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 later part.
Opening a demat account is quite simple. All you have to do is to approach a NSDL DP, which will help you to complete the formalities. You need to fill up a form, submit PAN card and proof of address. In addition, you need to provide details of your bank account.
After your demat account is opened, your DP will provide you DP ID and Client ID, a copy of your Client Master Report containing your demat account related details, tariff sheet and ’Rights & Obligations of Beneficial Owner and Depository Participant‘. DP ID is 8 characters long code, (example IN3XXXXX) allotted by NSDL to all DPs to identify them. Client ID is 8 digit long code used to identify the clients in the system. Combination of DP ID and Client ID makes your unique account number in the NSDL system.
You should verify the Client Master Report to ensure that all your details have been recorded correctly in depository system. If you want to trade in shares etc. (i.e. buy or sell), you would also need to open a Trading / Broking account with any SEBI registered stockbroker. There are many DPs which offer 3-in-1 arrangement for the benefit of investors (3-in-1 is a combination of demat account, trading account and bank account).
For list of DP locations and their comparative charge structure, please visit https://nsdl.co.in/joining/joincharges.php.
NSDL has specified certain basic eligibility criteria for becoming a DP. The criteria are similar or even higher in certain respects than the corresponding provisions of SEBI regulations. All the DPs are same in the sense they are appointed by NSDL only after grant of Certificate of Registration by SEBI to them. However, the type of services offered, service standards and charges for the services rendered may differ among DPs.
Please remember to take original documents to the DP for verification. In case you are unable to produce original document for verification, then photocopy should be attested by any authorized entity, like a public notary. Your DP may ask additional proof of identity / address to meet its requirements in addition to above-mentioned. The process of account opening is shown in the diagram below -Diagram
It is mandatory to establish the identity of the applicant at the time of opening account as per SEBI guidelines. This is done by the DP’s staff by verifying the affixed photograph on account opening form and the photo seen on document on PAN card with the person seeking to open the account. For Joint account holders, the ’in-person verification’ is required for all the holders.
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. The depository has not prescribed any minimum balance. You can have zero balance in your demat account.
Providing bank account details at the time of demat account opening is mandatory. These bank details are communicated to issuer companies / RTAs for the purpose of crediting any amount payable to you (such as dividend, interest or maturity payment or redemption amount) directly in your bank account. It is therefore suggested that you provide details of your active bank account in the account opening form. Later, in case of change therein, please remember to inform to your DP.
In demat account, debit or credit transactions are permitted only if it is duly authorized by the respective holder(s). As a Delivery Instruction Slip (DIS) is required for every debit transfer in the demat account, a 'Receipt Instruction Slip' is required for every credit transfer in the demat account. By giving a onetime standing instruction to your DP, you may avoid giving receipt instruction to your DP whenever a credit is expected in the account.
No. As per rules applicable at present, demat account cannot be operated on 'either or survivor' basis like the bank account. Therefore, every instruction given for a jointly held demat account needs to be signed by all the joint holders.
Yes. In case you have multiple demat accounts with one or more DPs and do not wish to continue with them, you may submit account closure form to your DP(s) in prescribed format. In the form, you are required to mention DP ID, DP name and Client ID of the account where you wish the balances to be transferred. Your DP will transfer all your securities as per your instruction and close your demat account. It is important to understand that a demat account cannot be closed if there is any balance in the account.
For shifting or transfer of a demat account, you need to first open a new demat account where you want the balances to be transferred to (if you already have another demat account, then you may use it for this purpose, instead of opening a new account). Then you need to submit duly filled and signed ‘Account Closure Form’ to your existing DP. In the form, you should mention the details of the other demat account where you want the balances to be transferred. After verification of your request, your DP will arrange to transfer the balances to the desired account and then close the source account.
Dematerialization is the process by which physical certificates of securities are converted into securities in electronic form by way of credit in investor's demat account held with a DP. Dematerialization is change in form of holding, it does not result into change of ownership.
In order to dematerialize certificates, you need to open a demat account. Once the demat account has been opened, you need to fill up a 'Dematerialization Request Form' in prescribed form and submit it to your DP along with the security certificates. Your DP will forward the demat request to the concerned issuer company or its Registrar and Transfer Agent for further processing. Once the request is confirmed by the concerned issuer company or its Registrar and Transfer Agent, it results in credit of electronic securities in the demat account of the respective investor. The process of dematerialization is shown in the diagram below –Diagram
Most of listed and active companies have already joined NSDL and their shares and other types of securities are available for demat. Many other companies are in the process of joining NSDL. You may search if the shares held by you are available for demat or not, at https://nsdl.co.in/master_search.php.
After ensuring that the certificates have been duly marked as above, you may submit the DRF to your DP along-with the share certificates for further processing.
As per SEBI's guidelines, DP is required to process the demat request received by it within 7 days. Further, issuer company / its RTA may take up to 15 days to process the demat request received by them. Considering the time required for transmission of documents from DP to issuer company / RTA, dematerialization will normally take about 30 days.
No. The demat account must be opened in the same ownership pattern in which the securities are held in the physical form. For example, if one share certificate is in your name and another certificate has your name along with your wife's name, then you would need to open two demat accounts (one in your name and other in joint names of yourself and your wife).
The Depositories Act, 1996 gives investors an option to hold securities in physical form or demat form. Hence, if you do not intend to sell the securities, you may not dematerialize them. However, holding the securities in demat form entails numerous benefits and is therefore highly recommended. Further, there are existing / proposed restrictions on transfer of securities belonging to listed companies and unlisted public limited companies, if held in physical form. It may therefore be better to dematerialize the securities.
Yes. You can dematerialize your tax-free bonds even when they are under lock-in. The process of demat is similar to that applicable to demat of shares. You need to submit duly filled in and signed DRF to your DP along with bond certificates. DP will forward the request to concerned issuer / its RTA and upon confirmation, credit will be received in your demat account.
Yes. Now the market of government securities like bonds and Treasury Bills (T-Bills) is easily accessible to retail investors. In fact, RBI does keep a portion of new issues reserved for retail investors. You may invest in G-Sec by participating in auction of new securities or by purchasing already issued securities in secondary market. For both, you need to approach any authorized bank or primary dealer or stock broker, mentioning your demat accounts details (DP ID and Client ID).
The SGB offers a superior alternative to holding gold in physical form. Option to hold SGB in demat form makes it even better and convenient. The process to buy or subscribe to sovereign gold bonds in demat form is quite easy. All you need to do is to mention your DP ID and Client ID in your subscription form. Some banks offer online application facility also (if investor makes application online and does payment electronically, then some price discount is also available at present). Upon allotment by RBI, your demat account will credited with the requisite number of bonds.
Yes, you may do so. For this purpose, you need to contact the bank / agent from whom you had purchased the SGBs. They will assist you in conversion of SGBs held in form of Certificate of Holdings into demat form.
Yes. You need to provide a duly filled in and signed request in prescribed format (known as Dematerialization Request Form - Government Securities) along with 'Form of Transfer' to your DP. Your DP will forward the request to NSDL. NSDL will arrange for necessary credit in your demat account.
The joint holders are entitled to change the sequence of names by making a written request to the company. This does not constitute a transfer. Changing the sequence of joint holders is called 'Transposition'. However, transposition facility can be availed for entire holdings in a folio and not allowed for part of the holdings.
If the same set of joint holders hold securities in different sequence of names, then there is no need to open multiple demat accounts for dematerialization of such securities. Using 'Transposition cum Demat facility' such securities held vide certificates in different combinations, can be dematerialized in one demat account. For this purpose, Dematerialization Request Form (DRF) and an additional form called 'Transposition cum Demat Form' should be submitted to the DP. This is explained in the diagram below -Diagram
Yes. If you wish to get back your securities in physical form, you need to submit 'Rematerialisation Request Form' in prescribed format to your DP. After necessary checks, your DP will forward your request through NSDL's depository system to the concerned Issuer company / RTA. The company / RTA will print the certificates and dispatch the same to you directly. You should check the rematerialisation charges with your DP before submitting the request.
Nomination is a simple process by which a holder of securities communicates his / her preference regarding who should receive these securities in case of his / her death. Process of nomination in respect of demat account can be done at the time of opening of demat account or any time later.
Nomination can be made only by individuals holding demat account singly or jointly. Non-individual holders like society, trust, body corporate, partnership firm , Hindu Undivided Family and holder of Power of Attorney cannot nominate.
Yes. Nomination is permitted for accounts with joint holders. However, 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 (if nomination given, else to legal heir).
Yes, NRI can nominate directly. However, the power of attorney holder cannot nominate on behalf of NRI.
No. Minor cannot nominate either directly or through his / her guardian.
Only an individual can be a nominee. Non individuals like society, trust, body corporate, partnership firm, Hindu Undivided Family cannot be a nominee in the demat account.
Yes, at present up to three nominations can be made for one demat account. In case, two or three nominees are mentioned, then it is also required to mention the proportion (%) in which various securities are desired to be transmitted upon death of the account holder.
Yes, a minor can be a nominee. Whenever, a minor is mentioned as a nominee in a demat account, details of his / her guardian should also be mentioned.
No. Nomination can be made account wise and not security wise. This means, in case of death of account holder, all the securities lying in the demat account, are liable to be transmitted to nominee(s) in the pre-registered proportion. If you wish different nominees for different securities, then you may consider keeping the securities in different demat accounts and mention nominee(s) as per your choice.
Yes, NRI can be a nominee in a demat account subject to the provision of foreign exchange regulations in force.
The demat account holders need to mention the information related to nominee(s) in the account opening form at the time of account opening. Up to three different individuals may be mentioned as nominee in one demat account.
In case, nomination was not done at the time of account opening or was done but account holder(s) wants to change it anytime later, then a Nomination form needs to be filled up and provided to 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.
Nomination is not mandatory for demat account. However, it is very much recommended to have nominee mentioned in the demat account. In the unfortunate case of death of sole account holder, it makes the process of transmission very easy and fast. In you do not wish to mention any nominee at the time of account opening, you are required to state that “I/We do not wish to make a nomination”.
Transmission is the process of law by which securities belonging to a deceased account holder are transferred to surviving joint holder(s) / legal heirs / nominee of the deceased account holder. Process of transmission in case of dematerialized holdings is relatively convenient as the transmission formalities for all securities held in a demat account can be completed by submitting the requisite documents to DP. There is no need to approach various companies for this purpose, as is required when securities are held in physical form.
Upon death of account holder (sole holder or joint holder), how the transmission will take place, is described in the diagram below –Diagram
In case of the death of the sole holder, for transmission of securities, the nominee needs to submit duly filled-in transmission form along with a copy of the death certificate duly attested by a Notary Public or a Gazetted Officer. In case the account of the claimant is not with the same Participant, copy of Client Master Report of the account of the claimant (certified by the concerned DP) is also required. After verification of these documents, the DP will transmit the securities to the demat account of the nominee.
After verifying the above documents and satisfying himself, the DP will transmit the securities to the surviving holder(s) account and will close the account of the deceased
'Transmission cum Demat' is a very useful facility when one of the joint holders mentioned in securities certificate (held in physical form) has died and remaining holder(s) wish to have the securities transmitted in their name in demat form. Using this facility the twin objectives of deletion of name of one of the deceased joint holders and dematerialization of securities can be achieved in a single step. This is explained in the diagram below -Diagram
Any trade settled through a clearing corporation is termed as a 'Market Trade'. These trades are done through stockbrokers on the platform of a recognized stock exchange. An 'Off Market Trade' is one which is settled directly between the two parties, without the involvement of clearing corporation.
Transfer of securities from a demat account held with one depository to another demat account held with a different depository is known as 'Inter Depository Transfer' (IDT). IDT is possible for those ISINs which are active in both the depositories.
In case you give a pay-in instruction for quantity which is more than the quantity available in demat account at the time of settlement of the instruction, then your demat account is debited to extent of balance available. In case of off market transfer, if sufficient balance is not available then the entire instruction fails, meaning that debit does not take place.
On every stock exchange, various transactions happen under different trade windows. These windows are identified by a distinct combination of a market type and a settlement number. It is important that you mention correct market type and settlement number (together said to be settlement details in depository system) in the delivery instruction slip so that your pay-in obligations are settled correctly. These details can be found in the contract note issued by the broker.
Under T+2 rolling settlement system, trades (buy and sell) happening on the platform of stock exchange on day 1 (T) are settled by the concerned clearing corporation two days later, means on the day 3 (T+2). For example, trades undertaken on Monday will be settled on Wednesday (presuming all days are working days). Similarly, all trades undertaken on Tuesday are settled on Thursday, so on and so forth. This kind of settlement system is known as T+2 rolling settlement.
Clearing corporations prescribe timelines for pay-in and payout of securities as well as funds for each settlement. Stockbrokers are required to adhere to them. In order to enable them to do so, DPs in turn prescribe time lines for securities pay-in for clients doing the sell trades (funds settlement happens through banks and therefore, is out of depository system).
As the trade has happened on Monday, pay-in of securities will take place on Wednesday, meaning your broker must get the securities before the clearing corporation prescribed time on Wednesday. As your DP will need some time to process the delivery instruction slip given by you, it would have prescribed some timeline for submission of pay-in related instructions (typically previous day of pay-in day). You need to ensure that your delivery instruction slip reaches your DP well before the given time and day. It may therefore be better to submit your delivery instruction slip to your DP immediately once you receive confirmation of your sell order from your broker.
Your DP will prescribe the timelines to be followed by you for submission of delivery instruction slips and communicate to you. These are generally printed on the DIS booklet given by the DP also for your information.
The broker is required to transfer the securities to you within one working day, after securities are received in its clearing member account, provided you have made the requisite payment to the broker.
Every DP prescribes some timelines for submission of delivery instruction slips. If it happens that your instruction slip reaches your DP after such deadline time, your DP can accept it with limited liability for its execution in the depository system. In such cases, DPs do mark the instruction slip (client copy as well as their office copy) with stamp containing description similar to 'Received late, Subject to best efforts' or 'Late, received at Client's risk'. If for some reason, DP is unable to execute the late received instruction in depository system successfully, and this results into client failing to meet its pay-in obligation, leading to financial loss (auction charges etc.), DP cannot be held liable for such loss.
Execution date is the date on which securities will be actually debited from your account. In order to ensure that the instruction gets executed on the execution date written on the delivery instruction slip, it must be entered by DP in the depository system. You may issue the instruction well in advance of the date on which you want the securities to be debited from your account (your account will be debited only on the execution date mentioned in DIS).
By giving a future dated instruction the risk of non-execution of instruction due to lack of time or last minute rush is avoided. You may like to use this facility to ensure that shares etc. are transferred to intended beneficiary's account on a day of your choice.
In case mode of payment is cheque or electronic payment, transferee's name, bank account number, bank name, transaction reference number for electronic payments or cheque number for cheque payments are required.
Pledging is basically committing the shares held by a person (pledgor) in favour of another person (pledgee) as a security or collateral for the exposure granted by pledgee. Generally, shares are pledged by the concerned shareholder for taking loan against shares.
Once the pledge instruction is confirmed in depository system, the underlying securities are blocked in the demat account of pledgor. Until this block remains, pledgor is disabled from disposing of those securities.
Upon repayment of loan, pledgor should submit a duly filled in ‘Pledge Closure Initiation Slip’ to its DP. Once executed, the information is forwarded to DP of the pledgee. The pledgee then may submit ‘Pledge Closure Confirmation Instruction’ to its DP. (Alternatively, the pledgee may give instruction to its DP to close the pledge without waiting for request from the pledgor).
Once pledge is closed, the block created on the underlying securities is removed and they become available once again for disposal by the erstwhile pledgor.
Yes, if the pledgee (lender) agrees, you may change the securities offered in a pledge. For this purpose, a new request for creation of pledge will have to be given by the pledgor and the existing pledge needs to be closed.
The pledgor continues to be the beneficial owner of the underlying securities during the period of pledge. Therefore, all the corporate benefits declared by the company during this period belong to pledgor. The pledgee will get the benefits if pledge is invoked and on record date, the shares remain in pledgee’s account.
If the shares are in pledged status on the record date, bonus shares are credited to pledgor’s account with pledge marked in favour of the pledgee. Later when the pledge is closed, all the shares (including the bonus) will be credited to the pledgor’s account as free balances. In case of invocation of pledge, all the shares (including the bonus) will be moved to pledgee’s account.
Digital LAS (Loan Against Shares) is a facility enabled by NSDL for making the process of loan against shares online. Using this facility, a demat account holder can obtain finance (loan) against pledge of eligible securities held in demat account in favour of lending bank. For more information on this, you may check with a participating bank.
In depository system, there is no difference between pledge and hypothecation except that pledge can be invoked by the lender (pledgee). Whereas, in case of hypothecation, for invocation to take place, consent of borrower (hypothecator) is also required.
No. A separate Margin Pledge form called ‘Form 43’ needs to be used for submitting margin pledge / re-pledge request.
No, transfer of securities to demat account of the TM/CM for margin purposes (i.e. Title Transfer Collateral Arrangement) is prohibited from September 1, 2020.
No, holding of Power of Attorney shall not be considered as equivalent to the collection of margin by the TM/CM from September 1, 2020.
A TM who is not a CM, should open demat account under sub-type ‘TM – Client Securities Margin Pledge Account’. Margin pledge of securities can be done in such a demat account.
A TM who is also a CM may open demat account under sub-type “TM/CM – Client Securities Margin Pledge Account’ and client securities pledged in the said account can in turn be re-pledged with CM (in its capacity as a TM) or CC (in its capacity as a CM) for providing collateral in form of securities as margin.
A CM who wants to take re-pledge of securities from a TM may open demat account under sub-type ‘CM – Client Securities Margin Pledge Account’ and client securities re-pledged in such account can in turn be further re-pledged with clearing corporation (CC) for providing collateral in form of securities.
No. Client can initiate the Margin Pledge either to the ‘TM – Client Securities Margin Pledge account’ or to the ‘TM / CM – Client Securities Margin Pledge account’.
In case of Margin Pledge invocation, stamp duty would be applicable and payable before the execution of invocation of the Margin Pledge by the concerned trading member / clearing member / clearing corporation.
No. The funded stocks can be held in ‘Client Securities under Margin Funding Account’ of trading member only by way of margin pledge.
On receipt of margin pledge instruction either from a client or TM (based on the POA), a link to ‘Confirm Margin Pledge Transactions’ would be generated and sent by NSDL through SMS on registered mobile number and registered e-mail id in the demat account of a client. On clicking the said link, client will be redirected to a web page where client will be authenticated with “PAN” (not applicable in case of PAN exempt clients), After authentication, client will be displayed the details of outstanding margin pledges for the specific TM and client can generate the One Time Password (OTP) through the same link and OTP will be sent on the registered mobile number and registered e-mail id of the client. On OTP authentication, margin pledge transaction would be processed further.
Margin Pledge instruction can be initiated in favour of a trading member only if the UCC allotted to the client by trading member is linked in the demat account of the Client. Validation of the margin pledge instruction will be done with the UCC database (i.e. Client UCC, TM ID, Segment) which is linked in the demat account of the Client.
Yes. Margin pledge instruction can be given electronically through NSDL e-services – SPEED-e platform.
OTP will be sent to NRI clients at email ID registered in their demat account.
Yes. Margin pledge and re-pledge transactions shall be shown in client’s account against each security provided as collateral to a TM, and in whose favour i.e. TM / CM / CC.
Client can initiate release of margin pledge request for the securities pledged/ re-pledged with TM/CM/CC. Alternatively, TM/CM/CC can initiate a unilateral release of pledged/re-pledged securities.
You may find the charges payable to your DP for margin pledge and re-pledge transactions from your DP. These charges may be different from the charges payable for pledge. Charges that are charged by NSDL to DPs are available at https://nsdl.co.in/about/charges.php
Yes. Inter depository transfers are possible.
Securities Lending and Borrowing Scheme (SLBS) is a mechanism by which short sellers can borrow the required securities on the stock exchange platform to meet their delivery obligations or as collaterals. This scheme is run by clearing corporations which are registered as ‘Approved Intermediaries’.
Stockbrokers who register themselves as ‘Participant’ with the Approved Intermediary, may participate in SLBS for their own account or on behalf of their clients. Retail investors may participate in the scheme through their stockbroker as lender or borrower. Lending and borrowing are effected through the depository system on a T+ 1 settlement basis. SLBS is permitted in dematerialized form only.
SLBS is a market based system which helps to meet the temporary need of the securities. Short sellers may meet their delivery obligation or collateral requirement by borrowing the securities from the market. Lenders on the other hand are able to earn lending fee by lending the securities lying idle in their portfolio.
Yes. You can lend your securities through your stockbroker who has registered itself as ‘Participant’ with the ‘Approved Intermediary’ (clearing corporation). You need to enter into a standard agreement with your stockbroker.
The tenure of lending and borrowing may be between 1 to 12 months. However, lenders and borrowers do have the option of recall of securities and early return of securities, respectively.
No. Securities, which are available for trading in Futures and Options segment of the stock exchange, are available for lending and borrowing at present. The list of securities eligible under SLBS are periodically announced by the respective approved intermediaries.
You may place your order to your broker for lending the securities. Your broker will enter the order on the platform of the stock exchange. After successful execution of the order, you will need to give delivery instruction slip to your broker for the purpose of payin.
Borrower of securities may return the securities at the end of the agreed period of lending or before it (if foreclosure of transaction is permitted by approved intermediary for that security). Upon return, securities will be credited to your demat account through your broker or directly by the clearing corporation.
Securities in which there are corporate actions are subject to either foreclosure of transaction or adjustment depending on the type of corporate action. All transactions in case of corporate actions other than dividend and stock-spilt are foreclosed on the ex-date. In case of dividend, the dividend amount is collected from the borrower by clearing corporation and paid to the lender. In case of stock split, the position of the borrower is proportionately adjusted and the lender will receive the revised quantity on the reverse leg settlement date.
You may place your order with your broker specifying the details (like name and quantity of securities required, borrowing period). Your broker will enter your order in exchange platform. Upon receiving the pay-out, your broker will arrange the credit of securities in your demat account. You will need to return the borrowed securities at the end of period (or before it, if so desired and permitted by the approved intermediary).
Record date is the date, which is taken as cutoff day by a company to consider the list of shareholders for the purpose of distribution of any type of corporate benefit. You would be entitled to receive the benefits as declared by the company if your name appears in the list of shareholders as on the ‘record date’. Therefore, it is important for you to ensure that securities bought by you are transferred to your account by your broker before record date.
The concerned company obtains the details of beneficiary holders from NSDL as on the record date. The due amount is credited to the linked bank account of the demat account holder directly by the company.
The concerned company obtains the details of beneficiary holders and their holdings from NSDL as on the record date. The number of shares you are entitled for, are credited to your demat account by the company / its RTA.
An allotment advice is issued by the Issuer company / its RTA for bonus / rights entitlement. You should check the same with the demat account statement received by you. The quantity shown in the advice and account statement should match.
Yes. You can dematerialise and hold all such investments in a single demat account.
NSDL has no restriction on type of instruments that can be admitted in the depository. Instruments like Bonds, Debentures, Commercial Papers, Certificate of Deposit, etc. irrespective whether these instruments are listed/unlisted/privately placed or even issued to a single holder can be dematerialized.
NSDL does not charge any fee one-time or on recurring basis from issuer for admitting any securities for dematerialisation. The only cost that will have to be borne by the company is towards electronic connectivity with NSDL. Electronic connectivity can obtained either through setting up in-house connectivity or through appointing a Registrar & Transfer Agent connected with NSDL.
Company has to send a request to NSDL detailing type of instrument alongwith a Letter of Intent. On receipt of request, a tripartite agreement will be signed between NSDL, Issuer and Registrar & Transfer Agent. Ones 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 debt instruments. The Issuer has to provide a confirmation on the same to NSDL before admitting the securities.
Each instrument will be identified separately in NSDL system through a unique code called ISIN. Description of each instrument will be communicated to all the DP and Issuers on activation.
Unique characteristic of each instrument will be incorporated in the company and security descriptor in NSDL system. The coupon rate and the date/year of maturity are a part of the standard descriptor. This will enable both Investors and the Depository Participants to easily identify these instruments.
Any new instrument can be issued directly in dematerialized form without recourse to printing of either Letter of Allotment or Certificates. Securities will be directly credited into the accounts of the investor by NSDL on receipt of allotment details from Issuer/Registrar & Transfer Agent.
Letter of allotment (LOA) issued to investors prior to issue of debenture certificates can be issued in demat form. On creation of charge, the issuer will have to submit the corporate action information form for conversion of LOA to Debentures/ Bonds and the description of the security will be changed in the system to reflect the conversion.
Yes, the Issuer has to pay the relevant stamp duty as applicable irrespective whether it is issued in either physical or demat form. As per the Finance Act 2000, stamp duty is waived only for transfers within the depository.
One way of handling of redemption in dematerialised form is through transfer of all balance under the instrument (i.e. ISIN) to a demat account opened by issuer for the purpose. Prior to the date of redemption, the issuer has to complete all formalities associated with redemption in physical form. On the day of redemption, a debit-credit action will be undertaken wherein all balances under the instrument will be transferred to say, an Issuer Redemption Account. Alternatively, on receipt of information regarding completion of statutory requirements for redemption, ISIN will be deactivated in NSDL.
Interest payment for debt instruments will be handled in the same way as corporate benefits are handled for equity. On communication of record date by the Issuer, beneficiary position will be downloaded to the Issuer/Registrar by NSDL. In addition to the above statutory requirement, NSDL provides weekly download of beneficiary position to all Issuer/Registrar.
Exercising of call/put option only prepones the redemption date of an instrument. On exercising call option by the company, the same procedure will be followed as in normal redemption. For put option, once the same is exercised by all/part of the investors, the details of which is communicated by the Issuer a debit action will be carried out by NSDL for those accounts of the investors.
It depends upon the convenience of investor whether one wants to open a separate account for debt instruments. NSDL has no restriction if existing account or multiple accounts are used for dematerialisation of debt instruments.
Procedure for dematerialisation of debt instrument is same as that carried out for equity shares. In order to dematerialise his/her 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 DP and submitting the same alongwith the physical certificates. The investor has to ensure that before the certificates are handed over to the DP for demat, he marks "submitted for dematerialisation" on the face of the certificates.
No. Single statement of holding will reflect all holdings in a particular account irrespective of type of instrument. Along with Statement of Holding, the DP's will also provide periodically each client with a Statement of Transaction giving the details of all transaction during the period under each depository account.
Procedure involved for delivery or receipt of debt instrument will be same as involved for equity shares.
NSDL does not charge any fee for dematerialisation of certificates from depository participants. DPs are free to charge any charges towards dematerialisation from its clients. A detailed fee structure charged by NSDL from DP's is provided in the Fee Structure Schedule.
Payment of interest is handled in the same way as corporate benefit like dividend in equity. List of beneficiary holders as on book closure date consisting of Holder Name and account number, address, bank details and DP ID is downloaded to the Issuer. Based on the information provided above, the issuer despatches interest warrants to the holders of dematerialised instruments.
On exercising put option by an investor, a debit corporate action will be carried by NSDL where the balance under the instrument is reduced to zero. The details of put option exercised by investors will be provided by the company to NSDL.
Procedure followed will be identical to that followed for direct credit of equity shares during IPO/Bonus/Rights. The issuer will provide an option for allotment of securities in demat form in its issue prospectus. Investors opting for demat will have to provide demat account number alongwith DP ID in their application form. On being allotted, a direct credit will be carried out in accounts of the allottees.
The company has to sign a tripartite/bipartite agreement with NSDL. If the company has admitted any of its securities in NSDL (shares, debentures, etc.) and wishes to appoint the same R & T agent for CP, then the company need not sign a separate tripartite / bipartite agreement. Company has to send a Letter of Intent (LoI) and a Master File Creation Form (MCF) for admitting its securities. Once admitted these securities would be made available for dematerialisation by NSDL.
Commercial paper can be issued in multiples of ₹5 lacs. The face value of the CP by default will be taken as ₹5 lakh in the NSDL system. The securities (CP) will be credited in the IPAs allotment account in terms of units. For e.g. If the company proposes a ₹50 crore issue, then 1000 units will be credited in the IPAs allotment account.
No. The same terms and conditions of the existing bipartite/tripartite agreement will be applicable for the CP. Only, a LoI and a MCF submitted by the issuer is sufficient.
Each instrument will be identified separately in NSDL system through a unique code called International Securities Identification Number (ISIN). Description of each instrument will be communicated to all the Depository Participants and Issuers on activation of ISIN in NSDL system.
On the receipt of LoI alongwith duly filled in MCF and requisite documents complete in all respects, an ISIN will be allotted on the same day.
The company name will be accompanied by CP 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. RIL 90D CP 10NV00 indicates 90 day (duration of the paper) CP issued by Reliance Industries with maturity date as November 10, 2000.
If the CP is allotted on different days say for 89 days to one investor, 88 days for another investor, the number of days in the descriptor will indicate the number of days the Issuer has provided NSDL at the time of the activation of the ISIN. Also, if the CP has been provided a backstop facility then the descriptor changes to RIL 90D CP 10NV00-BS.
A CP shall be issued in the form of a promissory note and held in dematerialized form.
Yes. The Issuer has to pay the relevant stamp duty as applicable. The stamp duty may be paid online and the Electronic - Secure Bank and Treasury Receipt (e-SBTR) may be submitted to the IPA alongwith the usance promissory note. In case the issuer is not in a position to make payment of stamp duty through e-SBTR, it can make the payment as per the manual process and submit a payment challan copy to IPA.
As per the FIMMDA guidelines, in case of default in payment by the issuer, the IPA will intimate the investors, the depositories, R&T Agents, trustee (if any) and the credit rating agencies. The holders would have recourse to the Issuer and stand-by credit provider (through trustee, if any), on the strength of default advice received from IPA.
In case of corporate action of CPs, a flat rate of ₹10,000/- is levied on the Issuer for 5 normal corporate actions. Additional fee of ₹10,000/- for every additional five issues.
No. It is to be agreed between the issuer and the RTA.
CP being a ‘standalone’ product, it would not be obligatory in any manner on the part of banks and FIs to provide stand-by facility to the issuers of CP.
However, Banks and FIs have the flexibility to provide for a CP issue, credit enhancement by way of stand-by assistance/credit backstop facility, etc., based on their commercial judgement and as per terms prescribed by them. This will be subjected to prudential norms as applicable and subject to specific approval of their Board.
Yes. Non-bank entities including corporates can provide unconditional and irrevocable guarantee for credit enhancement for CP issue provided that the offer document for CP properly discloses the net worth of the guarantor company, the names of the companies to which the guarantor has issued similar guarantees, the extent of the guarantees offered by the guarantor company, and the conditions under which the guarantee will be invoked.
issuer shall have the issue of Commercial Paper underwritten or co-accepted.
The issuer of CP shall -
The IPA for a CP issuance shall
Credit Rating Agency (CRA):
Yes. FIMMDA has specified the formats for letter of offer to be issued by CP issuer and IPA certificate to be issued by IPA in its Operational guidelines on CPs.
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
CP can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. However, the maturity date of the CP should not go beyond the date up to which the credit rating of the issuer is valid.
CP can be issued in denominations of Rs.5 lakh or multiples thereof.
Yes. CP may be issued on a single date or in parts on different dates provided that in the latter case, each CP shall have the same maturity date. Further, every issue of CP, including renewal, shall be treated as a fresh issue.
Any scheduled bank can act as an IPA for issuance of CP.
Yes. A CP will be issued in the form of a promissory note and will be held only in dematerialised form through any of the depositories approved by and registered with SEBI.
Yes. CP is issued at a discount to face value as may be determined by the issuer
The investor can hold CP in same account along with other securities like equity, debentures, bonds, etc. However, if an investor desires, the investor can hold the CP in a separate demat account also. NSDL has no restriction if existing account/different accounts are used for holding CPs in dematerialised form.
Yes. CPs are actively traded in the OTC market. Such transactions are to be reported to the Financial Market Trade Reporting and Confirmation Platform (“F-TRAC”) of Clearcorp Dealing System (India) Ltd. within 15 minutes of the trade by all eligible market participants.
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 securities into the account of Buyer who may have opened account with the same or any other DP. Buyer receives the securities in its account immediately if the buyer has provided standing instruction to its DP. Settlement of funds is between the parties as agreed between them.
For account transfers, 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 charge payable by the investor to the DP is determined as per the agreement between the investor and the DP
No. A single consolidated account statement received by investor will reflect all holdings and transactions in a particular account irrespective of type of instrument(s).
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.
BSDA is like a regular demat account but with no or low annual maintenance charges.
|Sr. No.||Value of Debt Securities||Value of Other than Debt Securities||Total Value of Holdings||AMC|
|6||2,00,000/-||2,50,000/-||4,50,000/-||As per Regular Account|
|7||3,00,000/-||3,00,000/-||6,00,000/-||As per Regular Account|
|8||2,50,000/-||2,00,000/-||4,30,000/-||As per Regular Account|
|9||50,000/-||2,50,000/-||3,00,000/-||As per Regular Account|
|10||2,50,000/-||50,000/-||3,00,000/-||As per Regular Account|
The value of the holding for this purpose is determined by the DP based on the daily closing price or NAV for the securities / mutual fund units. If value of holding in BSDA exceeds the above limits on any day, DP may levy charges as applicable to regular accounts (non-BSDA) from that day onwards.
NSDL offers following very useful e-services to demat account holders -
b. Mobile App
Internet based Demat Account Statement (IDeAS) is an internet based facility for demat account holders to view transactions that have happened in the demat account. It also enables account holders to view account balances along with respective valuation. Account holders can view / download month wise statement of transaction for previous 12 months.
In case you have not been using this facility already, you may request your DP to register for the same or may do it yourself online at https://eservices.nsdl.com/. This facility is completely free for the account holders.
NSDL has developed an extremely useful mobile app for demat account holders. You may download this from Google Play Store or App Store. This App can be used to view balances and use NSDL e-Voting system online in a single sign-on. This App is completely free for the account holders.
For more information, please visit https://eservices.nsdl.com/.
SPEED-e (pronounced as speedy) is an internet based facility offered by NSDL. It enables a demat account holder to give delivery, pledge and mutual fund redemption related instructions in electronic form, thus making the process quite fast, secure and efficient. This facility is available on computers (desktop / laptop) and password users may access the same on mobile phone also. Demat account holder can avail this service if his / her DP offers this service. List of DPs offering this service is available at https://nsdl.co.in/speede-dps.php.
This facility can be used by demat account holders who register themselves for this purpose. Your DP will help you in registering for the facility. After successful registration, you would be able to submit instructions online and monitor the status of such instructions. You will not need to fill-in and submit the physical instruction slips to your DP. For more information and registration, please visit https://eservices.nsdl.com/.
The delivery instructions which can be submitted on SPEED-e platform depends upon the kind of access you opt for. There are two options available – password user and e-token users.
Password user log in with password and can transfer securities only to six pre-specified broker accounts of his / her choice. e-token user log in with the help of e-token and is enabled to transfer securities to any demat account of his / her choice.
Following are the additional benefits of e-token option in SPEED-e facility:
a. Facility of multiple authorization, that is authorization of instruction by joint holders.
b. You may freeze your demat account (entirely or partially). If account is frozen by SPEED-e user, then it can be unfreezed by the SPEED-e user only. Therefore, you may submit delivery instruction and transfer securities when you wish, lock the account and unlock it only when you need to, that is complete control of your account is in your hands.
Yes, the pre-notified brokers account, where transfer of securities is permitted to password users, can be changed by giving intimation to DP. These changes are effective after due authorization from your DP.
For more information, please visit - https://eservices.nsdl.com/.
NSDL electronic voting (e-Voting) platform allows every shareholder to exercise voting rights online without the need to be physically present at the meeting location. e-voting service has been integrated with Speed-e as well as NSDL Mobile App.
For more information, please visit https://www.evoting.nsdl.com/.
In case you have not been using this facility already, you may request your DP to register for the same or may do it yourself online at https://eservices.nsdl.com/. This facility is completely free for the account holders.
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 at https://nsdl.co.in/joining/fee-payable-by-depository-participants.php.
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 ‘Rights and Obligations of Beneficial Owner and Depository Participant’. You may keep a copy of this for your future reference. You can also get a comparative list of DP charges at https://nsdl.co.in/joining/joincharges.php.
Your DP may revise charges by giving you 30 days' notice in advance.
No. You should not submit delivery instruction slips (DIS) to your DP without mentioning the execution date. It should be the date on which you wish your account to be debited for the mentioned security and quantity thereof. In case of market instruction, it must be well within the date of payin. For off-market transfers, it may be a future date of your choice.
You will get account statement showing the transactions and balances periodically to help you to monitor the happenings in your account. You may also monitor the same by using facilities like SMS alerts, IDeAS and Mobile App.
NSDL provides a consolidated account statement to you at monthly intervals (at quarterly intervals for BSDA holders) if there are transactions in the given month (quarter). In case there is no transaction in the account, or if the balance has become Nil during the year, the statement is sent annually to such clients.
For more information, please visit https://nsdlcas.nsdl.com/.
In case of any discrepancy in the account statement, you must immediately contact your DP. If the discrepancy cannot be resolved at the DP level, you should approach NSDL.
There is no need to worry. You may simply request NSDL to provide your statement for the desired period once again. You may find it convenient to opt for e-CAS to ensure that statement is not lost or misplaced during transit. Using facilities like IDeAS and Mobile App you may view / download account statement as and when you want.
Any transaction in the demat account is possible only upon a valid instruction from the account holder. In addition, the entries in the depository software at DP’s end are possible through a maker checker system. Still in order to prevent any undesired transaction happening in the account, demat account holder may opt to freeze his / her demat account by submitting a written request to DP. The following types of freeze are available -
a. Freeze for debits only - A demat account holder may freeze the account only for debits by submitting a freeze instruction to its DP. However, during the period of freeze, the account holder will continue to receive credits like bonus or credits arising out of any other corporate action.
b. Freeze for debits as well as credits - An account holder may freeze the account for debits as well as credits. No debits and credits can be made in the account, unless the account holder issues unfreeze instruction. This facility is beneficial to clients who do not use their account for long period. By freezing their account for debits and credits, they can avoid undue credits to their accounts in addition to preventing debits.
c. Freeze particular ISIN(s) in the account - An account holder may freeze a particular ISIN(s) (security of a specific company) either for ‘debit’ or ‘debit & credit’, without freezing the whole account. If this type of freeze facility is used, all other securities in the account can be debited or credited but the securities under the specific ISIN(s) will be frozen for ‘debit’ or ‘debit & credit’ respectively. The client will be able to use other securities lying in its demat account and also receive credits in the ISIN which has been frozen only for debit.
d. Freeze a specific number of securities held under an ISIN in an account. An account holder may freeze a specific quantity of a specific security in an account.
In a rare event of your DP going bankrupt or closing its operations, the interests of the demat account holders are fully protected. In such a situation, you would be given option to transfer your balances to any other DP of your choice or rematerialize the same.
Data security and data integrity are considered critical and given highest importance by NSDL. NSDL follows highest standards in this regard. DPs are also required to follow the best practices to ensure that clients’ data and assets remain protected.
Following are some of the measures adopted by NSDL in this regard -
a. Stringent requirement of daily back up of data at DP level as well as depository level.
b. Backup is stored locally and also at a remote site by DPs and depository both on a daily basis.
c. NSDL maintains a backup site as well as a Disaster Recovery Site to ensure continuing of operations in any case of disruption.
d. Best industry practices are followed with respect to data handling and cyber security framework.
e. Fall back mechanism for critical equipment, communication systems and utilities used for depository infrastructure.
f. Data is stored in state of art data center managed by professional and qualified specialists.
g. Logical and physical access barriers are adopted at various levels.
h. Maker checker system is followed for critical data entry in depository system.
i. NSDL has obtained ISO – 27001 certification (for Information Security Management) and ISO 22301:2012 certification (for Business Continuity Management Systems), indicating compliance with best industry practices.
All the DPs are subjected to NSDL inspection at least once in a year. In addition, they need to engage an independent and qualified auditor to undertake audit of their depository operations. Report of such audit should be forwarded to NSDL, twice a year. DPs are also inspected by SEBI.
NSDL has been authorized to act as a securities depository by SEBI. NSDL is subject to periodical inspection by SEBI in addition to other applicable audits as per Companies Act, 2013.
NSDL obtains an insurance cover on behalf of all the DPs.
Non- Resident Indian [NRI] means a person resident outside India who is a citizen of India or is a person of Indian origin.
Under the Foreign Exchange Management Act, 1999 [FEMA], a person who is NOT a person resident in India, as defined under Section 2 (v) of the Act is considered as a person resident outside India. The most important change in definition [since FERA 1973] is that the citizenship of a person no longer has a bearing in determination of residential status.
Investment by PIO in Indian Securities is treated the same as the investment by non-resident Indians and requires same approvals and enjoys the same exemptions.
Overseas Corporate Body means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least sixty percent by Non-Resident Indians and includes overseas trust in which not less than sixty percent beneficial interest is held by Non-Resident Indians directly or indirectly but irrevocably.
OCBs were debarred from Portfolio Investment Scheme w.e.f November 29, 2001. OCBs have been banned as a class of investor w.e.f September 16, 2003. However, they have been permitted to continue to hold the securities acquired by them prior to these dates. Accordingly OCBs may open a demat account, however it can be only for the purpose of dematerializing the existing holdings.
NRI/PIO can open a demat account with any Depository Participant [DP] of NSDL. The NRI/PIO needs to mention the type [NRI as compared to Resident] and the sub-type [Repatriable or Non-Repatriable] in the account opening form collected from the DP.
No permission is required from RBI to open a demat account. However, credits and debits from demat account may require general or specific permissions as the case may be, from designated authorised dealers.
No. Securities received against investments under Foreign Direct Investment scheme (FDI), Portfolio Investment scheme (PIS) and Scheme for Investment on non - repatriation basis have to be credited into separate demat accounts. Investment under PIS could be on repatriation or non - repatriation basis. Investment under FDI scheme is on repatriation basis.
No special permission is required. Holding securities in demat only constitutes change in form and does not need any special permission. However, only those physical securities which already have the status as NR- Repatriable / NR- Non-Repatriable can be dematerialised in the corresponding Depository Accounts.
No. An NRI must open separate demat accounts for holding repatriable and non-repatriable securities.
As per section 6(5) of FEMA, NRI can continue to hold the securities which he/she had purchased as a resident Indian, even after he/she has become a non resident Indian, on a non-repatriable basis.
Yes. It is the responsibility of the NRI to inform the change of status to the designated authorised dealer branch, through which the investor had made the investments in Portfolio Investment Scheme and the DP with whom he/she has opened the demat account. Subsequently, a new demat account in the resident status will have to be opened, securities should be transferred from the NRI demat account to resident account and then close the NRI demat account.
NRIs are permitted to make direct investments in shares/ debentures of Indian companies/ units of mutual fund. They are also permitted to make portfolio investments i.e. purchase of share / debentures of Indian Companies through stock exchange. These facilities are granted both on repatriation and non-repatriation basis.
Yes. The issuing company is required to issue shares to NRI on the basis of specific or general permission from GoI/RBI. Therefore, individual NRI need not obtain any permission.
Under this scheme, NRIs are permitted to acquire shares/debentures of Indian companies or units of domestic Mutual Funds through the stock exchange(s) in India.
Investment can be made both on repatriation or non-repatriation basis. For making investment on repatriation basis, it will be necessary to make payments by way of inward remittance or by debit to the NRE / FCNR account of the NRI / PIO. Investment on non-repatriation basis can also be made by way of inward remittance or by debit to the NRE / FCNR / NRO accounts.
The sale proceeds of the repatriable investments can be credited to the NRE / NRO accounts of the NRI / PIO at the option of the investor, whereas the sale proceeds of non-repatriable investment can be credited only to NRO accounts.
The sale of shares will be subject to payment of applicable taxes.
The application is to be submitted to a designated branch of an authorised dealer in India in the prescribed form. No permission is required from RBI.
Reserve Bank has authorised a few branches of each authorised dealer to conduct the business under Portfolio Investment Scheme on behalf of NRIs. These branches are the main branches of major commercial banks. NRIs will have to route their applications through any of the designated authorised dealer branches who have authorisation from Reserve Bank.
No. NRI can select only one authorised dealer for the purpose of investment under Portfolio Investment Scheme and route the transactions through the branch designated by the authorised dealer.
The sale of shares will be subject to payment of applicable taxes.
An NRI or a PIO can purchase shares up to 5% of the paid up capital of an Indian company. All NRIs / PIOs (also the OCBs who had purchased shares under the earlier scheme) taken together cannot purchase more than 10% of the paid up value of the company. (This limit can be increased by an Indian company to 24% by passing a General Body resolution).
The table given below summarizes the permissions required for the off-market transfer
|NRI||NRI||Sale or Gift||General permission, no specific permission to be taken*|
|NRI||Resident Indian||Gift||Prior approval of RBI required.|
|NRI||Resident Indian||Sale under private arrangement||General permission already available.|
|Resident Indian||NRI||Gift||Prior approval of RBI/FIPB should be obtained.|
|Resident Indian||NRI||Sale under private arrangement||General permission is already available provided the shares being transferred are not of the companies engaged in financial service sectors, such transfer does not attract SEBI takeover code and the activity of the company should be eligible for FDI.|
* provided that the person to whom the shares are being transferred has obtained prior permission of Central Government to acquire the shares, if he has previous venture or tie up in India through investment in shares or debentures or a technical collaboration or a trade mark agreement or investment by whatever name called in the same field or allied filed in which the Indian company whose shares are being transferred is engaged.
An individual NRI cannot purchase under PIS shares exceeding 5% of the paid up capital of a company. The onus of monitoring this limit is that of the designated authorised dealer. Shares purchased under PIS scheme can be sold only through a stock exchange. See the rules explained under Q.No. 19. No permission is required from RBI to purchase or sell under Portfolio Investment Scheme.
The above details recorded by the DP in the demat account may be used by the Issuer to directly credit dividend or interest.
(Dividend/interest received on Investments made on repatriation and non - repatriation basis under Portfolio Investment Scheme is not an eligible credit to NRE (PIS) Account and NRO (PIS) Account respectively).
This FAQ is prepared based on NSDL's (National Securities Depository Limited's) understanding of FEMA regulations. While utmost care has been exercised while developing the FAQs, National Securities Depository Ltd. does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The readers are requested to keep abreast of the changes taking place in the underlying provisions of RBI.
NSDL helps demat account holders to monitor the important transactions happening in their account by sending SMS alerts on their mobile number registered in the demat account. As the alerts are sent by NSDL directly, they reflect the true status of the demat account. This facility is completely Free for demat account holders.
In case you have not been using this facility already, you may register yourself simply by submitting a written request to your DP mentioning your mobile number. You will start receiving the alerts once your mobile number is successfully recorded and SMS flag for receiving SMS alerts option is enabled in depository system by your DP.
Those account holders who want to register their mobile number to DP but do not wish to avail this facility, may inform their DP to disable the SMS flag provided such accounts are not operated by Power of Attorney and are not Basic Service Demat Account.
a. All debit transfers
b. Credits for IPO, sub-division and bonus
c. Failed instructions
d. Overdue instructions
e. Change of mobile number
f. Change of address
g. Debit of mutual fund units
h. Registration and de-registration of Power of Attorney
i. Modification, cancellation / deletion of nominee name
j. Pledge initiation, confirmation and invocation (to pledgor)
k. Blocking of and debit of shares in respect of tender offer instruction.
For change of address, registration and de-registration of Power of Attorney in depository system, SMS alerts are sent to registered mobile phone irrespective of whether account holder has opted for this facility or not.
NSDL directly sends messages for many important transactions carried out in demat account to the registered mobile number. This acts as an effective monitoring method to safeguard your demat account.
No charge is levied by NSDL on DPs for providing this facility to account holder.
If you are not getting SMS alerts, you need to give a request to your DP to enable the SMS Alert flag in the depository system. Merely giving mobile number is not sufficient.
In case you change your mobile number, you just need to provide your new mobile number to your DP in writing. Once change is effected by DP in depository system, you will receive a message on your old as well as new mobile number in this regard. In case you are considering changing your mobile number, you may like to opt for mobile number portability by which you may change your service provider but retain the current mobile number.
No, except for individual accountholders who are having a Basic Service Demat Account and whose accounts are operated through Power of Attorney, this facility is not mandatory, but highly recommended. As the alerts are directly sent by depository, you are in position to monitor the important transactions happening in the account and take appropriate actions, if required.
If you are holding mutual fund units in physical form, which are represented by Statement of Account (SOA) and you want to hold them in demat form, you may do so by submitting a request in prescribed form to your DP. This is known as conversion of mutual fund units in demat form.
In case you do not have a demat account and wish to convert your mutual fund investments in demat form, you need to open a demat account with any NSDL DP.
a. You receive a single consolidated account statement, which mentions all your investments in various securities including mutual fund units. You need not look at different statement received from mutual funds companies.
b. Change in address recorded in your demat account gets registered with all the concerned issuer companies and mutual fund companies / Registrar and Transfer Agent (RTA). Thus, eliminating the need to correspond with each of them separately.
c. By using facilities like IDeAS and NSDL Mobile App, you can monitor transactions and holdings in an extremely fast and efficient manner.
d. You receive SMS alerts upon debit of mutual fund units from your demat account.
e. You may opt for online redemption of mutual fund units by subscribing to SPEED-e facility.
You need to submit a duly filled in Conversion Request Form (CRF) to your DP along with the Statement of Account. After necessary checks, your DP will forward your request to concerned AMC / its Registrar. Upon confirmation from AMC / Registrar, mutual fund units will be credited in your demat account.
Yes, provided demat account is opened under NRI status.
You need to simply give a subscription order to your stockbroker along with the required amount. Your broker will enter the request on the platform of stock exchange. Upon receipt of units from AMC / Registrar on the payout day, your broker / clearing corporation will arrange to credit of desired mutual fund units in your demat account.
You may redeem your mutual fund units held in demat form through your DP or Stockbroker. SPEED-e users may submit redemption request online also.
You need to submit a duly in Redemption Form (RF) to your DP. After necessary checks, your DP will forward your request to concerned AMC / Registrar. After undertaking necessary verifications, redemption amount will be credited to your filled linked bank account directly by AMC / Registrar. You may give redemption request for a specific quantity or all the units or for a desired amount to your DP.
You need to give a redemption order to your stockbroker. In addition, you need to submit Delivery Instruction Slip to your DP to transfer the mutual fund units to the designated CM Pool account of NSE Clearing Limited / Indian Clearing Corporation Limited.
Yes. You can transfer mutual fund units from your demat account to any other demat account of your choice (held with same or different DP / depository) except for mutual fund units which are under lock-in status for any reason.
Yes, name of the account holder in a demat account can be changed after opening of the demat account. The supporting documents required along with the written request depend upon the nature of change desired. If the change is required on account of any data entry error committed by the DP, then it can be corrected upon request from the concerned account holder or suo-moto by the DP, without any document asked from the account holder.
a. In case of the minor corrections (such as spelling correction, abbreviation or expansion of initials), self-attested copy of any proof of identity document like PAN card, Passport, Voter’s identity card, Aadhaar card, Driving license, NREGA card, containing the correct name is required. Account holder should also provide a confirmation that it is not a change in name of the individual for any reason including due to marriage, divorce, court order, etc. In case, an individual changes the spelling of its name for any reason including for numerology, etc., it will be considered as a change in name, and not a correction in name.
b. In other cases of the change or correction in name, following documents are required –
|Name change on account of marriage||Name change on account of reasons other than marriage|
|Marriage Certificate or copy of Passport showing husband’s name or publication of name change in official gazette.||Publication of name change in official gazette.|
For residents of Karnataka and Punjab, where publication of name change in official gazette may not be available, following documents may be provided -
a. Sworn affidavit executed before the Notary Public / Magistrate of First Class / Executive Magistrate mentioning the reason for change of name and his complete address.
b. Paper publication in one local newspaper and one national newspaper.
c. Proof of Identity and Proof of address document in changed name.
Account holder should submit a self-attested copy of above document along with original for verification.
Yes. You may change bank account details registered in your demat account any time by submitting a written request to your DP. You will also need to provide supporting documents for your new bank account. For example, copy of passbook or account statement or cancelled cheque leaf, containing your name, bank account number, bank name, MICR code and IFSC.
In case your address is changed, you need to inform the new address to your DP. When DP enters the new address in the depository system, it will be automatically conveyed to all companies in which you hold shares / units etc.
You can change your address in the depository system by submitting a written request to your DP. Such a request should be signed by all the joint holders, if account is jointly held. Following documents should be submitted along with the request -
a. Latest Transaction Statement of the demat account (not required if the client visits DP personally).
b. Self-attested copy of any proof of identity document like PAN card, Passport, Voter’s identity card, Aadhaar card, Driving license, NREGA card.
c. Self-attested copy of any document as proof of new address Passport, Voter’s identity card, Aadhaar card, Driving license.
You would be required to produce original document for the purpose of verification of photocopy by your DP. You or your authorized representative should sign the application once again in the presence of the officials of the Participant. Once the request for change in address is processed in the depository system, an email is sent by NSDL to the account holder(s) informing the update, in addition to intimation from the DP.
All dividends and shares, which remain unpaid or unclaimed for seven consecutive years due to any reason, are transferred by respective companies to Investor Education and Protection Fund (IEPF) Authority. IEPF Authority is a statutory body, constituted under the provisions of Companies Act, 2013.
Investor or his / her authorized representative need to submit claim to IEPF Authority to receive unpaid dividend and/or unclaimed shares. After verification of the claim, company confirms the claim to IEPF authority, which then initiates refund to claimant in his / her linked bank account through electronic transfer. In case the claim is for shares, they are credited to demat account specified in the claim form. The complete process and documents required are shown in the diagram number 8 below. One applicant can file one claim form for each company in one financial year. For more information, please visit http://www.iepf.gov.in/. It is important to know that all companies need to publish details of unclaimed shares and dividend on their website.