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Frequently Asked Questions (FAQs)
Sign a tripartite/bipartite agreement with NSDL. The Issuer has to send the Master Creation Form to NSDL providing the details of instrument along with a Letter of Intent. Once admitted, these securities would be made available for dematerialisation by NSDL.
No. The same terms and conditions of the existing bipartite/tripartite agreement will be applicable for the Certificate of Deposit.
Certificate of Deposit can be issued in multiples of Rs. 1 lakh. The face value of the CD by default will be taken as Rs. 1 lakh in the NSDL system. The securities (CDs) will be credited in the investor's account in terms of units. For e.g. If the Issuer proposes a 1 crore issue, then 100 units will be credited in the Investors account.
Yes, the Issuer has to pay the relevant stamp duty as applicable irrespective whether it is issued in either physical or demat form.
Yes, each type of security like Equity Shares, Debentures, bonds, Commercial Paper etc. is identified separately in the NSDL System by a unique code called ISIN (International Securities Identification Number). Certificate of Deposits having different maturity dates will be identified separately in NSDL system through separate ISINs. However Certificate of Deposits having the same maturity date will be identified by the same ISIN irrespective of the date of allotment. Description of each ISIN will be communicated to all the DP and Issuers on the activation of ISIN in NSDL system.
The Issuer Name will be accompanied by CD (Certificate of Deposit) alongwith date/year of maturity as a part of the standard descriptor. This will enable both Investors and the Depository Participants to easily identify these instruments. e.g. ICICI Bank CD 10NV05 indicates Certificate of Deposit issued by ICICI Bank Limited with maturity date as November 10, 2005.
As per the RBI Monetary and Credit Policy 2002-03, with effect from June 30, 2002, banks and FIs should issue CDs only in the dematerialised form. A new CD can be issued directly in demat form without recourse to printing of Certificates. Securities will be directly credited into the allotment account of the investor's by NSDL on receipt of allotment details from Issuer/Registrar & Transfer Agent. The issuance in demat form will be in accordance with the Fixed Income Money Market and Derivatives Association of India (FIMMDA) Guidelines on issuance of CD's, details of which are available on the www.fimmda.org.
The steps to be taken for allotting CDs in demat form are enumerated in the Process Flow.
According to the guidelines issued for the CD by the FIMMDA the Issuer has to ensure that the investor receives the credit (of the CD) in his demat account latest by the following working day from the date of realization of the cheque.
The procedure for dematerialisation of Certificate of Deposit is same as that carried out for equity shares. Investor shall submit the Certificate of Deposit alongwith demat request form (which is available with DP) to the DP. Only those Certificates of Deposit, which have been made available for dematerialisation by its Issuer, can be dematerialized.
The Issuer has to open a redemption account with Depository Participant (DP). The details of the Redemption Account (DP_ID, Client ID) have to be provided at the time of activation of ISIN. The Investors holding CDs in demat form will give the Delivery Instruction Slip (DIS) to their respective Depository Participants to transfer the CDs to the Issuers Redemption Account so that the transfer takes place by 3.00 p.m. atleast two working days prior to the maturity date.
After the confirmation from the Issuer to NSDL on payment of redemption proceeds to all the investors, the balance in the redemption account is extinguished by carrying out debit-type corporate action of the redemption account. The Depository Registrar (at the Issuers instance) in co-ordination with NSDL will initiate this corporate action
As per the FIMMDA guidelines, the investor after giving the transfer instructions as mentioned above should also communicate to the issuer the place at which the payment is request by a letter/fax enclosing the copy of the DIS it had given to its DP. On the receipt of Certificate of Deposit in the redemption account, the issuer will make payment to the investors.
The issuer can request for beneficiary download on T-2 settlement date or as on the record date. This beneficiary position will only indicate the details of the CD holders to the Issuer as on that particular date but will no way imply that redemption amount will be paid to the above beneficiary holders. Redemption amount will be paid to the investor who finally transfers the balances to the Issuers redemption account. This is considered as a statutory download and is free of cost.
In addition, NSDL on a weekly basis provides the download of beneficiary position to all the Registrars (on every Friday - there is no need for an issuer to solicit a special benpos on a Friday). Issuers can take the details from the registrar. The same can be exported to the back office of the Registrar & Transfer agent on Saturday morning.
NSDL also provides downloads of beneficiary position as and when requested by the Issuer. For these type of download NSDL charges a flat fee of Rs 5000 where number of records are less than 10,000 and a fee of Rs 10,000 for records exceeding 10,000.
The ISIN will be freezed at the end of the redemption date. It will be done so only after the Issuer confirms that all the investors have been paid the redemption proceeds.
Yes, A new ISIN has to be generated to identify these rolled over Certificate of Deposit separately in the NSDL system, as the date of maturity will be different. However in case an ISIN already exists for the maturity date of the rolled over CD, then the Issuer can directly do the allotment in the existing ISIN.
In case of issue of Certificate of Deposits and for Short term Debt instruments (less than or equal to 365 days), excluding Commercial Paper, a fee of Rs. 10,000/- (plus service tax) shall be levied on the Issuer for five such issues made in a financial year. Provided however an additional fee of Rs.10,000/- (plus service tax) shall be levied on the Issuer for every additional five issues.
No. The charges are to be decided mutually by the issuer an its Depository Registrar.
It depends upon the convenience of investor whether one wants to open a separate account for Certificate of Deposit. NSDL has no restriction if existing account or multiple accounts are used for dematerialisation of Certificate of Deposit.
The minimum size to be subscribed/transacted by investor is Rs. 1 lakh.
Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor's account with his DP.
The procedure for dematerialisation of Certificate of Deposit is same as that carried out for equity shares. The client (holder) will submit a request to the DP, in the Dematerialization Request Form (DRF), along with the original CD certificate/s to be dematerialized. Before submission, the client/holder has to write on the reverse of the 'CD' (certificate/s) in the space provided for endorsement followed by signature of authorized official of holder;
"SURRENDERED FOR DEMATERIALISATION and credit to my/our demat ACCOUNT. (account number) with (DP) name /-------- number.
The DP would give an acknowledgment (DRF acknowledgement portion) to its client confirming the acceptance of the CD for dematerialisation. Only those Certificates of Deposit, which have been made available for dematerialisation by its Issuer, can be dematerialized. However, as per the RBI Monetary and Credit Policy 2002-03, with effect from June 30, 2002, banks and FIs should issue CDs only in the dematerialised form.
No. Single Statement of Transaction will reflect all holdings in a particular account irrespective of type of instrument.
Buyer and Seller decide upon price and quantity of securities to be transacted. Seller authorises its DP through Delivery Instructions to debit his account and transfer the security into the account of Buyer who may have opened account with the same or any other DP. Buyer receives said securities in its account immediately if the buyer has given one-time standing instruction to its DP. Settlement of funds between the parties will be settled outside the ambit of NSDL
NSDL does not charge any fee for dematerialisation of certificates from depository participants. Also, no settlement fee shall be charged by NSDL. However, DPs are free to levy any charges towards dematerialisation/trade from its clients.
Procedure followed will be identical to that followed for direct credit of equity shares during IPO/Bonus/Rights. Investors will have to provide demat account number alongwith DP ID to the issuer.
The Issuer has to open a redemption account with Depository Participant. The Investors holding CDs in demat form will give the Delivery Instruction Slip (DIS) to their respective Depository Participants to transfer the CDs to the Issuers Redemption Account so that the transfer takes place by 3.00 p.m. atleast two working days prior to the maturity date. On sighting the securities in the Redemption account, the Issuer will initiate the steps to pay the investors the redemption proceeds.
Issuer will open a redemption account with the DP at the time of issue of Certificate of Deposit in demat mode. This redemption account will be the same for all the CDs Issued by the Issuer. As per the FIMMDA guidelines the Issuer will provide the details of the redemption account in the form of a certificate to the first investor of the CD. The details of the Issuers redemption account will also be communicated to all its Depository participants by NSDL.