Depository_System_India OM about related nsdl csdsl

nsdl cdsl

1. DEPOSITORY
SYSTEM IN
INDIA

2. INTRODUCATION DPOSITORY SYSETM
1994
1996
1999
1992 2002
The NSE is established as a tax-
paying, for-profit company, the
first demutualized stock exchange
in India. Its creation was based on
the recommendations of the
Pherwani Committee.
Incorporation
The NSE began operations with a fully electronic,
screen-based trading system (NEAT). This made the
process of placing buy and sell orders instant and
transparent. the ownership transfer and settlement
on the physical movement of paper certificates
NSE Introduces
Electronic Trading
NSE with other financial institutions,
promoted the National Securities
Depository Limited (NSDL). This
was India's first depository, creating
the actual infrastructure to make the
Demat system a reality
The Depositories Act &
NSDL
the market regulator, SEBI, mandated that shares of
certain top companies could only be traded in
Demat formon the stock exchanges. This list of
companies was gradually expanded, forcing the
market to shift away from physical certificates.
Compulsory Demat
Trading
The list of compulsory Demat
stocks covered almost all
actively traded companies.
Physical share trading on
exchanges effectively ended,
and the depository system
became the universal
standard
The Digital Standard

3. CAUSE OF CERTIFICATES BASED TRADING
The process of transferring
ownership was entirely manual.
After a purchase, the certificate had
to be sent to the company's transfer
agent for the name change, a
procedure that could take weeks or
even months to complete
Sometimes the
said documents
were returned
because of
mistake in transfer
form or incomplete
information in it.
The system required extensive
paperwork and physical storage for
both investors and companies.
This not only made the process
cumbersome but also increased
the chances of errors and
misplacement of important
documents
If certificates
were torn
they were
returned
without
approval by
the company
Just as receiving shares
was slow, getting money
after a sale was equally
delayed.
Sometimes legal points
regarding the purchase of
shares were also raised by the
company. On also certificates
were returned to transferee.
Physical certificates
were susceptible to
being lost, stolen, or
damaged by things
like fire or water
The long settlement cycle meant
sellers had to wait a considerable
amount of time to receive their
payment, impacting their ability
to use the funds.

4. In order to solve this problems increasing need for scripless trading was felt. For scripless trading, that is
for book entry based trading it is necessary to convert share certificates in dematerialisation (demat)
form and adopt the system of transfer simply by book entries. It is also known as scripless trading And
for scripless trading on the line of the U.S.A. and the UK.
Depository system has been created in India too. At present
two depository institutions with their depository participants
are at work for dematerialisation of share
certificatesandscripless
trading. One is the National Securities Depository Ltd. and the
other is the Central Depository Services of India Ltd. These two
companies have been promoted to provide facility for book
entry based trading in place of certificate based trading. They
are knownasdepositories

5. NSDL and CDSL are working as depositories. Their main
objectives are to convert the share certificates in the
Dematerialisation (Demat) form and replace the lengthy
and costly certificate based trading by book entry based
trading.
They convert the share certificates in Demat form and
provide facilities for transfer of shares without transfer form
and share certificates. Depositories store the securities in
electronic form which is knownasdematform.
The system provides a centralized and regulated platform
for holding securities, which increases the safety of an
investor's assets. Ownership records are transparent and
can be easily verified.
By enabling paperless transactions, the system aims to
make the settlement of trades faster and more efficient.
OBJECTIVES OF
DEPOSITORY SYSTEM

6. FUNCATION
OF
DEPOSITORY
SYSTEM
In case of need the
depository
converts Demat
form of shares into
physical
certificates
They afford
quick
transfer of
shares
simply by
book entry
It makes
settlement of the
transactions
made
outsidethemark
et
The depository
system helps in
making quick
payments by
reducing delay in
delivery
They convert the
share certificates
in Demat or
electronic form
The depository
makes possible
the trading of
securities in
Demat form
They help the
investors in
quick collection
of dividend,
interest, bonus
shares and rights
shares.
The depository
helps the
clearing house in
quick settlement
of Transactions
costly

7. COMPONENTS OF DEPOSITORY SYSTEM
DEPOSITORY
NSDL & CDSL
SHARE TRANSFER
AGENTS
DEPOSITORY
PARTICIPANTS
INVESTOR

8. NSDL (National Securities Depository Limited)
•National Securities Depository Limited, is India's first and one of its two central securities depositories. It
functions as a bank for securities, holding financial assets like shares, bonds, and mutual funds in a digital
(dematerialized) format. It was established in 1996, primarily promoted by the National Stock Exchange (NSE).
Demat Account Number:A 16-character ID starting with 'IN'followed by 14 numeric digits
(e.g., IN12345678901234
•NSDL provides an alert service that notifies investors via SMS for all transactions taking place in their Demat
account, such as debits, credits, or failed instructions. This helps in tracking account activity and preventing
unauthorized transactions.
•IDeAS(Ideas for Depository Account Statement):This is a facility for investors to view the balances and
transactions in their Demat accounts online, anytime. It's essentially an electronic passbook for your holdings.
•Depository Participants (DPs):These are the agents that provide depository services to investors. Your
stockbroker (like HDFC Securities, Kotak Securities) or bank acts as a DP. They are the bridge between you and
NSDL

9. CDSL(CENTRAL Depository SERVICES OF INDIA LTD)
•Central Depository Services (India) Limited, is one of India's two central securities depositories. Promoted by
the Bombay Stock Exchange (BSE), CDSL is the largest depository in the country in terms of the number of
active Demat accounts, making it a cornerstone of the Indian capital market's infrastructure
•Primary Exchange:It is the primary depository for the majority of securities traded on the BSE.
•Demat Account Number:A 16-digitall-numeric ID (e.g., 1234567890123456)
•e-Voting:CDSL provides a platform for Demat account holders to cast their votes on company resolutions and
proposals electronically, promoting wider shareholder participation in corporate governance.
•CDSL has the largest number of active Demat accounts in India. This is partly because many of the country's
largest discount brokers (like Zerodha, Angel One, Upstox, etc.) are registered as Depository Participants (DPs)
primarily with CDSL.
•Dematerialisation:Converting physical security certificates into electronic entries in an investor's Demat account.
•Corporate Actions:Facilitating the distribution of corporate benefits like bonus shares, stock splits, rights issues,
and dividends to the rightful shareholders electronically.

10. NSDL vs CDSL Market Share
1000
1100
1200
1300
1500
1600
1700
1800
1900
2000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NSDL CDSL
Last year 2024

11. Comparison OF DEPOSITORY
4,10,02,186 ₹ Crore
10,564 ₹ Crore
NSDL
5,738
1,995
88
1,11,14,428
8200 Crore
₹ 78 Lakh Crore
VS
Client Accounts Active
Number of certificates
eliminated (Approx.) (in
Crore)
Average number of
accounts opened
per day since
November 1996
CDSL
Equity Shares
(QTY)
NSE
BSE
Value (in ₹ Crore)
7,87,948 ₹ Crore
3 to 4 Lakh
5.2 Lakh Crore

12. DEPOSITORY PARTICIPANTS
•A Depository Participant (DP) is the link between you (the investor) and the central depositories like NSDL and
CDSL. Think of a DP as a branch of a bank; while your money is held by the main bank (like SBI), you interact
with it through your local branch. Similarly, your shares are held by NSDL or CDSL, but you manage them
through your DP.
•DP records purchase and sales transactions of the In When he buys the shares his Demat a/c. is credited.
When sells the shares he has to fill in the delivery instruction from in which the name of the buyer and his Demat
a/c number mentioned. When the seller gives this form to his DP, his De a/c. is debited by the number of shares
sold.
•DP stores the investments of the investor in electronic from and maintains the record of purchase and sell.
•It provides periodical statements of the position of the Deme account to the Investors.
•When the investor desires to convert his shares into physical certificates from demat form he has to apply to the
DP. It can be done only through DPanddepository.
•Providing you with account statements and transaction details

13. DEPOSITORY PARTICIPANTS
STOCK BROKERS MARKET SHARE
Zerodha 18%
Angelone 13%
Groww 12%
ICICISecurities 6%
HDFCSecurities 5%
MotilalOswal 2%

16. A share transfer agent is a professional agency that a company appoints to manage its
shareholder records and transactions. They act as the official keeper of investor data on behalf of
the company.
they are the intermediary between a company and its shareholders, handling all the
administrative tasks related to the ownership of shares.
Maintaining Records:They keep an up-to-date record of who owns the company's shares and
bonds.
Processing Share Transfers:When shares are bought or sold, the transfer agent updates the
ownership records, canceling the old share certificates (if any) and issuing new ones.
Shareholder Communication:They handle communications with investors, including sending
annual reports, notices of meetings, and other official documents.
Distributing Dividends:The agent is responsible for paying out dividends to all the registered
shareholders on behalf of the company.
Handling Corporate Actions:They manage the logistical aspects of stock splits, bonus issues,
and rights issues.
Dematerialisation:The process of converting old physical share certificates into a modern,
digital format.

17. A market leader in India, CAMS is the
largest registrar and transfer agent for
mutual funds in the country. They also
provide RTA services for a range of other
financial institutions.
Computer Age Management Services (CAMS):
The second-largest player in the Indian mutual
fund space and a major competitor to CAMS.
They offer a comprehensive suite of services
including registrar and transfer agency, and
solutions for IPOs, corporate actions, and
brokerage transactions.
KFinTechnologies Ltd
One of the oldest and most respected
RTAs in India. They are well-regarded
for their professional services and
handle the registry for many of the top
corporate groups in the country,
including the Tata Group.
TSR DarashawConsultants Pvt. Ltd
A prominent SEBI-registered
RTA with a strong focus on
providing services for IPOs,
corporate actions, and
maintaining shareholder records
for a large number of listed and
unlisted companies.
Link IntimeIndia Pvt. Ltd

18. Investor is the demat account holder of DP and he is the beneficiary of the depository system. Investor becomes
the co-pan of the system through DP. In India ICICI Bank, UTI Bank, HD Bank. Stock Holding Corporation of
indiaetc. are acting as through their branches spread over the big cities and towns of country. They are easily
accessblebytheinvestors
Your investments are held in a
digital Demat account,
eliminating the risks of physical
certificates being lost, stolen,
damaged, or forged
Safety
All your different investments—equity
shares, bonds, government
securities, and mutual funds—can be
held in a single account. Corporate
actions like bonus shares or stock
splits are automatically credited to
your account without any paperwork
Convenience
Speed
This is your stockbroker or bank
(like Zerodha, HDFC Securities,
Angel One). They act as the
"branch" of the main depository.
Depository ParticipantWhen you buy or sell shares,
the transfer is almost instant.
Trades are settled within one
day (T+1), so you get your
shares or money quickly.

19. INVESTOR DEPOSITORY SYSTEM
NATONALSECURITIES DEPOSITORY LIMITED
ICICIBANK 10%
State Bank of India 12%
Citi Bank 14%
Dena Bank 16%
Canara Bank 13%
UnionBankofIndia 17%

20. INVESTOR DEPOSITORY SYSTEM
CENTRAL DEPOSITORY SERVICS OF INDIA
BANKOF BARODA 10%
Bank of Maharashtra 12%
Centurion Bank of Punjab Ltd 14%
Jammu And Kashmir Bank Limited 16%
Calcuttastock exchange ltd 13%
HDFCBANK 17%

21. 1
2
3
4
BENEFITS TO THE
INVESTOS
BENEFITS TO THE
COMPANY
BENEFITS TO THE
FININACIAL
INTERMEDIARIES
BENEFITS TO THE
NATIONS
BENEFITS OF
DEPOSITORY
SYSTEM

22. BENEFITS OF THE INVESTORS
1
Investor gets the dividend,
interest bonus shares etc
From the company very
quickly
2
Investor gets the
notice of the annual
general meeting in
time
3
Immediately after
allotment of shares
trading is possible
4
Share transfer
becomes fast and less
costly
5
The investor can lend
shares in demat
account and earn
incomefromlending
6
Problems like loss of
share certificates in
transit, artificial
certificates, forgery etc.
do not arise.

25. Reduces the cost of
printing of certificates
The company can get quickly the
names and addresses of the
shareholders from the depository
Reduces the cost of
distribution of certificates
Communication with share
holders becomes fast
It provides attraction to the
foreign investors toinvestinIndia
Reduces the cost of
distribution of certificates
1
2
3
4
5
6

26. BENEFITS TO THE FINANCIAL INTERMEDIARIES
It increases income of
brokerage by
increasing the volume
of trade
Brokers are freed from
the botheration of bad
delivery problems
Cost of purchase and
sales is reduced
Cash flow becomes
very fast
Can be pledged with
the bank for
gettingadvances

27. BENEFITS TO THE
NATION
25% 50% 75%
Growth rate of the economy
can be increased by attracting
foreign capital by providing
demat facility
It creates favourableclimate
for the privatisationof public
sector units
It increases the confidence of the
people in capital market which
again inspires them to invest
their savings for economic
development of the nation
10% 80%
Depository system increases the liquidity of
the capital market and thereby encourages
investment and economic development
Demat based trading increases the volume of trade
As result income of securities transactions tax and
service tax for government increases In tax revenue
for governmentincrease