PRESENTED BY :DEEPAK SINGH

Although India had a vibrant capital market which is more

than a century old, the paper-based settlement of trades
caused substantial problems like bad delivery and delayed
transfer of title till recently. The enactment of Depositories
Act in August 1996 paved the way for establishment of
NSDL, the first depository in India. This depository
promoted by institutions of national stature responsible
for economic development of the country has since
established a national infrastructure of international
standards that handles most of the securities held and
settled in dematerialized form in the Indian capital market.

Using innovative and flexible technology systems, NSDL
works to support the investors and brokers in the capital
market of the country. NSDL aims at ensuring the safety
and soundness of Indian marketplaces by developing
settlement solutions that increase efficiency, minimize risk
and reduce costs. At NSDL, we play a quiet but central role
in developing products and services that will continue to
nurture the growing needs of the financial services
industry.


In the depository system, securities are held in
depository accounts, which is more or less
similar to holding funds in bank accounts.
Transfer of ownership of securities is done
through simple account transfers. This method
does away with all the risks and hassles
normally associated with paperwork.
Consequently, the cost of transacting in a
depository environment is considerably lower as
compared to transacting in certificates.


1 Core services


2 special services
Maintenance of individual investors
beneficial holding in an electronic form


Trade settlement
Automatic delivery of securities to the
clearing corporation.
Dematerialisation and rematerialisation of
securities.
Allotments in the electronic form in case of
initial public offering.
Account transfer for settlement of trade in
electronic share.
Facility for freezing/locking of investor
account


NSDL depository reaches its services to investors through market
intermediaries called Depository Participants (DP), who as per SEBI
regulations could be organisations involved in the business of providing
financial services like banks, brokers, custodians, financial institutions,
etc. This system of using the existing distribution channel helps NSDL to
reach to a wide cross section of investors spread across a large
geographical area.

The admission of DPs involves a detailed evaluation by NSDL and a further
evaluation and approval by SEBI.

Realising the potential in this market, all the custodians in India and a
number of banks, financial institution and major brokers have already
joined NSDL as DPs and they are providing services in a number of cities.
Many more organisations are in various stages of establishing connectivity
with NSDL.




Dematerialisation

Rematerialisation
Dematerialisation is the process by which a client can get
physical certificates converted into electronic balances.

An investor intending to dematerialise its securities needs
to have an account with a DP. The client has to surrender
the certificates registered in its name to the DP. After
intimating NSDL electronically, the DP sends the securities
to the concerned Issuer/ R&T(registration & transfer)
agent. NSDL in turn informs the Issuer / R&T agent
electronically, using NSDL Depository system , about
the request for dematerialisation. If the Issuer/ R&T
agent finds the certificates in order, it registers NSDL as
the holder of the securities (the investor will be the
beneficial owner) and communicates to NSDL the
confirmation of request electronically. On receiving such
confirmation , NSDL credits the securities in the
depository account of the Investor with the DP.
Rematerialisation 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 DP releases the request
to NSDL and sends the request form to the
Issuer/ R&T agent. The Issuer/ R&T agent then
prints the certificates, despatches the same to
the client and simultaneously electronically
confirms the acceptance of the request to NSDL.
Thereafter, the client's blocked balances are
debited.
NSDL carries out its activities through various
functionaries called "Business Partners" who include
Depository Participants (DPs), Issuing companies and their
Registrars and Share Transfer Agents, Clearing
corporations/ Clearing Houses of Stock Exchanges. NSDL
is electronically linked to each of these business partners
via a satellite link through Very Small Aperture Terminals
(VSATs) or through Leased land lines. The entire
integrated system (including the electronic links and the
software at NSDL and each business partner's end) is
called the "NEST" [National Electronic Settlement &
Transfer] system.

In order to avail of depository facilities, an
investor has to open a beneficiary account with a
depository participant of his choice.This is
similar to opening a bank account to use the
banking services.
Just as one can hold funds in a bank account and
transfer funds across accounts without actually
handling cash; one can hold securities in a
depository account and transfer securities across
depository accounts without actually handling
share certificates.
The account holder is called 'beneficial owner' in
a depository system and the account is known as
'beneficiary account'.

Securities issued by issuers who have entered into an agreement with
NSDL can be dematerialised in the NSDL depository. As per this
agreement, issuer agrees to verify the certificates submitted for
dematerialisation before they are dematerialised and to maintain
electronic connectivity with NSDL. Electronic connectivity facilitates
dematerialisation, rematerialisation, daily reconciliation and corporate
actions.

The clearing corporations/houses of stock
exchanges also have to be electronically
linked to the depository in order to facilitate
the settlement of the trades done on the
stock exchanges for dematerialised shares. At
present, all the major clearing
corporations/houses of stock exchanges are
electronically connected to NSDL.



Madras Stock Exchange Ltd. (MSE)
National Stock Exchange of India Ltd.
(NSE)
Inter-connected Stock Exchange of India
Ltd. (ISE)
OTC Exchange of India (OTCEI)
The Calcutta Stock Exchange Association
Ltd. (CSE)
The Delhi Stock Exchange Association
Ltd. (DSE)
The Stock Exchange, Mumbai (BSE)
The Stock Exchange, Ahmadabad (ASE)

Monetary benefits (dividends etc): NSDL will give
the beneficiary ownership details to the Issuer/R
& T Agent. The Issuer/R & T Agent will carry out
the necessary processing and the distribution of
such benefits will be outside the system.

Non-monetary benefits (rights bonus etc): NSDL
will give the beneficiary ownership details to the
Issuer/ R & T Agent. The Issuer/R & T Agent will
carry out the necessary processing and upload
the beneficiary ownership details to NSDL. NSDL
will then credit the beneficiary owners' accounts
by downloading the data to the DPs.
CDSL was promoted by Bombay
Stock Exchange Limited (BSE)
jointly with leading banks such as
State Bank of India, Bank of India,
Bank of Baroda, HDFC Bank,
Standard Chartered Bank, Union
Bank of India and Centurion Bank.

CDSL was set up with the objective of providing convenient,
dependable and secure depository services at affordable cost to
all market participants. Some of the important milestones of
CDSL system are:

CDSL received the certificate of commencement of business from
SEBI in February, 1999.

Honorable Union Finance Minister, Shri Yashwant Sinha flagged
off the operations of CDSL on July 15, 1999.

Settlement of trades in the demat mode through BOI
Shareholding Limited, the clearing house of BSE, started in July
1999.

All leading stock exchanges like the National Stock Exchange,
Calcutta Stock Exchange, Delhi Stock Exchange, The Stock
Exchange, Ahmedabad, etc have established connectivity with
CDSL.

As at the end of Dec 2007, over 5000 issuers have admitted their
securities (equities, bonds, debentures, commercial papers),
units of mutual funds, certificate of deposits etc. into the CDSL
system.



1 BSE 5,663.46 54.20
2 Bank of India 582.00 5.57
3 Bank of Baroda 530.00 5.57
4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 750.00 7.18
6 Standard Chartered Bank750.00 7.18
7 Canara Bank 674.46 6.45
8 Union Bank of India 200.00 1.91
9 Bank of Maharashtra 200.00 1.91
10 The Calcutta Stock 100.00 0.96
Exchange Limited
TOTAL 10,450.00 100.00

Sr.
No.
Name of shareholders
Value of holding
(in Rupees Lacs)
% terms to
total equity
COUSTDY FEE RS.0.50/MONTH NIL
RS.6Per Annum NIL
PURCHASE NIL NIL
SALE RS.10/Transaction(rs.8
effective from jan 1,2004) RS 6Per
transaction
pledge creation Rs 25 Rs. 12
Annual fee NILL NILL
REMATEREAL Rs 10/certificate Rs10/certificate
ISATION
charges
NSDL
CDSL