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Role and Functions of NSDL and CDSL

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Table of Content

History………………………………………………………………………………………… 3

Introduction………………………………………………………………………………… 5

Legal framework………………………………………………………………………….. 7

Promoters……………………………………………………………………………………. 8

Role & Functions………………………………………………………………………….. 9

Management……………………………………………………………………………….. 10

Participant……………………………………………………………………………………. 12

Sources………………………………………………………………………………………….13

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History

The first depository was set up way back in 1947 in Germany.

In India it is a relatively new concept introduced in 1996 with the enactment of Depositories Act 1996 .

Their operations are carried out in accordance with regulations made by SEBI ,bye-laws and rules of Depositories Act and SEBI (Depositories and Participants) Regulations Act 1996 .

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Before introduction of Depository system, the problems faced by investors and corporates in handling large volume of paper were as follows:

Bad deliveries Fake certificates Loss of certificates in transit Mutilation of certificates Delays in transfer Long settlement cycles Mismatch of signatures Delay in refund and remission of dividend etc

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INTRODUCTIONDepository : An organization that holds securities of investor in electronic format at the request of the investor through a registered Depository Participant.

Difference between Bank and Depository :

Bank Depository

Holds fund into an account. Holds securities into an account.

Transfer funds between accounts on the instruction of the account holder.

Transfer securities between accounts on the instruction of the account holder.

Facilitates transfers without having to handle money.

Facilitates transfers of ownership without having to handle securities.

Facilitates safe keeping of money.

Facilitates safe keeping of shares.

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OBJECTIVE

Reduce the time for transfer of securities. Avoid the risk of settlement of securities. Enhance liquidity and efficiency. Reduce cost of transaction for the investors. Create a system for the central handling of

all securities. Promote the country's competitiveness by

complying with global standards. Provide service infrastructure in a capital

market.

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ACTIVITIES

Accepting deposit of securities for custody. Making computerized book entry deliveries of

securities which are immobilized in its custody. Creating computerized book entry pledges of

securities in its custody. Providing for withdrawal of securities. Undertaking corporate actions like distribution of

dividend and interest. Redemption of securities on maturity.

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Benefits of availing depository services

o Safe & Convenient .o Immediate transfer of securities.o No stamp duty for transfer of securities.o Elimination of risk with physical certificates.o Reduction in paper work and transaction cost.o Change in address gets automatically updates with

all companies.o Automatic credit in demat accounts.

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PROCESS

o Fill in a Demat Request Form ( DRF) available with the DP and submit the physical certificates . Separate DRF should be filled for each ISIN no.

o DP intimates Depository of the request through the system .

o DP submits the certificates to the registrar.o Registrar confirms the demat request from depository.o After dematerialization certificates , registrar updates

accounts and informs depository.o Depository updates its accounts and informs DP.o DP updates accounts and inform investor.

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Introduction of Depository system.

the term Depository means a place where a deposit of money, securities, property etc is deposited for safekeeping under the terms of depository agreement

A depository is an organization, which assists in the allotment and transfer of securities and securities lending.

The shares here are held in the form of electronic accounts i.e dematerialized form and the depository system revolves around the concept of paper-less or scrip-less trading.

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It holds the securities of the investors in the form of electronic book entries avoiding risks associated with paper

It is not mandatory and is left to the investor to decide

Depositories carry out its operations through various functionaries called business partners

Conti..

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Legal framework for a depository

A depository system is governed by the following acts

Securities & Exchange Board of India Act 1992

The SEBI(Depositories and Participants) Regulations, 1996

Bye –laws of depository

Business rules of depository

The Companies Act 1956

Presently there are two Depositories working in India

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NSDL

It was registered by the SEBI on June 7, 1996 as India’s first Depository to facilitate trading and settlement of securities in the demat form

Promoters :-

IDBI UTI NSE

CDSL

It commenced its operations during feb, 1999

Promoters :-

BSE BOB BOI SBI HDFC

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Role and Functions of NSDL and CDSL

A/C main MaintenanceDematerializationMarket TransfersTransmissionCorporate ActionsPledge / HypothecationOff - Market TransfersRematerialisation

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Management of CDSL

FYI…..

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Management of CDSL

FYI…..

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Participants of NSDL & CDSL

Intermediaries like :-

Depository participant

Issuer companies

RTA

Clearing members

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Difference between NSDL & CDSL….?

The only Difference between NSDL & CDSL is scope of the work

NSDL Work for NSE Ltd.CDSL work for BSE

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Source :-

https://nsdl.co.in/index.php#

http://www.cdslindia.com/index.html

http://www.slideshare.net/KavitaSharma3/ppt-on-depository-system-in-india

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