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A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.

A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening an account with any branch of a bank in order to utilise the bank's services. Suggestions on how to select a DP are given in Section IV.

 
  • The benefits of participation in a depository are:
    • Immediate transfer of securities;
    • No stamp duty on transfer of securities;
    • Elimination of risks associated with physical certificates such as bad delivery, fake securities, etc.;
    • Reduction in paperwork involved in transfer of securities;
    • Reduction in transaction cost;
    • Nomination facility;
    • Change in address recorded with DP gets registered electronically with all companies in which investor holds securities eliminating the need to correspond with each of them separately;
    • Transmission of securities is done by DP eliminating correspondence with companies;
    • Convenient method of consolidation of folios/accounts ;
    • Holding investments in equity, debt instruments and Government securities in a single account;
    • Automatic credit into demat account, of shares, arising out of split/consolidation/merger etc.
 
  • NSDL offers following facilities
    • Dematerialisation i.e., converting physical certificates to electronic form;
    • Rematerialisation i.e., conversion of securities in demat form into physical certificates;
    • Facilitating repurchase / redemption of units of mutual funds;
    • Electronic settlement of trades in stock exchanges connected to NSDL;
    • Pledging/hypothecation of dematerialised securities against loan;
    • Electronic credit of securities allotted in public issues, rights issue;
    • Receipt of non-cash corporate benefits such as bonus, in electronic form;
    • Freezing of demat accounts, so that the debits from the account are not permitted;
    • Nomination facility for demat accounts;
    • Services related to change of address;
    • Effecting transmission of securities;
    • Instructions to your DP over Internet through SPEED-e facility. (Please check with your DP for availing the facility);
    • Account monitoring facility over Internet for clearing members through SPEED facility;
    • Other facilities viz. holding debt instruments in the same account, availing stock lending/borrowing facility, etc.
 

NSDL provides its services to investors through its agents called depository participants (DPs). These agents are appointed by NSDL with the approval of SEBI. According to SEBI regulations, amongst others, three categories of entities i.e. Banks, Financial Institutions and Members of Stock Exchanges [brokers] registered with SEBI can become DPs. You can get a list of DPs from NSDL's office or from our website at www.nsdl.co.in.

  • You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be:
    • Convenience - Proximity to your office/residence, business hours.
    • Comfort - Reputation of the DP, past association with the organisation, whether the DP is in a position to give the specific service you may need?
    • Cost - The service charges levied by DP and the service standards.

In order to obtain the complete list of DP locations and their comparative charge structure, you may log on to www.nsdl.co.in or else you may write to NSDL for the same.

All the DPs are appointed subject to fulfilment of uniform requirements of SEBI ( Depositories and Participants) Regulations, 1996 and requirements of NSDL. However, the type of services offered and the service standards may differ among various DPs. For example, a DP branch having direct connectivity with the main office having depository set-up may be in a position to execute instructions faster.

You can approach any DP of your choice and fill up an account opening form. At the time of opening an account, you have to sign an agreement with the DP in a NSDL prescribed standard agreement, which details your and your DP’s rights and duties. You have to submit the following with the prescribed account opening form. In case you want to open account jointly with other person(s), following should be submitted for all the account holders.

Proof of Identity (POI) (copy of any one proof)
Passport Voter ID Card
Driving license PAN card with photograph
Identity card/document with applicant’s Photo, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student), g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and h) Credit cards/Debit cards issued by Banks.
Proof of Address (POA) (copy of any one proof)
Ration card Passport
Voter ID Card Driving license
Bank passbook Verified copies of Electricity bills (not more than two months old)/ Residence Telephone bills (not more than two months old)/ Leave and License agreement / Agreement for sale.
Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts.
Identity card/document with address, issued by a) Central/State Government and its Departments, b) Statutory/Regulatory Authorities, c) Public Sector Undertakings, d) Scheduled Commercial Banks, e) Public Financial Institutions, f) Colleges affiliated to universities (this can be treated as valid only till the time the applicant is a student); and g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.
Passport-size photograph

Copy of PAN Card

You must remember to take original documents to the DP for verification. Your DP will carry-out “in-person verification” of account holder(s) at the time of opening your account. You should remember to obtain a copy of the agreement and schedule of charges for your future reference.

Note : Your DP may ask an additional proof of identity/address.

Yes. You can open more than one account with the same DP. There is no restriction on the number of accounts you can open with a DP.

No. There are no restrictions on the number of DPs you can open accounts with. Just as you can have savings or current accounts with more than one bank, you can open accounts with more than one DP.

No. The depository has not prescribed any minimum balance. You can have zero balance in your account.

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 your individual name and another certificate is jointly held in your and your wife's name , two different accounts would have to be opened.

In this case you may open only one account with husband and wife as the account holders and lodge the security certificates with different order of names for dematerialisation in the same account. You will fill-up an additional form called " Transposition cum Demat" form. This would help you to effect change in the order of names as well as dematerialise the securities.

Yes. If you authorise any person to operate your account by executing a power of attorney and submit it to your DP, that person can operate the account on your behalf.

It is for protection of your interest. Your bank account number will be mentioned on the interest or dividend warrant, you are entitled to, so that such warrant cannot be encashed by any one else. Further, a DP cannot open the account if bank account number is not given.

Yes. Since in the depository system monetary benefits on your security balances are paid as per the bank account details provided by you at the time of account opening , you must ensure that any subsequent change in bank account details is informed to your depository participant.

In a bank account, credit to the account is given only when a 'paying in' slip is submitted together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be submitted to receive securities in the account. However, for the convenience of investors, facility of 'standing instruction' is given. If you say 'Yes' for standing instruction, you need not submit 'Receipt in' slip everytime you buy securities.

No. The demat account cannot be operated on "either or survivor" basis like the bank account.

No. Names of the accountholders for a depository account cannot be changed. If you want to change name or add / delete an accountholder, you need to open a new account in the desired holding pattern (names) and transfer the securities to the newly opened account. The old account may be closed.

In case your address is changed, you only need to inform the new address to your DP(s). When DP enters the new address in the depository computer system, it will be automatically conveyed to all companies in which you hold shares.

Yes. You can submit account closure request to your DP in prescribed form. Your DP will transfer all your securities, as per your instruction, and close your demat account.

The charges would be as per the schedule of charges of your DP, agreed by you at the time of account opening or any subsequent changes therein.

 

Nomination can be made only by individuals holding beneficiary accounts either singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, karta of Hindu Undivided Family, holder of power of attorney cannot nominate.

Yes. Nomination is permitted for accounts with joint holders. But, in case of death of any of the joint holder(s), the securities will be transmitted to the surviving holder(s). Only in the event of death of all the joint holders, the securities will be transmitted to the nominee.

Yes, NRI can nominate directly. But, the power of attorney holder cannot nominate on behalf of NRI.

No, a minor cannot nominate either directly or through its guardian.

Only an individual can be a nominee. A nominee shall not be a society, trust, body corporate, partnership firm, karta of Hindu Undivided Family or a power of attorney holder.

You may mention upto to three nominees in one depository account. Please take care to mention the share of each nominee (in %) in the nomination form, if you are mentioning more than one nominee.

Yes, a minor can be a nominee. In such a case, the guardian will sign on behalf of the nominee and in addition to the name and photograph of the nominee, the name, address and the photograph of the guardian must be submitted to the DP.

No. Nomination can be made account wise and not security wise.

Yes, NRI can be a nominee subject to the exchange control regulations in force from time to time.

The nomination form duly filled-in and signed, should be submitted to the DP either at the time of account opening or later. If nomination was not made at the time of account opening or you want to change the nominee(s) given earlier, you may do so anytime, by submitting a new nomination form to your DP.

Yes, the nomination can be changed anytime by the account holder/s by simply filling up the nomination form once again and submitting it to the DP.

 

Transmission is the process by which securities of a deceased account holder are transferred to the account of the surviving joint holder(s)/nominee/legal heirs of the deceased account holder. 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 surviving joint holder(s)/nominee/ legal heirs has to correspond independently with each company in which shares are held.

In case of the death of the sole holder , for the purpose of transmission of securities, the nominee has to submit a duly filled-in transmission form, notarised copy of death certificate and an affidavit in the prescribed format to the DP. After verifying these documents and if found in order, the DP will transmit the securities to the account of the nominee.

In case nomination is not made by the sole account holder, the securities would be transmitted to the account of legal heir(s), as may be determined by an order of the competent court. However in cases where the value of securities to be transmitted is less than Rs. 1,00,000/- the DP may process the request based on submission of necessary letter of indemnity , surety , affidavits and NOC documents.

In the event of death of one of the joint holders , the securities will be transmitted to the surviving holder(s) on submission of Transmission Form and notarised copy of the death certificate of the deceased joint holder to the DP. For transmission of securities, the account of the surviving holder(s) must be in the same sequence in which the names appear in the joint account to be closed.

 

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 its DP. In order to dematerialise certificates; an investor will have to first open an account with a DP and then request for the dematerialisation of certificates by filling up a dematerialisation request form [DRF], which is available with the DP and submitting the same along with the physical certificates. The investor has to ensure that before the certificates are handed over to the DP for demat, they are defaced by marking "Surrendered for Dematerialisation" on the face of the certificates.

You can dematerialise only those certificates that are already registered in your name and are in the list of securities admitted for dematerialisation at NSDL. All the scrips included in S&P, CNX, NIFTY and BSE SENSEX have already joined NSDL. This list has more than 4,300 companies and is steadily growing. You can get an updated list of these companies from your DP or from NSDL's office or from NSDL website at www.nsdl.co.in.

Before defacing the share certificate, you must ensure that it is available for dematerialisation. You must therefore check with your Depository Participant (DP) whether the ISIN (code number for the security in a depository system) has been activated and made available for dematerialisation by the depository. If yes, then you may deface the share certificate. The certificates are defaced by marking "Surrendered for Dematerialisation" on the face of the certificate.

Dematerialisation will normally take about 30 days.

If the process of dematerialisation takes more than 30 days, please contact your DP. If he is unable to help you, then you may send your grievance to:

The Officer in Charge Investor Grievance Cell National Securities Depository Limited
4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai - 400 013
Email:

 

Yes. You can dematerialise and hold all such investments in a single demat account.

 

Yes. If you wish to get back your securities in physical form, all you have to do is to request your DP for rematerialisation of the same. 'Rematerialisation' is the term used for converting electronic holdings back into certificates. Your DP will forward your request to NSDL, after verifying that you have the necessary balance. NSDL in turn will intimate the registrar who will print the certificates and dispatch the same to you.

 
  • The procedure for selling dematerialised securities is very simple. After you have sold the securities, you would instruct your DP to debit your account with the number of securities sold by you and credit your broker's clearing account. This delivery instruction has to be given to your DP using the delivery instruction slips given to you by your DP at the time of opening the account. Procedure for selling securities is given here below:
    • You sell securities in any of the stock exchanges linked to NSDL through a broker;
    • You give instruction to your DP to debit your account and credit the broker's [clearing member pool] account;
    • Before the pay-in day, your broker gives instruction to its DP for delivery to clearing corporation;
    • Your broker receives payment from the stock exchange [clearing corporation] ;
    • You receive payment from the broker for the sale of securities.
  • For receiving demat securities you may give a one-time standing instruction to your DP. This standing instruction can be given at the time of account opening or later. Alternatively, you may choose to give separate receipt instruction every time some securities are to be received. The transactions relating to purchase of securities are summarised below:
    • You purchase securities through a broker ;
    • You make payment to your broker who arranges payment to clearing corporation on the pay-in day ;
    • Your broker receives credit of securities in its clearing account (clearing member pool account) on the pay-out day;
    • Your broker gives instructions to its DP to debit clearing account and credit your account;
    • You receive shares into your account. However, if standing instructions are not given at the time of opening the account, you will have to give 'Receipt Instructions' to your DP for receiving credit,.

You should ensure that your broker transfers the securities from its clearing account to your depository account, before the book closure. If the securities remain in the clearing account of the broker, the company will give corporate benefits (dividend or bonus) to the broker. In that case, you will have to collect the benefits from your broker.

Any trade settled through a clearing corporation is termed as a 'Market Trade'. These trades are done through stock brokers on a stock exchange. 'Off Market Trade' is one which is settled directly between two parties without the involvement of clearing corporation. The same delivery instruction slip can be used either for market trade or off-market trade by ticking one of the two options.

Even if you sell securities through a sub-broker, you are required to transfer securities directly to the broker’s account. Hence you need to fill the Market Trade portion of the Delivery Instruction Slip to transfer securities directly to the account of the broker (i.e., the clearing member).

On every stock exchange, various settlements are effected every day such as daily settlement , auction settlement etc. Each of these settlements is identified by combination of a market type and a settlement number. You are required to mention the appropriate settlement details on the delivery instruction slip while transferring the shares to your broker's account. These settlement details are available on the contract note issued by the broker.

In this case also, the settlement deadlines will remain the same (i.e. Wednesday morning for a Monday trade). Further, in respect of trades executed through a sub-broker, you are required to transfer securities directly to the account of the broker (i.e., clearing member) and not to the account of the sub-broker. Hence, if you have sold securities through a sub-broker, you need to make sure that securities reach the account of the clearing member latest by Tuesday for a trade done on Monday.

In this case also the settlement deadlines will remain the same (i.e. Wednesday morning for a Monday trade). Further, in respect of trades executed through sub-broker you are required to transfer the securities directly to broker viz. clearing member account and not to the sub-broker’s account. Hence, if you have sold securities through sub-broker, you need to make sure that the securities reach the account of clearing member of the stock exchange latest by Tuesday.

The depository participant with whom you have your demat account will prescribe the deadlines to be followed by you for submission of delivery instruction slips. You should deliver instructions to your DP as per these deadlines.

The broker is expected to transfer the securities to you within two working days or four calendar days after securities are received in his pool account, provided you have made the requisite payment to the broker.

  • The following precautions are to be taken
    • Ensure and insist with your DP to issue DIS book; do not accept loose slips.
    • Ensure that DIS numbers are pre-printed and DP takes acknowledgment from you for the DIS booklet issued to you.
    • Ensure that your account number [client id] is pre-stamped.
    • If your account is a joint account, all the joint holders have to sign the instruction slips. Instruction cannot be executed if all joint holders have not signed.
    • Avoid using loose slips
    • Do not leave signed blank DIS with anyone viz. broker/sub-broker.
    • Keep the DIS book under lock and key when not in use.
    • If only one entry is made in the DIS , strike out remaining space to prevent misuse by any one.
    • Please fill in target account -Id and all details in the DIS, yourself.

Execution date is the date on which securities will be actually debited from your account. The execution date written on the delivery instruction has to be entered by the DP, in the DPM system [computer]. DPM system will record the date and will debit your account only on that date. You may issue the instruction well in advance of the date on which you want the securities to be debited from your account but your account will be debited only on the execution date. This facility is called future execution date facility.

By giving a future dated instruction the risk of non-execution of instruction due to lack of time or last minute rush is covered.

In case the securities bought by you are yet to be transferred into your account by your broker before the book closure / record date, you will not be entitled to receive corporate benefits such as dividend or bonus since your name will not figure in the list of beneficial owners. Hence, you must ensure that securities bought by you are transferred into your account before the book closure / record date announced by the company.

 

Yes. NSDL has recently launched a facility for delivering instructions to your DP over Internet , called SPEED-e. The facility can be used by all registered users. Your DP will help you in registering for the facility.

You can submit delivery instructions electronically, on the SPEED-e website https://www.speed-e.nsdl.com, after your DP has authorised you to operate your account through the SPEED-e facility. You can monitor the status of such delivery instructions to ensure that the instructions have been executed.

The benefit offered by SPEED-e to a demat account holder / Clearing Member is the convenience of conducting demat account transactions using an Internet connection from anywhere at anytime eliminating paperwork. Time and efforts for obtaining delivery instruction forms from your DP and submitting them to the DP everytime you sell securities is saved.

For using the SPEED-e facility it is essential that your DP must be registered with NSDL for this facility. There are two types of users for this facility , one is password based user who logs in with his password and can transfer securities only to three pre-specified broker accounts of his choice. The second is the smart-card based user who is issued a smart card for logging on to the site and can transfer the securities to any account. A password user can visit the SPEED-e website, fill-up the registration form available on the website. The website would allot a registration number and the DP of the client would authorise him for using the facility upon submission of a request with the registration number.

A smart card user can download the form from the website, fill it and submit the same to its DP. The DP will process the form and enable the client for using the facility. The smart card user will also be issued a smart card reader and a smart card.

Smart card based access to SPEED-e is more secure as your identification is based both on "What you have i.e. smart card" and "what you know i.e. PIN code" and provides a digital signature to identify you. In the case of password based access , you should handle your password carefully. In view of this security difference, the password based users have been permitted to transfer securities through SPEED-e facility to only three pre-specified broker accounts. These three accounts can be changed by the user.

  • Following are the additional benefits of smart card option in SPEED-e facility :
    • smart card user can transfer securities to any account unlike password users where transfer of securities is permitted only to three pre-notified broker accounts;
    • single smart card can be used to access all your demat accounts, opened with the same DP;
    • facility of multiple authorisation;
    • you can freeze your demat account or any particular ISIN or specific quantity within an ISIN yourself, through SPEED-e. The account freezed using SPEED-e can be unfreezed only by you.

Thereby you can deliver instructions and transfer securities when you wish, lock the account and unlock it only when you need, i.e. complete control of your account in your hands.

For password based operation, only one user can operate the account. Joint holders will have to give a power of attorney to one joint holder among themselves. For smart card based operation, in addition to what is stated above, all the joint holders can operate the account independently or jointly using multiple authorisation facility.

 

The concerned company obtains the details of beneficiary holders and their holdings from NSDL. The payment to the investors will be made by the company through the ECS ( Electronic Clearing Service) facility or by issuing warrants on which your bank account details are printed. The bank account details will be those which you would have mentioned in your account opening form or changed thereafter.

The concerned company obtains the details of beneficiary holders and their holdings from NSDL. Your entitlement will be credited by the company directly in your NSDL depository account.

An allotment advice will be sent by the Issuer/ its R&T agent for bonus/ rights entitlement. The Transaction Statement given by the DP, will also show the bonus/ rights credit into the account. The quantity shown in the advice and statement of transaction should match.

 
  • The procedure is as follows:
    • Both you (pledgor) as well as the lender (pledgee) must have depository accounts;
    • You have to initiate the pledge by submitting to your DP the details of the securities to be pledged in a standard format ;
    • The pledgee has to confirm the request through its DP. It is suggested that after creation of the pledge request, you may inform the pledgee and request him to confirm the request;
    • Once this is done, your securities are pledged All financial transactions between the pledgor and the pledgee are handled as per usual practice outside the depository system.

After you have repaid your loan, you can request for a closure of pledge by instructing your DP in a prescribed format. The pledgee on receiving the repayment will instruct its DP accordingly for the closure of the pledge.

Yes. The pledgee can have an account with a different depository participant of NSDL.

Yes; if the pledgee [lender] agrees, you may change the securities offered in a pledge.

Pledgor will continue to receive dividend on the pledged securities. The pledgee will get the benefits only if pledge is invoked and on record date the shares are in the pledgee's account.

  • The software in NSDL has been modified to handle distribution of bonus entitlements through Automatic Corporate Action (ACA) Module. This works as follows:
    • The holdings as of the record date / book closure, (including those holdings which are pledged) are considered for computing bonus entitlements.
    • At the time of effecting the credit of bonus shares, the system checks whether pledge is still open or closed.
    • Where pledge orders are not closed / invoked or partially closed / invoked, the bonus entitlements in such cases are credited to the pledgor's account with pledge marked in favour of the pledgee.
    • If the pledge is closed/invoked fully, the bonus entitlements will be credited to the pledgor's account as free balances.
 

SEBI has introduced Securities Lending and Borrowing scheme. As per this scheme, those persons having securities can lend their securities for consideration and those requiring securities (for meeting market obligations, as collateral etc.) can borrow the same. Under the scheme, the securities are lent through intermediaries who are approved by SEBI. The approved intermediary would borrow the securities for further lending to borrowers. Lenders of the securities and borrowers of the securities enter into separate agreements with the approved intermediary for lending and borrowing the securities. Lending and borrowing is effected through the depository system.

Yes. You can lend your securities through Intermediaries approved by SEBI.

You may enter into an agreement with the approved intermediary to be a lender under this scheme. After that, you may lend securities any time by submitting lending instruction to your DP.

Intermediary may return the securities at any time or at the end of the agreed period of lending. Intermediary has to repay the securities together with any benefits received during the period of the loan.

The benefits will be given to the Intermediary/borrower. However, whenever the securities are being returned/recalled, Intermediary/borrower will return the securities together with benefits received.

 

NSDL charges the DPs and not the investors. NSDL's charges to its DPs are fixed and are based on the usage of NSDL system. Complete details of NSDL charges as are payable by the DPs are available on NSDL website (www.nsdl.co.in). The DP charges its client for the services offered. The charges that the DP will be charging you for various services are mentioned in the Schedule of Charges which forms a part of the account opening agreement. You may keep a copy of this for your future reference. You can get the details of the charges from the DPs. You can also get a comparative list of DP charges from NSDL's office or from the NSDL website.

Your DP may revise charges by giving you 30 days notice in advance.

 

Your DP will give you a Transaction Statement periodically, which will detail your current balances and the various transactions you have done through the depository account. If you so desire, your DP may provide Transaction Statement at intervals shorter than the stipulated ones, probably at a cost.

You will receive a Transaction Statement from your DP once in a quarter. If you have done any transaction during the quarter, you will receive the statement within fifteen days of the transaction.

In case of any discrepancy in the transaction statement, you can contact your DP. If the discrepancy cannot be resolved at the DP level, you should approach NSDL. NSDL also sends out a statement of holdings to a few clients of DPs, picked at random. In case the balance in your account as indicated by your DP does not tally with the balance as indicated by NSDL, you can contact your DP/ NSDL for clarification.

You should inform your DP and obtain a duplicate Transaction Statement.

No transaction can be effected in your account without your written authorisation. Further, if you are away for a long time, you have the facility of freezing your account wherein only credits into your account will be allowed and no debit will be possible.

In a rare event of your DP going bankrupt or closing the operations, the interests of the investors will be fully protected. In such a situation, the investors will be given an option of either transferring the securities to a new DP or they may rematerialise the securities.

  • The data carries a high importance in the NSDL depository system. NSDL has taken necessary steps to protect the transmission and storage of data. The data is protected from unauthorised access, manipulation and destruction. The following back up practices are adopted to protect the data:
    • Local Back up
    • Remote Back up
    • Disaster Recovery Site

In addition to this, every DP is required to take daily back up, at the end of each day of operation

NSDL system provides the facility to freeze the depository accounts for any debits or for both, debits and credits. In an account which is "freezed for debits", no debits will be permitted from the account, till the time it is unfreezed.

In case of failure of a DP to resolve your grievance, you can write to the investor grievance cell of NSDL at the following address:

The Officer in Charge
Investor Grievance Cell
National Securities Depository Limited

4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Email :