:

A Depository is a Company where the shares of an individual are held in the

electronic form, at the request of the shareholder. This eliminates the physical form of

holding. IDBI, UTI, SBI and NSE promoted the National Securities Depository Limited

(NSDL). The Central Securities Depository Limited (CDSL) was promoted by BSE.

Your money may be held in the form of liquid cash at your home or may be

deposited in a bank. The bank holds your funds in the electronic form and subsequently




debits or credits the account. Depending on your issuance of cheques or deposit of

cheques. The advantages of safety and convenience of dealing with a Bank overweigh the

reasons for holding liquid cash in your home. Your financial assets such as Equity Shares

may be compared to the above example. You may hold physical share certificates in your

home and be exposed to the various risks of lack of safety, mutilation, loss etc.

Alternatively, you may deposit your shares in an organization called a Depository, which

holds your shares in the electronic form. You can dematerialize shares of only those

companies that have signed agreement to dematerialize their shares with the depository.

You cannot dematerialize shares if they are not in your name, i.e. shares held in street

name (market deliveries) cannot be dematerialized. However, when you send shares to the

registrar to be transferred to your name you can request that you want those shares in

dematerialized form.

Karvy Consultants Ltd. has four DPMs as on date. They are:

1.Hyderabad-IN300394

2.Lucknow - IN301557

3.Bangalore- IN301926

4. Mumbai - IN302470

In India depositories are required to be registered with SEBI and are governed by

the provision of the Depositories Act, 1996 and regulation and bylaws framed for

depositories by the SEBI.

The depositories work in a completely computerized environment with electronic

linkages with the point of origination for the transactions that may cause the change in

ownership of securities. A depository will be electrically linked with the Register of the




members maintained by the company/registrar, clearing and settlement system in the stock

exchanges, stock lending organization (if in existence), custodians of securities, depository

participants and brokers.

Function of Depository

Dematerlisation: one of the primary functions of depository is to eliminate or minimize

the movement of the physical securities in the market. This is achieved through

dematerialisation of securities. Dematerlisation is the process of converting securities held

in physical form into holdings in book entry form.

Account Transfer: The depository gives effect to all transfers resulting from the settlement

of trade and other transactions between various beneficial owners by recording entries in

the accounts of such beneficial owners.

Transfer and Registration: A transfer is the legal change of ownership of a security in the

records of the issuer. For effecting a transfer, certain legal steps have to be taken like

endorsement, execution of a transfer of security occurs merely by passing book entries in

the records of the depositories, on the instructions of the beneficial owners.

Corporate Actions: A depository may handle corporate actions in two ways. In the first

case, it merely provides information to the issuer about the persons entitled to receive

corporate benefits. In the other case, depository itself takes the responsibility of

distribution of corporate benefits.

Pledge and hypothecation: Depositories allow the securities placed with them to be used

as collateral securities in physical form to the lender or its custodian. These securities are

verified for authenticity and often need to be transferred in the name of lender. This has a

time and money cost by way of transfer fees or stamp duty. If the borrower wants to




substitute the Pledging/Hypothecating the securities makes the process very simple and

collateral accounting through book entries in the records of the depository.

Linkage with clearing system: whether it is a separating clearing corporation attached to a

stock exchange or a clearing house (department) of a stock exchange, the clearing system

performs the function of ascertaining the pay-in (sell) or pay-out (buy) of brokers who

have traded on the stock exchange. Actual delivery of securities to the clearing system

from the selling and delivery of securities from the clearing system to the buying broker is

done by the depository. To achieve this, depositories and the clearing system should be

electronically linked.

Depository Participant:

Depository Participant (DP) is an organisation that acts as an Agent of the

Depository and interacts with the investor. A DP is responsible for maintaining your

securities account and operating it only under your written instructions. The Depositories

Acts mandates that investors can use Depository facilities only through DP’s. The

distribution channel and geographical spread of the DP’s offices allows you to access the

Depository at a low cost. DP can only access their own clients' information. They cannot




access the client information of any other DP. The information of your holdings in the

account is completely confidential& it is similar to your account balance in a bank.

You can select your DP to open a demat account just like you select a bank for opening

a savings account. Some of the important factors for selection of a DP can be:

1. Convenience - Proximity to your office/residence, business hours.

2. Comfort - Reputation of the DP, past association with the organisation, whether the

DP is in a position to give the specific service you may need?

3. Cost - The service charges levied by DP and the service standards.

Individual accounts can be opened by Ordinary Resident, HUF, NRI ~ Repatriable

and NRI Non-Repatriable. Body Corporate, Banks, Trusts, Financial Institutions, Foreign

Institutional Investors, and Overseas Commercial Banks etc can open corporate Accounts.

An account can be opened in the name of HUF in a similar way to individual account and

mentioning the account category as HUF. However, Kartha of HUF will sign the

application, agreement and all transactions under the account

An account cannot be opened in the name of the firm. It has to be opened in the

name of any of the Partner as an Individual account only.

Procedure for Dematerialisation

Dematerialisation Process

1

2A 2 5


Investor

R & T Agent

DP

NSDL



3

4

Steps:

1. Client/ investor submits the DRF (Demat Request Form) and Physical certificates to DP.

DP checks whether the securities are available for demat. Client defaces the certificates by

stamping ‘Surrender for Dematerlisation’. DP punches two holes on the name of the

company and draws two parallel lines across the face of the certificate.

2.DP enters the demat request in his system to be sent to NSDL. DP dispatches the

physical certificates along with the DRF to the R & T Agent.

3.NSDL records the details of the electronic request in the system and forwards the request

to the R&T Agent.

4.R&T Agent, on receiving the physical documents and the electronic request, verifies and

checks them. Once the R&T Agent is satisfied, Dematerialisation of the concerned

securities is electronically confirmed to NSDL.

5.NSDL credits the dematerialized securities to the beneficiary account of the investor and

intimates the DP electronically. The DP issues a statement of transaction to the client.

A. DPs provide Dematerlisation request forms (DRF) to their clients.

B. The client completes the DRF in all respect 7 submits to the DP along with the security

certificates to be dematerialized.

C. The DP checks the DRF for validity, completeness and correctness. The following

points should be checked particularly:




The security certificate sought to be dematerialized are attached to

DRF.

The attached security certificates are marked (defaced) with the

words ‘surrendered for dematerialisation’. This is a precautionary

measure to prevent misuse of share certificates by anyone.

The certificate are not mutilated or defaced in a manner affecting

any material information.

The name of client on DRF and the certificates is exactly the same

as in the client’s account in DPM. However, minor variations in the

name (like abbreviated name, initials in the place of first name,

middle name, minor name mistake in the name) may be permitted if

it can be reasonably established that both names are of the same

person. The permitted variations refer to initials not being spelt out

fully or put prior to after the surname. In such cases, if the signature

on the DRF matches the specimen signature available with the DP,

the securities can be considered for demat.

Details like security type, face value, paid-up value, pari passu

status, certificate numbers, distinctive numbers, number of

certificates, total quantity of securities and lock-in statues are filled-

in correctly.

D. If the DRF & the accompanying security certificates are found in order, the DP should

accept the DRF and certificates.




E. If DRF and the accompanying security certificates are not found in order, the DP should

return the DRF and certificates.

F. The DP should enter the dematerialisation request in the DPM. DPM generates a request

number (DRN), which should be mentioned on DRF.

G. An autorised person, other than one who entered the DRF details in the DPM, should

verify the details of DRN and release a request to NSDL.

H. Once the DP has received the certificates defaced by investor, the DP punches two

holes on the name of the issuer or its R&T Agent for dematerialisation. DRF and

enclosures have to be sent at the “address to which physical certificate to be sent”

communicated by NSDL. The forwarding letter should refer to the allotted DRN and

should refer to the allotted DRN and should Be sent within seven days of accepting it from

the client.

I. The issuer or its R&T Agent verify the DRF & the accompanying certificate for validity,

completeness and correctness. They also match the details with the intimation received

from NSDL against the same DRN.

J. In case DRF is not found in order, the issuer or its R&T Agent send an objection memo

to the DP, with or without DRF & security certificates depending upon the reason for

rejection.

K. DRFs & Certificate are sent back on the following grounds:

DRN does not match with message from DM

Quantity of actual securities is less than DRF

Quantity of actual securities is more than DRF

L. DRF & certificate are not sent back:




If the certificate is fake

If the certificate has been reported to be stolen

If the duplicates of the original certificates sent for demat have already been issued

If the endorsements are forged

If the securities are not in the name of the account holder as per DRF

If the details of the certificates do not pertain to the R&T Agent

If the signatures differ

If there is any court order on the securities

If the certificate are received after 15 days of the electronic request.

M. The DP informs the client accordingly & requests removal of reasons for objection.

The DP removes these or provides additional information to the issuer or its R & T Agent

within 15days of receiving the objection memo.

N. The DP, if the client so requires, may generate a new dematerialisation request & send

the securities again to the issuer or R &T Agent.

Precaution to be taken while processing DRF

Ensure account to have the same sequence of names of holders and name

structure as printed on the physical certificate.

Ensure ISIN is activated

Separate DRF for:

Partly & fully paid-up shares

Locked & free holding

Holdings locked in for different reasons

Locked in holdings having different release date




Different ISINs of the company

ISIN to be entered by DP.

All joint holders to sign DRF.

Check DRF form with details on certificate.

Demat process

The demat process requires defacing of securities which will make the security

certificate undeliverable unless the demat formalities are completed. Therefore, the client

should be assisted in ascertaining whether the securities in question are available for

demineralisation. Clients should be helped in filling up the demat request properly. Demat

rejection causes great inconvenience to the client. DP should attend to this area with care

and caution. One of the important reasons for demat rejection is signature mismatch.

Taking the following precaution can reduce this:

If the client is aware that the signature with the company& signature of the client

should be advised to the register the new signature.

If the signature is slightly different, client should be advised to sign as per the

signature that was recorded by the company and as recorded with the DP.

Ensure dispatch of DRFs and certificate to R &T Agents within seven days.

Client may be encouraged to use the Transfer-cum-demat facility if it is offered by

the company. They should be made aware of the procedures of the scheme.

In case of joint holdings, the clients should be informed about the availability of

Transposition cum Demat facility.

Closure of account:




Closure on Client’s Request- A DP can close a depository account on receipt of an

application in the prescribed format. The application should be made by the account. In

case joint-holders. An account can be closed sought to be closed, the following steps are

necessary.

a. Re-materialization of all securities standing to the credit of the same account making the

application for closure; or

b. Transferring the balance to the credit of another account opened by the same account

holder(s) either with the same participant or with a different participant.

Before closing the account the DP should ensure that all pending transactions have been

settled. The request for closure should be processed only after ensuring that there is no

balance lying in the account.

Consolidations of accounts- Some clients have opened multiple accounts to dematerialize

their shares held in multiple combination and sequence of names. However, they may not

need so many accounts after they have dematerialized their shares and may want to bring

all their share holdings into one or fewer accounts. This can be achieved by using normal

off Market transfer instruction.

Closure by DP – the DP may also initiate closure of a client’s account if the client has

defaulted in performing should give sufficient notice to the client before initiating closure

of his account. The notice should clearly state the reasons for closure of his account. The

notice should clearly state the reasons for closure of account. The process of closing

account in such a case is the same that of client-initiated closure.

Closure/ Shifting of Clearing Account –A clearing member may transfer its clearing

account from one DP to another DP. For this, simultaneously applications have to be made




for closure of account to the earlier DP and for opening of new clearing member account to

the new DP. On receipt of the application, the new DP forwards the application to the

depository for approval and allotment of a new CM-BP-ID is allotted, the new DP opens a

new Clearing account and intimates the depository about the new client- ID. On receipt of

intimation from the intimates the clearing member. All pay-out of securities, subsequent to

the closure of old clearing account, take place in the new account. Pg-17-3

Trading & Settlement:

This is the an area where the DP must the DP must take immense care while accepting and

processing request listed below should from the account of his client to another account.

The aspects listed below should be kept in mind.

Ensure that the delivery instruction book given to each client has pre-printed serial

number and client-ID.

Inform clients about the pay-in deadline of the stock exchange and the deadline of

the DP.

Each DIS received should be inwarded correctly with the date and time stamp.

Late stamp must be affixed on the instructions received after the expiry of the

deadline set by the DP.

Ensure the correctness of execution date on the DIS.

Ensure signature on DIS matches with the records of the DP.

Ensure that the signatures of all holders are obtain in case of joint accounts.

If the client has not issued “standing instructions”, he should be made aware that a

receipt in instruction will be required to the credits into the account on purchase of

shares.




Client should be made aware of the accounting freezing facility.

Settlement

The settlement of trades in the stock exchanges is undertaken by the clearing

corporation (CC)/ clearing house (CH) of the corresponding stock exchanges. While the

settlement of dematerialized securities is effected through depository, the funds settlement

is effected through the clearing banks. The clearing members directly with the CC/ CH

settle the physical securities.

Exclusive demat segment follows rolling settlement (T+5) cycle and the unified (erstwhile

- physical) segment follows account period settlement cycle. In case of rolling settlement

cycle, the account period is reduced to one day.

In case of settlement of trades done in exclusive demat segments, the pay-in and

pay out of funds and securities are effected on the same day afternoon and evening

(same day) thus reducing the blockage of funds and limiting exposure to the

clearing corporation.

Settlement of funds is effected through the clearing banks and depository plays no

role in this.

Settlement of securities is effected through NSDL depository system.

Clearing and settlement of the regular market trades is effected through the clearing

members of the clearing houses of respective stock exchanges. All trading members

of stock exchanges are clearing members of clearing houses. In addition, for




settlement of institutional trades, custodians are also allowed to act as clearing

members.

Clearing members of clearing house, dealing in dematerialized securities are

expected to open a clearing account with any DP for the purpose of settling trades

in dematerialized securities. As, in the mixed (unified) segment, there is a

possibility for all clearing members to receive dematerialized securities, they are

expected to open clearing accounts.

If there is any short delivery at the time of pay-in of securities, these short positions are

auctioned in the Demat segment as done in the Unified (erstwhile-physical) segment.

Selling And Buying Of Shares: Selling dematerialized shares in stock exchanges is

similar to the procedure for selling physical shares. Instead of delivering physical shares to

the broker, you instruct your DP to debit your account with the number of shares sold by

you and credit your broker's clearing account.

For this, a delivery instruction has to be given to your DP in a standardized format, which

will be available with your DP.

In short, for selling demat shares;

You can sell shares in any of the stock exchanges linked to a depository through a

broker of your choice.




Give an instruction to your DP to debit your account and credit your broker's

clearing member pool account. (this is a depository account used exclusively for

settling transactions by a broker)

On the pay-in day, your broker gives instruction to his DP for delivery of the shares

to clearing corporation of the relevant stock exchange.

The broker receives payment from the clearing corporation

You receive payment from your broker for the sale in the same manner you would

receive payment for a sale in the physical mode.

Buying Demat Shares: The procedure for buying dematerialized shares in stock

exchanges is similar to the procedure for buying physical shares. When you want to

purchase shares in electronic form, you have to instruct your broker to purchase the

dematerialized shares from the stock exchanges linked to a depository.

Once the order is executed, you have to instruct your DP (vide a simple format

which is available with the DP) to receive securities from your broker's clearing account.

Alternatively, you may give a standing instruction to receive credits into your

account and do away with giving a separate receipt instruction each time you expect a

credit. You have to ensure that your broker too gives a matching instruction to his DP to

transfer the shares purchased on your behalf into your depository account.

You should also ensure that your broker transfers the shares purchased from his

clearing account to your depository account, before the book closure. This is really




important because shares that remain in the clearing account of the broker on the book

closure/ record date will not be eligible for corporate benefits.

In brief, the transactions relating to purchase of shares are:

You can purchase shares in any of the stock exchanges connected to a depository

through a broker of your choice and make a payment to your broker;

Your broker receives credit in his clearing account with his DP on the pay-out day;

Broker gives instructions to his DP to debit his clearing account and credit your

account;

You instruct your DP for receiving credit into your depository account either

through a specific receipt instruction or using the "standing instruction" facility.

In case you are not using the "standing instruction" facility then, your depository

account is credited only if the instructions given by you and your broker match.

Other Services

Besides demat and trading Depositories also offer other services, these are:

o Pledging/ hypothecation of dematerialized securities.

o Electronic credit in public offerings of companies.

o Receipt of non-cash corporate benefits such as bonus, rights in electronic form.

o Stock lending and borrowing.

o Transmission of securities.




Pledging: Dematerialized shares could be pledged; in fact, this is more advantageous as

compared to pledging share certificates.

To pledge your Demat shares

Both you (pledgor) as well as the lender (pledgee) must have depository accounts.

You must initiate the pledge by submitting the details of the securities to be

pledged in a standard format (available with DPs).

The pledgee should confirm the request through his DP.

Once this is done, your securities are pledged

All commercial documentation between the pledgor and the pledgee are handled

outside the depository system.

After you have repaid your loan, you can request for a closure of pledge by instructing

your DP through a standard format. The pledgee on receiving the repayment as well as the

request for closure of pledge will instruct his DP accordingly.

Even the locked-in securities can be pledged, however they cannot be invoked before the

lock-in release date.

Even after the securities are pledged, the pledgor continues to remain the beneficiary

holder of those securities and will receive benefits of a corporate action, if any.

Initial Public Offerings: Credits for public offers can be directly received into demat

account. In the public issue application form of depository eligible companies, there will

be a provision to indicate the manner in which securities should be allotted to the applicant.




All you have to do is to mention your client account number and the name and

identification number of your DP.

Any allotment due to you will be credited into your account.

If the applicant is allotted securities in dematerialized form, but the details

regarding the beneficiary account are incomplete/ wrong, the person will get physical

delivery of allotted securities.

If securities were allotted in the dematerialized form, these would be credited to

applicant’s account any day between allotment date and listing date, at the discretion of the

company.

The issuer company/ their R&T agent will forward the applicant the allotment

advice giving the number of shares allotted in dematerialized form. Through this you can

come to know that you have been allotted shares.

An amendment to the company law requiring all future public issues above

Rs100mn to compulsorily offer securities in dematerialized form is awaiting legislative

approval. After this all the issues above Rs100mn will require investors to trade only in

demat way.

Partly paid up and fully paid up shares in the depository, will be given separate

ISINs (International Securities Identification Number). These are also traded separately at

the stock exchanges.




The company issues call notices to the beneficial holders of securities in the

electronic form. The details of such beneficial holders will be provided to the issuer/ their

R&T agent by NSDL. After the call money realization, issuer/ their R&T agent will

electronically convert the partly paid up shares to fully paid up shares.

Receipt Of Cash/ Non-Cash Benefits: When any corporate event such as rights or bonus

or dividend is announced for a particular security, depository will give the details of all the

clients having electronic holdings in that security as of the record date to the registrar. The

registrar will then calculate the corporate benefits due to all the shareholders. The

disbursement of cash benefits such as dividend/ interest will be done directly by the

registrar. In case of non-cash benefits, depository will directly credit the securities

entitlements in the depository accounts of all those clients who have opted for electronic

allotment based on the information provided by the registrar.

The bonus/ rights issue against holding in dematerialized form can be either in the

physical/ dematerialized form as per the choice of the investor. If no choice is given, by

default, the securities will be issued in the physical form.

Even if an investor has holdings in physical form, he can receive the bonus/ rights

issue against this in the dematerialized form.

In case of fractional part, as in the physical segment, it would be paid in cash and

the remaining whole part would be credited to the investors account.

The statement of holding and transaction statement is sent by the investors DP, it

will show the bonus/ rights credit into investor’s account. This report is sent to the investor




every fifteen days. In addition, an allotment advise will be send by the issuer/ their R&T

agent for bonus/ rights entitlement.

Stock Lending and borrowing: Through the depository account securities in the demat

form can be easily lent/ borrowed. Securities can be lent or borrowed in electronic form

through an approved intermediary, who has opened a special 'intermediary' account with a

DP.

To Lend Securities: You have to instruct your DP through a standard format (which is

available with your DP) to deposit your securities with the intermediary.

If the intermediary accepts your deposit of securities, the securities will be moved from

your account into the intermediary's account. If you wish to recall the securities lent by

you, you can make a request vide a standard format available with your DP.

To Borrow Securities: You have to instruct your DP through a standard format (which is

available with your DP) to borrow securities from the intermediary.

If the intermediary accepts your request, the securities will be moved from the

intermediary's account to your account. If you wish to return the securities borrowed by

you, you can make a request vide a standard format available with your DP.

Transmission Of Securities: Transmission of securities due to death, lunacy, bankruptcy,

and insolvency or by any other lawful means other than transfer is also possible in the

depository system. In the case of transmission, the claimant will have to fill in a

transmission request form, (which is available with the DP) supported by valid documents.




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

of the claimant. For this, the claimant must have a depository account. The major

advantage in transmission of dematerialized holdings is that the transmission formalities

for all securities held with a DP can be completed in one go, unlike in the case of share

certificates, where the claimant will have to interact with each issuing company or its R&T

Agent.

In case where the deceased was one of the joint holders in the Client account, the

surviving client(s) shall be the person(s) recognized by depository as having title to the

securities held in that joint Client account. In case where the deceased was a sole holder of

the Client account, his legal heir(s) or the legal representative(s) will be the person(s)

recognized by depository as having title to the securities held in that sole Client account.

Security: National Security and Depository Limited claims to have undertaken sufficient

security measures. These measures are:

A DP can be operational only after registration by Sebi, which is based on the

recommendation from NSDL and Sebi’s own independent evaluation. Sebi has

prescribed criteria for becoming a DP in the regulations.

DPs are allowed to effect any debit and credit to an account only on the basis of

valid instruction from the client.

Every day, there is a system driven mandatory reconciliation between the DP and

NSDL.




There are periodic inspections into the activities of both DP and R&T agent by

NSDL. This also includes records based on which the debit/ credit are effected.

The data interchange between NSDL and its business partners is protected by

standard protection measures such as encryption. This is a SEBI requirement.

There are no direct communication links between two business partners and all

communications between two business partners are routed through NSDL

All investors have a right to receive their statement of accounts periodically from

the DP.

Every month NSDL forwards statement of accounts to a random sample of

investors as a counter check.

In the depository, the depository holds the investor holdings on trust. Therefore, if

the DP goes bankrupt the creditors of the DP will have no access to the holdings in

the name of the clients of the DP. These investors can then either dematerialize

their holdings or transfer them to a different account held with another DP.

Investor grievance: All grievances of the investors are to be resolved by the

concerned DP. If they fail to do so the investor has the right to approach NSDL.

Insurance Cover: NSDL has taken a comprehensive insurance policy to protect the

interest of the investors in cases of failure of the DP to resolve a genuine loss. The

details of the policy is as under:




Upper limit per claim: Rs200mn.

Number of claims allowed: unlimited

Minimum value of the claim: Rs150, 000

To cover claims valued less than Rs150, 000 NSDL has an investor protection fund

in place.

Besides all these safety measures efforts have been done to make this electronic system

foolproof.

Demat Shares: Are They 100% Safe

When you buy physical shares from the stock market, you could never be certain of

the validity of the title of shares. There were many reasons- the sellers' signature did not

match, or the certificates were fake, forged or stolen, and so on.

Demat shares are supposed to obviate these problems. Buying shares in the demat

form always guarantees you a good title as soon as the settlement is over. The biggest

attraction of trading in demat shares is that the shares you buy come with a clean title and

immediately after the settlement on the relevant stock exchange.

Rule 100 of market regulator SEBI determines whether the shares delivered in a

settlement, are good or not. Under rule 100, the shares that have been transferred the

company can still withdraw any number of times, if a transfer is found to be invalid for any

reason.




Suppose a sells physical shares to B and B gets them dematerialized. Later B sells

the shares in the stock exchange and C buys them. Meanwhile A discovers that his share

certificates were stolen and fraudulently sold by someone else. He gets a court order

restraining the company from further transferring the shares and attaching them (currently

in possession of C). This is known as 'stop transfer'. So C who has bought dematerialized

shares is now struck with the shares. He cannot sell these shares since they would be

frozen in his account

In demat shares, pre-demat problems about the validity of a share do not effect the

interest of the buyers after dematerialization. Shares go through a verification process at

the registrars' before they are dematerialized.

Therefore the responsibility lies with the registrar. The registrar must find a remedy

if the original transfer of shares, before their dematerialization comers under doubt. But

there is a catch. The company and its registrars are not responsible if the reasons for

original transfer being invalid were not available at the time of dematerialization. Matters

have to be dealt with on a case-to-case basis. Which means that even demat buyer may find

that his shares have been frozen in his demat account. This kind of case has to be contested

in court by the parties involved.

This issue is not directly addressed in The Depositories Act, 1996. Sebi’s

regulations on depositories and depository participants also do not mention the issue.




Matters get more complex if an investor has traded further in shares of the same

company in his demat account. Demat shares are fungible and don’t have distinctive

numbers. It is not easy to track the sale or trade of shares after they are dematerialized.

In a rare event of your DP going bankrupt or closing the operations, the interests of

the investors will be fully protected. In such a situation, the investors will be given an

option of either transferring the securities to a new DP or they may rematerialise the

securities

Analysis of customer satisfaction

A. Sample size selected: 100

Total Number of customer available for survey: 100

The sample size selected for the survey was 100.(Hundred) customers of KARVY

CONSLUTANT STOCK BROKING were available for survey. So opinion was taken to

know the customer satisfactions towards demat account.




1.Customer came to know the about “KARVY FINANCIAL CONSULTANT “

Total no. Of sample taken: 100

1 2 3 4 5

FriendsNews Papers/Business Magazines Online Agent/Financial Others

47 18 10 14 11




Source: Survey Data The above table and chart shows the respondents know KARVY FINANCIAL

CONSULTANT is from the friends is more. Nearly 47.00% of respondent will know .

18% of Customer through News paper ,10% of Customer through online ,14% of

Customer through Agent and financial consultant and 11% of Customer know through.

Others.




2.They are interested to visit “KARVY FINACIAL CUNCALTANT “


Source: Survey Data The above table and chart shows the respondents interested to visit KARVY FINANCIAL CONSULTANT 94 % and only 6% of Customer are not interested to visit .


1 2Yes No94 6



3. They have been use service of “KARVY FINACIAL CUNCALTANT “ Because of visual pleasure ,hospitality, communication etc


Source: Survey Data The above table and chart shows they have been use service of “KARVY FINACIAL CUNCALTANT “ 47% of Customer agree ,and , 45% of Customer just agree only 8% of Customer are not interest to give there opinion .


Q-3 1 2 3 4 5Agree Just agree No Opinion Just DisagreeDisagree47 45 8 0 0



4.They will definitely use service “KARVY FINACIAL CUNCALTANT “ because attitude of employee.


Q-4 1 2 3 4 5Agree Just agree No Opinion Just Disagree Disagree69 24 7 0 0

Source: Survey Data The above table and chart shows they have been use service of “KARVY FINACIAL CUNCALTANT “Because of there attitude 69% of Customer agree ,and , 24% of Customer just agree only 7% of Customer are not interest to give there opinion.




5.they will definitely use of “KARVY FINACIAL CUNCALTANT “because what they benefit get from them.


Source: Survey Data

The above table and chart shows they have been use service of “KARVY FINACIAL CUNCALTANT “Because what benefit get from them 50% of Customer agree ,and , 41% of Customer just agree only 8% of Customer are not interest to give there opinion.1% of Customer just disagree .





6. They will interested “KARVY FINACIAL CUNCALTANT “because they introduce new scheme and we get benefit .


Source: Survey Data

The above table and chart shows they have been interested to use service of “KARVY FINACIAL CUNCALTANT “because they introduce new scheme and we get benefit . 86%of Customer say Yes .only 14% of Customer are not satisfied ..


Q-6 1 2Yes No86 14



7.They use “KARVY FINACIAL CUNCALTANT “ they know customer value and money value



Source: Survey Data

The above table and chart shows they have been interested to use service of “KARVY FINACIAL CUNCALTANT “because they know customer value and money value.54% of say agree .39% Customer say just agree .6%of parole say no opinion and only 1% of Customer say just disagree.




8.they want to specify use “KARVY FINACIAL CUNCALTANT “better then other .



Source: Survey Data

The above table and chart shows they have been specifically said “KARVY FINACIAL

CUNCALTANT “ better then other Dp services. 41% of customer agree.31% of

customer are just agree. 20 % of Customers are not given any opinion. Only 1% of

customer just disagree 1% of customer disagree.




9a. Demat


Extremely satisfied SatisfiedNeither satisfied/nor Unsatisfied Unsatisfied

Extremely unsatisfied

38 46 16 0 0

Source: Survey Data

The above table and chart shows demat services offered is satisfied.38% of the

customers are extremely satisfied, 46% Satisfied,16%of of customer Neither satisfied/nor

Unsatisfied.




b. Settlement (Selling/ Buying)


bExtremely Satisfied Satisfied

Neither satisfied/nor Unsatisfied Unsatisfied


25 49 26 0 0

Source: Survey Data

The above table and chart shows that service offered is Extremely

Satisfied for25% of the respondents; 49% of respondent are satisfied and 26% of

respondent are having neutral opinion of the settlement service




c. Freezing/Defreezing


cExtremelySatisfied Satisfied

Neither satisfied/norUnsatisfied Unsatisfied


6 49 45 0 0

Source: Survey Data

The above table and chart shows the services of freezing/defreezing 49% of the

respondent are satisfied. and Out of 45% of respondent who are respondent are having

neutral opinion about freezing/defreezing 6% of respondent are Extremely Satisfied with this

service because they are have understood the core concept.




d. Loan Against SharesTotal no. Of sample taken: 100

d

Extremely satisfied Satisfied

Neither satisfied/nor unsatisfied Unsatisfied


22 33 45 0 0

Source: Survey Data

The above table and chart shows most of the respondent are having neutral

opinion i.e., 45% and 33% have satisfied this service. 22% of respondent are Extremely

satisfied.




f. Share TradingTotal no. Of sample taken: 100

e ExtremelySatisfied Satisfied


Extremelyunsatisfied

49 47 4 0 0

Source: Survey Data

The above table and chart shows the service of share trading 49% of the

respondent have Extremely Satisfied with this service and 47% of respondent are satisfied;

In all we can say that 96% respondent have satisfied with the services of

Share trading.




i. Periodic statements


fExtremelySatisfied Satisfied

Neither satisfied/nor unsatisfied Unsatisfied


48 44 8 0 0

Source: Survey Data

The above table and chart shows the services of the Periodic statements 48% of

the respondent are extremely Satisfied & 44% of the respondent are satisfied with this

service. In all 92%(appr) of respondent have satisfied with this service.




h. Telephone Quires


gExtremelySatisfied Satisfied



40 48 12 0 0

Source: Survey Data

The above table and chart shows the 48% of the respondent are satisfied with the

Telephonic service; 40% of the respondent are mostly satisfied & In all 88% of the

customer satisfied; 12% having neutral opinion.




h. Co-operation by Staff Total no. Of sample taken: 100

h

Extremely satisfied Satisfied

Neither satisfied/nor unsatisfied unsatisfied


60 35 5 0 0 46

Source: Survey Data

The above table and chart shows overall 60% of the respondent are Extremely

satisfied; 35% of the respondents are satisfied & 5% of the respondents are having neutral

opinion.




I. Bills acceptance .


I

Extremelysatisfied Satisfied

Neither satisfied/nor unsatisfied unsatisfied


50 32 16 1 1

Source: Survey Data

The above table and chart shows overall 50% of the respondent are Extremely

satisfied; 32% of the respondents are satisfied &16% of the respondents are having neutral

opinion..




10. Dissatisfied with services/ schemeTotal no. Of sample taken: 100

1. Frequently reminders are given to karvy consultant ltd., for update the information

4 4%

2. Irregular receipt of Holding/Transaction statement 1 1%3. Improper attention given to the enquires 5 5%

4. Improper format of Holding/Transaction statement 1 1%5. Billing problems 1 1%

6. Inadequate information 2 2%7. Others 0 0%a b c d e f4 1 5 1 1 2

Source: Survey Data

The above table and chart shows that 5% of the respondents are unsatisfied with

Improper attention given to the enquires.& 4% of the respondent are unsatisfied with

Frequently reminders are given to karvy consultant ltd., for update the information given

by DP. So proper communication with the customer & update information is required.




11. Tariff Structure


11 Very high High Reasonable Low Very low13 25 62 0 0

Source: Survey Data

The above table and chart shows that 62% of the respondents think the

tariff structure of the KARVY CONSULTANT is very reasonable.25% of the respondent

thinks the tariff structure is high. 13% of the respondent feel the tariff structure is very

high.




12. Rate of Satisfaction for DP services


Source: Survey Data

The above table and chart shows that 53% of the respondent have satisfied

80% of service given by DP; 31% of the respondent have satisfied 60% of service and 11%

of the respondent have satisfied 40% of the service. only 5% of respondent have satisfied

100 of the service.


120% 20% 40% 60% 80% 100%0 0 11 31 53 5



13. Preference of own DP over other DP


13Quality service Rate Charged Nothing in particular Safety Reach35 14 10 40 1

Source: Survey Data

The above table and chart shows that 40% of the respondents preferred this DP to

the DP because of Safety & 35% of the respondents preferred this DP to the DP because of

the quality service. In all 75% prefer KARVY CONSULTANT to the other DP because of

the Safety.




QUESTIONNAIRE

Dear Sir/Madam

NAME : ____________________________

ADDRESS : ____________________________

____________________________

OCCUPATION: ____________________________ Phone No: __________

1. I came to know about KARVY FININCIAL CONSULTANTS from1 2 3 4 5Friends News Papers

/Business Magazine

Online Agent/Financial Agency

Others

2. I am interested in visiting KARVY FININCIAL CONSULTANTS because

they provide quick and timely service.

1) Yes 2) No

3. I have been using service of KARVY FININCIAL CONSULTANTS because of the low cost, visual pleasure, Hospitality, Communication, and new concept of financial consultancy

1 2 3 4 5Agree Just Agree No opinion Just disagree Disagree

4. In future I will be definitely using the service of KARVY FININCIAL CONSULTANTS because of the attitude of the employees towards customers.


5. I will definitely use service of KARVY FININCIAL CONSULTANTS because of the benefit I get from KARVY FININCIAL CONSULTANTS





6. I am interested in KARVY FININCIAL CONSULTANTS because of the new scheme introduced frequently and benefit from such scheme

1) Yes 2) No

7. I use KARVY FININCIAL CONSULTANTS because they know customer value as well as money value of customers


8. KARVY FININCIAL CONSULTANTS service of dp are better then other dp services.


9. Express your satisfaction level about the following scheme/service please tick.

Schemes/servicesExtremely Satisfied

Satisfied Neither satisfied/norunsatisfied

unsatisfied

Extremely Unsatisfied

a. Dematb. Settlement(Selling/purchasing)c. Freezing/ defreezing Of an accountd. Loan against sharese. Share tradingf Periodic statementsg. Telephone queriesh. Co-operation by staffi. Bills Acceptance

10. If you have faced any when dealing through your DP or you are unsatisfied with the above mentioned services/schemes.

Frequently reminders are given to KARVY FININCIAL CONSULTANTS., for update the information




Irregular receipt of Holding/Transaction statement

Improper attention given to the enquires

Improper format of Holding/Transaction statement

Billing problems

Inadequate information

Other specify___________________

11. Please tick the following:

TariffStructure

1 2 3 4 5

Very High High Reasonable Low Very Low

12. How do you rate the services of your DP

0% 20% 40% 60% 80% 100%

13. How do you justify your preference for your KARVY FININCIAL CONSULTANTS DP over other DP’s?

1 2 3 4 5QualityService

RatesCharged

Nothing in particular

Safety Reach




14. A) Your age (Yrs)

<25 26-35 36-45 46-60 > 60

B) Income (Pa) <60000 60000-1.2 L 1. 2 L– 2.4 L

2.4 L– 3.6L 3.6 L – 6.0.L 6.0 L –12.0 L

C) Education

Up to Xth Graduate Post Graduate. PhD. Others.

D) Yearly of investment.1L-5 L 5L-10L >10L

15. Suggestion ______________________________________________

______________________________________________

Thank you for your co-operation




code Sheet of Customer Response

Q9. Extremely Satisfied: 1; Satisfied: 2;Neither Satisfied/Nor Dissatisfied: 3;Unssatisfied:4;

Extremely Dissatisfied: 5+

Q11. Very High: 1;High: 2;Reasonable: 3;Low: 4;Very Low:

Q12. 0%: 1; 20%: 2; 40%: 3; 60%: 4;80%: 5;100%:

Q813. Quality Service: 1;Rates charged: 2;Nothing in particular: 3; Safety: 4;Reach: 5

DATA CODE - SHEETSl No

1 2 3 4 5 6 7 8 9a 9b 9c 9d 9e 9f 9g 9h 9i 10a 10b 10c 10d 10e 10f 11 12 13a 13b 13c 13d 13e

1 1 1 1 1 1 1 1 2 2 2 3 3 1 2 1 1 2 2 3 5 3

2 1 1 1 1 1 2 2 2 1 2 2 2 2 2 2 1 2 3 4 1

3 1 1 1 1 1 1 2 1 2 2 2 2 2 2 3 2 3 3 2 4 4

4 1 1 2 2 2 2 2 2 2 2 3 3 2 2 2 2 2 2 3 3

5 1 1 1 1 1 1 1 1 1 2 2 3 1 1 1 2 2 3 5 1

6 1 1 2 1 1 1 2 1 1 1 2 1 1 2 1 1 2 2 5 4

7 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 1 3 5 1

8 4 1 1 1 1 1 1 1 2 1 3 3 1 1 1 1 1 3 6 4

9 1 1 1 2 2 1 2 3 2 2 3 3 2 1 1 1 1 3 5 1

10 1 1 2 3 1 2 3 2 2 3 2 3 2 3 2 2 2 3 4 2 4 3

11 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 2

12 2 1 2 1 2 1 3 2 2 2 2 2 2 2 2 2 2 3 5 1

13 2 1 2 2 2 1 2 2 2 1 1 3 1 1 1 3 1 1 3 4 3

14 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 1 5 1

15 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 1 2 3 5 4

16 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 2 3 4 1

17 2 1 1 1 1 1 1 3 1 2 3 3 2 2 1 1 1 3 5 1

18 1 1 2 1 2 1 1 2 2 1 2 1 1 1 1 1 1 3 5 4

19 1 1 1 1 1 1 2 2 1 1 2 2 1 1 1 2 1 3 5 1

20 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1

21 1 1 2 2 3 1 2 1 1 2 2 2 1 1 2 1 1 2 5 4

22 4 1 2 1 1 1 2 3 1 2 3 3 1 2 1 1 3 2 5 4

23 1 1 1 1 1 1 2 1 1 1 2 3 1 1 1 1 1 3 5 4

24 1 1 1 1 1 1 2 3 1 1 3 3 2 1 1 2 1 3 5 4

25 1 1 1 1 1 1 1 1 3 2 2 3 1 1 2 1 2 3 5 1

26 4 2 3 2 3 2 2 2 3 2 3 3 2 2 2 2 2 2 4 3

27 1 1 1 1 1 1 2 1 1 1 2 3 2 1 2 1 1 3 4 1

28 1 1 2 2 3 1 1 1 2 2 2 3 2 2 1 1 1 3 5 1




29 1 1 2 1 3 2 1 2 1 2 3 3 1 1 1 1 1 1 5 4

30 2 1 1 1 1 1 1 1 2 1 3 3 1 2 1 1 1 3 5 1

31 2 1 1 1 1 1 1 1 2 2 2 3 2 2 2 2 2 3 5 4

32 1 1 2 1 1 1 1 1 2 2 2 3 2 2 2 2 2 1 3 3 1

33 1 1 1 1 1 1 2 2 2 2 2 3 2 2 1 1 2 3 4 1

34 2 1 2 2 1 2 2 2 2 2 2 3 2 2 2 2 2 3 5 1

35 1 1 1 1 1 1 1 1 2 2 2 3 1 1 2 2 2 1 3 5 4

36 5 1 2 1 2 2 2 5 2 2 2 3 2 3 2 2 5 1 3 6 2 4 3

37 1 1 1 2 2 1 2 2 2 3 3 2 2 1 2 1 1 3 3 1

38 1 1 1 1 1 1 1 2 2 1 2 1 1 1 1 1 1 5 2 5 4

39 1 2 3 3 4 2 4 4 2 2 3 3 2 2 3 2 4 3 6 3 3 3

40 1 1 1 1 1 2 2 2 2 2 3 3 2 2 2 2 2 2 4 4

41 1 1 2 1 2 2 1 3 2 2 3 3 2 2 1 1 2 3 5 1

42 2 1 1 1 2 1 1 1 1 2 2 3 1 1 2 1 1 2 5 4

43 4 1 2 1 1 1 1 2 1 2 3 3 1 1 1 1 1 3 5 1

44 1 1 3 2 1 2 2 3 2 2 3 3 2 2 1 1 2 3 1 3 2

45 1 1 1 1 2 1 1 2 2 1 2 3 1 1 2 1 2 3 4 2

46 2 1 3 3 2 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1

47 1 2 2 1 2 1 1 1 3 2 1 2 1 2 3 1 1 3 4 1

48 2 1 2 2 1 1 3 2 2 3 3 1 2 2 3 2 3 2 4 2

49 1 1 1 1 2 1 1 1 3 2 2 3 1 2 3 1 1 3 3 3

50 5 1 2 1 1 1 1 2 1 3 1 2 2 3 2 1 1 2 5 1

51 1 1 2 2 2 1 1 1 3 1 3 3 1 3 2 2 1 3 4 2

52 2 1 1 1 1 1 3 2 2 3 2 1 3 2 3 1 1 3 5 3

53 1 1 2 1 2 1 1 1 1 2 1 2 1 3 2 1 1 2 4 2

54 1 2 2 2 1 1 3 3 3 1 3 2 2 1 3 1 1 3 3 1

55 3 1 1 1 2 1 1 1 2 3 2 3 1 2 2 1 1 2 5 3

56 1 1 2 2 1 1 1 2 3 2 2 2 2 1 2 1 1 3 4 2

57 2 1 1 1 2 2 1 1 1 1 3 1 1 2 3 2 1 3 3 2

58 4 1 2 1 1 1 3 2 2 3 1 3 2 1 2 1 1 1 4 1

59 1 2 2 2 2 1 1 1 3 2 3 2 1 2 3 1 1 3 5 2

60 3 1 1 1 1 1 2 2 2 3 2 1 2 1 2 2 1 3 3 4

61 1 1 2 1 2 1 1 1 3 1 3 2 1 2 3 1 1 3 4 2

62 3 1 2 1 1 1 2 3 1 3 2 3 2 1 2 2 1 1 5 1

63 1 1 1 1 2 1 1 1 3 2 2 2 1 2 3 1 1 3 4 4

64 4 1 1 1 1 2 1 2 2 3 1 1 2 1 2 2 1 3 3 2

65 1 1 2 1 2 1 1 1 1 1 3 2 3 1 3 1 1 3 4 1

66 1 1 2 2 3 1 2 3 3 3 2 1 2 2 2 2 1 3 3 2

67 1 2 1 1 2 1 1 1 2 2 3 2 3 1 1 1 1 3 4 4

68 3 1 2 1 3 1 2 2 3 3 2 3 2 1 2 1 1 3 5 1




69 3 1 1 1 2 1 1 2 3 3 3 1 1 2 1 2 1 2 5 1

70 4 1 2 1 2 1 2 3 2 2 3 1 2 1 1 2 1 2 5 4

71 5 1 2 4 1 1 1 2 1 3 3 3 1 2 1 2 1 2 4 1

72 5 1 1 1 2 1 2 3 3 1 2 1 2 1 1 1 1 1 5 4

73 5 1 2 2 3 1 1 1 1 3 3 3 1 2 1 2 1 2 4 4

74 5 1 2 2 1 1 2 3 2 2 3 1 2 1 1 2 1 2 5 1

75 5 1 3 1 2 1 1 2 3 3 3 2 1 3 2 1 1 1 4 4

76 4 1 2 2 1 1 2 1 1 1 3 1 2 1 2 2 1 2 5 1

77 2 1 2 1 2 1 1 3 1 3 2 3 3 2 1 1 1 1 4 4

78 5 1 1 3 1 1 2 2 3 2 3 2 1 2 2 3 2 2 5 2

79 3 1 2 1 2 1 1 1 2 3 2 1 2 1 2 1 2 1 4 1

80 1 1 1 1 3 1 2 2 1 2 3 3 1 2 2 2 2 1 5 4

81 4 1 1 1 2 1 1 3 1 3 2 2 2 1 2 1 2 3 4 2

82 5 1 2 2 1 1 2 1 1 2 3 1 1 2 1 2 2 1 5 4

83 3 1 3 1 2 1 1 2 1 2 2 2 2 1 2 1 2 3 4 4

84 2 1 2 1 2 1 2 3 2 3 3 2 1 3 2 2 2 3 5 1

85 4 1 1 3 1 1 1 1 2 1 2 1 2 1 1 1 2 1 4 4

86 3 1 3 1 2 1 2 2 1 3 2 3 1 2 2 2 2 3 5 4

87 1 1 2 2 2 2 1 3 1 2 3 2 2 1 2 1 2 3 4 4

88 5 1 1 1 2 1 2 3 2 2 3 1 1 3 2 3 3 1 5 5

89 2 1 3 1 1 1 1 1 2 3 2 2 2 1 1 1 3 3 4 4

90 4 1 2 1 2 1 2 2 1 2 3 2 1 2 2 2 3 3 6 1

91 3 1 1 1 2 1 1 3 2 1 3 3 2 1 1 1 3 2 5 4

92 2 1 2 1 1 1 2 2 2 3 2 2 1 2 2 3 3 3 6 4

93 5 1 1 1 2 1 1 1 2 2 3 1 2 1 1 2 3 3 5 4

94 4 1 2 1 2 1 2 3 1 2 3 2 1 2 2 3 3 3 5 4

95 2 1 1 2 2 1 1 2 2 3 2 2 2 1 1 2 3 2 5 4

96 4 1 2 1 1 1 2 1 1 2 3 1 1 2 2 1 3 3 6 4

97 3 1 1 2 2 1 1 3 2 3 2 3 2 1 2 1 3 3 5 4

98 2 1 2 2 1 1 2 2 1 2 3 1 1 2 2 1 3 2 5 4

99 4 1 1 2 2 1 1 2 2 3 3 3 2 1 2 1 3 3 5 4

100 2 1 2 3 1 1 2 1 1 1 3 1 1 2 2 1 3 3 5 4

Glossary




Account Freezing: The Depository Participant may freeze the account of a client

maintained with him on written instructions received by the Participant in that regard from

the client concerned in the form specified under the Business Rules.

Account Opening: Any person willing to avail the services offered by a Depository shall

open an account with a Depository Participant.

Beneficiary: A person who benefits from a trust set up on his / her behalf & anyone who

benefits from the proceeds of a will

A person who benefits from a contractual or fiduciary relationship

Beneficiary ID No: Each beneficiary is allotted an ID No. generated by DP by which a

beneficiary is identified. This is similar to your Bank A/c No. Or the Folio No.

BSE: Bombay Stock exchange is one of the oldest stock exchanges in Asia with over

6,000 stocks listed.

Beneficiary Account: An investor or a broker who wants to hold shares in dematerialised

(demat) form and undertake scrip less trading must have a depository account called

beneficiary account with Depository Participant of his choice.

CDSL: Central Depository Securities Ltd is an organization promoted by the stock

exchange Mumbai, (BSE) in association with Bank of India, Bank of Baroda, State Bank

of India and HDFC Bank to provide electronic depository facilities for securities traded in

the equity and the debt market. CDSL is the second depository in India. Karvy is one of the

Depository Participants of CDSL.




Client Id: Whenever any client opens an account with a Depository Participant he /she is

provided with an account number which is known as the beneficiary account number or the

Client Id. The combination of the Client Id and the Depository Participant Id is unique.

Deface: The client (registered owner) shall submit a request to the DP in the DRF for

dematerialisation along with the certificates of securities to be dematerialised. Before

submission, the client has to deface or cancel the certificates by writing "SURRENDERED

FOR DEMATERIALISATION”.

Defreezing of an account: The client can request his depository participant to release the

suspension order and defreeze the account for regular operations. The Depository

participant shall defreeze the account only after receipt of the application for defreezing

signed by all the account holders

Delivery Instructions by client: In order to transfer securities from his account to another

a beneficial account owner must give an instruction to his / her Depository Participant. A

beneficial account owner must give instruction to his / her DP to transfer

DRN: When the securities are found in order with the details of the request as mentioned

in the form, the depository participant enters the details in the DPM (Depository

participant Module, provided by NSDL to the DP) a Dematerialization Request Number

(DRN) is generated by the system. The DRN so generated is entered in the space provided

for the purpose in the Dematerialization Request Form. The request is then released to DM

(Depository Module – Depository’s software system). The DM forwards the requests to the

Issuer / R & T agent electronically. Once the DRN is confirmed or accepted by the Issuer /




R & T agent the DM electronically authorize the creation of appropriate credit balances in

the client’s account. The DPM shall credit the client’s account automatically.

Electronic Public Offering (EPO): An initial public offering, or new issue of shares, in

which the process of applying for shares is handled electronically (via websites).

Freezing of an account: Any client can give instructions, in the prescribed form, to his

Depository Participant to freeze his account either for debit or for all operations. Only after

receipt of the application for freezing the account signed by all the account holders the

Depository Participant shall freeze the account till further notice received from the client in

this regard.

Fungible: Dematerialized shares do not have any distinctive numbers or certificate

numbers. These shares are fungible – which means that 100 shares of a security are the

same as any other 100 shares of that security.

Hypothecation: The pledging of securities as collateral. A client having a beneficiary

account with a DP can hypothecate securities in electronic form against loan / credit

facilities extended by a pledge, who has a beneficiary account with a DP. The creation of

pledge / hypothecation will be initiated by the pledgor through its DP and the pledgee will

instruct its DP to confirm the creation of the pledge. The pledge / hypothecation so created

can either be closed on repayment of loan or invoked on default. After the pledgor repays

the loan to the pledgee the pledgor will initiate the closure of pledge / hypothecation. In

case of default by the pledgor in repaying the loan to the pledgee, the pledgee may initiate

invocation of pledge / hypothecation, after taking such steps as may be necessary as per




the terms of the underlying agreement with the pledgor and the Bye Laws and Business

Rules of NSDL and SEBI Regulations. In case of hypothecation, the pledgor will instruct

its DP to confirm the invocation of the hypothecation.

Initial Public Offering (IPO) : The first offering of a company’s shares to the public. The

shares offered may be existing ones held privately, or the company may issue new shares

to the public.

Inter Depository Instructions: Inter-Depository Transfer means transfer of securities

which are admitted for dematerialisation on both the depositories from an account held in

one depository to an account held in the other depository

ISIN: International Securities Identification Number (ISIN) is a code that uniquely

identifies a specific securities issue.

Market Trade: Trades which are settled through the Clearing Corporation / Clearing

House of an exchange are classified as " Market Trades ".

NSDL: The National Securities Depository Limited is an organisation promoted by the

Industrial Development Bank of India, the Unit Trust of India and the National Stock

Exchange of India Limited to provide electronic depository facilities for securities traded

in the equity and the debt market. NSDL commenced its operations in the year 1996 and is

the first depository in India.




NSE: National Stock Exchange is one of the leading stock exchanges in India. The NSE

has been set up by leading institutions to provide a modern, fully automated screen –

based trading system with national reach.

Off Market Trade: Trades which are not settled through the Clearing Corporation /

Clearing House of an exchange are classified as " Off Market Trades ". Negotiated trades

which are not cleared and settled through the Clearing Corporation / Clearing House are

off-market trades.

Pledge: To deposit personal property as security for a personal loan of money. If the loan

is not repaid when due, the personal property pledged shall be forfeit to the lender. A client

(pledgor) having a beneficiary account with a Depository Participant can pledge securities

in electronic form against loan / credit facilities extended by a pledgee, who too has a

beneficiary account with a Depository Participant.

Rematerialisation: It is the process by which a client can get his electronic holdings

converted into physical certificates. The client has to submit the rematerialisation request

to the DP with whom he has an account. The DP enters the request in its system, which

blocks the client’s holdings to that extent automatically. The Issuer / R& T agent then

prints the certificates, dispatches the same to the client and simultaneously electronically

confirms the acceptance of the request to NSDL. Thereafter, the client’s blocked balances

are debited.

Registrar and Transfer Agent (RTA) : A transfer agent and registrar for a publicly held

company keeps record of every outstanding share certificate and the name of the person to




whom it is registered. When the share changes hands, the transfer agent transfers the

ownership of the stock from the seller’s name to the buyer’s name. The registrar reconciles

all transfer records and makes sure that the number of shares debited is equal to the number

of shares credited.

Settlement: It is the process by which investors pay for shares they have bought and

receive payment for shares they have sold. It is also the process by which the investor

delivers the shares he has sold to the clearing house and receives the shares which he has

purchased from the clearing house of a recognized stock exchange.

Settlement Day: The day on which purchased securities are due for delivery to the buyer

and payment is due to be made to the seller.

Statement of Holding: A statement of holding details out the current balance in a

depository account. At least once every fortnight the Depository participant sends a

statement of Holdings to its clients.

Statement of transaction: A statement of transaction details out the various transactions

done through that depository account. At least once in every fortnight the Depository

Participant sends a statement of transaction to its clients. Karvy’s Online Demat services

enable its clients to view their statement of transactions on the net.

Transferability of Shares: Shares in a company are freely transferable, subject to certain

conditions, such that no shareholder is permanently or necessarily wedded to a company.

When a member transfers his shares to another person, the transferee steps into the shoes

of the transferor and acquires all rights of the transferor in respect of those shares. For




dematerialised shares the depository participant debits and credits the account of the client

with an authorisation from such client.

Transmission: Transmission of shares denotes a process by which ownership of share is

transferred on legal heir or to some other person by operation of law. In case of

transmission no transfer deed and no stamp duty is required. Transmission of shares

generally takes place in case of death, insolvency or mental illness or purchase in case of

shares by court or in case of amalgamation, where the amalgamating company holds shares

in various companies.

BibliographyWeb sites

www.karvy.com

www.indiainfoline.com

www.sharekhan.com

[email protected]

Books

Company books & Brochures

NSDL Books


mailto:[email protected]

http://www.sharekhan.com/

http://www.indiainfoline.com/

http://www.karvy.com/


A Project Report on Customer Satisfaction towards Depository Participants at Karvy

Documents

Transcript of A Project Report on Customer Satisfaction towards Depository Participants at Karvy