Depository

There are only two depositories in India, namely, NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services Ltd.). JYOTI is the Depository Participant to both the Depositories. JYOTI is also providing the online punching facility to clients known as SPEED-e

What is a Depository? A depository is an organisation which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities. How is a depository similar to a bank? It can be compared with a bank, which holds the funds for depositors. A Bank – Depository analogy is given in the following table: How many Depositories are registered with SEBI? At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI. Who is a Depository Participant? A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services. Public financial institutions, scheduled commercial banks, foreign banks operating in India with the approval of the Reserve Bank of India, state financial corporations, custodians, stock-brokers, clearing corporations /clearing houses, NBFCs and Registrar to an Issue or Share Transfer Agent complying with the requirements prescribed by SEBI can be registered as DP. Banking services can be availed through a branch whereas depository services can be availed through a DP. Is it compulsory for every investor to open a beneficial owner (BO) account to trade in the capital market? As per the available statistics at BSE and NSE, 99.9% transactions take place in dematerialised mode only. Therefore, in view of the convenience of trading in dematerialised mode, it is advisable to have a beneficial owner (BO) account for trading at the exchanges. What are the benefits of availing depository services? As per the available statistics at BSE and NSE, 99.9% transactions take place in dematerialised mode only. Therefore, in view of the convenience of trading in dematerialised mode, it is advisable to have a beneficial owner (BO) account for trading at the exchanges. The benefits are enumerated below:- A safe and convenient way to hold securities; Immediate transfer of securities; No stamp duty on transfer of securities; Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. Reduction in paperwork involved in transfer of securities; Reduction in transaction cost; No odd lot problem, even one share can be traded; Nomination facility; Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately; Transmission of securities is done by DP eliminating correspondence with companies; Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc Holding investments in equity and debt instruments in a single account.  How can services of a depository be availed? To avail the services of a depository an investor is required to open a Beneficial Owner (BO) account with a Depository Participant (DP) of any depository. How can one open an account? First an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents which serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. Apart from these PAN card has to be shown in original at the time of account opening from April 01, 2006. All applicants should carry original documents for verification by an authorized official of the DP, under his signature. Investor has to sign an agreement with DP in a depository prescribed standard format, which gives details of rights and duties of investor and DP. DP should provide the investor with a copy of the agreement and schedule of charges for their future reference. The DP will open the account in the system and give a unique account number, which is also called BO ID (Beneficial Owner Identification number) and used for all future transactions. What are all charges an investor has to pay for opening and maintenance of a BO account? SEBI has rationalised the cost structure for dematerialisation by removing account opening charges, transaction charges (for credit or buy transactions of securities), custody charges and account closing charges. Custody charges are now paid by the issuer companies. Broadly, investors are required to pay the charges towards:- Dematerialisation and Rematerialisation of their securities Annual account maintenance charges Transactions fees (only for sell transactions) The DP may revise the charges by giving 30 days notice in advance. Why should an investor give his bank account details at the time of BO account opening? Bank account details are necessary for the protection of interest of investors. When any cash or non cash corporate benefits such as rights or bonus or dividend is announced for a particular scrip, depositories provide to the concerned issuer /it’s RTA, the details of the investors, their electronic holdings as on record / book closure date for reckoning the entitlement of corporate benefit. The disbursement of cash benefits such as dividend is credited directly by the Issuer/it’s RTA to the beneficiary owner through the ECS (Electronic Clearing Service wherever available) facility or by issuing warrants on which bank account details are printed for places where ECS facility is not available. The bank account number is mentioned on the dividend and warrant to avoid any fraudulent misuse. The bank account details will be those which are mentioned in account opening form or modified details that had been intimated subsequently by the investor to the DP. Can an investor change the details of his bank account? Yes. However, the investor must inform the DP regarding change in the bank account and corresponding change in MICR / IFSC code while updating their bank account details with DP. In the depository system monetary benefits on the security balances are paid as per the bank account details provided by the investor at the time of account opening. The investor must ensure that any subsequent changes in bank account details are informed to the DP. What should be done if the address of the investor changes? Investor should immediately inform his DP along with necessary documents, who in turn will update the records. This will obviate the need of informing different companies What would be the charges for account closure and securities transfer due to account closing? SEBI has advised that from January 09, 2006, no charges shall be levied by a depository on DP and consequently, by a DP on a BO, when a BO transfers all the securities lying in his account to another branch of the same DP or to another DP of the same depository or another depository, provided the BO Account/s at transferee DP and at transferor DP are identical in all respects. In case the BO Account at transferor DP is a joint account, the BO account at transferee DP should also be a joint account in the same sequence of ownership. All other transfer of securities consequent to closure of account, not fulfilling the above-stated criteria, would be treated like any other transaction and charged as per the schedule of charges agreed upon between the BO and the DP. Can multiple accounts be opened? Yes. An investor can open more than one account in the same name with the same DP and also with different DPs. For all the accounts, investor has to strictly comply with KYC norms including Proof of Identity, Proof of Address requirements as stipulated by SEBI and also provide PAN number. The investor has to show the original PAN card at the time of opening of demat account. Does the investor have to keep any minimum balance of securities in his account? No. Is it necessary to have account with the same DP as broker has? No. Depository / DP can be chosen by investor as per convenience irrespective of the DP of the broker.  Can an investor open a single account for securities owned in different ownership patterns such as securities owned individually and securities owned jointly with others? No. The Demat account must be opened in the same ownership pattern in which the securities are held in the physical form. e. g. if one share certificate is in the individual name and another certificate is jointly with somebody, two different accounts would have to be opened. What is required to be done if one has physical certificates with the same combination of names, but the sequence of names is different i.e. some certificates with ‘A’ as first holder and ‘B’ as second holder and other set of certificates with ‘B’ as first holder and ‘A’ as the second holder? In this case the investor may open only one account with ‘A’ & ‘B’ as the account holders and lodge the security certificates with different order of names for dematerialisation in the same account. An additional form called "Transposition cum Demat" form will have to be filled in. This would help you to effect change in the order of names as well as dematerialise the securities Can an investor operate a joint account on "either or survivor" basis just like a bank account? No. The demat account cannot be operated on "either or survivor" basis like the bank account. Can someone else operate the account on behalf of the BO on the basis of a power of attorney? Yes. If the BO authorises any person to operate the account by executing a power of attorney and submit it to the DP, that person can operate the account on behalf of the BO. Can addition or deletion of names of accountholders is permitted after opening the account? No. The names of the account holders of a BO account cannot be changed. If any change has to be effected by addition or deletion, a new account has to be opened in the desired holding pattern (names) and then transfer the securities to the newly opened account. The old account may be closed. Can an investor close his demat account with one DP and transfer all securities to another account with another DP? Yes. The investor can submit account closure request to his DP in the prescribed form. The DP will transfer all the securities lying in the account, as per the instruction, and close the demat account. What if there are any discrepancies in the statement of holdings? In case of any discrepancy in the statement of holdings, investor can contact his DP and in case of discrepancies in corporate benefits, one can approach the company / its Registrar and Transfer Agent. If the discrepancy is not resolved, the investor may approach concerned Depository (NSDL or CDSL). Whether investor can freeze his account(s)? Investor can freeze his account and/or ISIN and/or specific number of securities under an ISIN for any given period of time as per applicable Regulations of SEBI and Bye Laws of the respective depository.

Transmission of dematerialised securities

What is transmission of dematerialised securities? Transmission is the process by which securities of a deceased account holder are transferred to the account of his legal heirs / nominee. Process of transmission in case of dematerialised holdings is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting documents to the DP, whereas in case of physical securities the legal heirs/nominee/surviving joint holder has to independently correspond with each company in which securities are held. In the event of death of the sole holder, how the successors should claim the securities lying in the demat account? The claimant should submit to the concerned DP an application Transmission Request Form (TRF) along with the following supporting documents 1.  In case of death of sole holder; where the sole holder has appointed a nominee Notarised copy of the death certificate 2. In case of death of the sole holder; where the sole holder has not appointed a nominee Notarised copy of the death certificate And anyone of the below mentioned documents - Succession certificate Copy of probated will Letter of Administration The DP, after ensuring that the application is genuine, will transfer securities to the account of the claimant. The major advantage in case of dematerialised holdings is that the transmission formalities for all securities held with a DP can be completed by interaction with the DP alone, unlike in the case of physical share certificates, where the claimant will have to interact with each Issuing company or its Registrar separately.

Inter Depository Transfers

If a BO holds an account with NSDL/CDSL, can he receive securities from an account in CDSL/NSDL? Yes. Inter depository transfers are possible without any additional costs.