Joining NSDL as an Investor
The Indian capital market has witnessed an unprecedented growth in the past few years which was made possible by the modernisation in the trading and settlement systems. Automation of the trading mechanism has given us a trading system comparable with the best in the world. The establishment of a settlement guarantee mechanism removed the counter-party risk in stock exchanges.
Though the advent of automated trading brought with it several associated benefits such as transparency in trading and equal opportunity for market players all over the country; the problems related to settlement of trades such as high instances of bad deliveries and long settlement cycles continued. As an answer to the myriad settlement problems, National Securities Depository Ltd. (NSDL) was inaugurated in November 1996 as the first depository in the country.
The introduction of scripless holding and transaction of securities provide various benefits to investors viz.
- Elimination of bad deliveries such as signature mismatches, invalid transfer deeds, etc.
- Elimination of all risks associated with physical certificates, such as loss, theft, mutilation, etc.
- Reduction in handling of huge volumes of paper.
- Waiver of stamp duty for transfer of equity & debt instruments and units of mutual funds in depository.
- Immediate transfer and registration of securities.
- Pay in & pay out of securities & funds on the same day for scripless trades.
- Faster settlement cycles.
- Faster disbursement of corporate benefits like rights, bonus, etc.
- Reduction in brokerage for trades done in dematerialised securities.
- Periodic status reports to investors on their holdings and transactions, leading to better controls.
- Convenient nomination facility.
- Convenience in effecting change in address.
All these lead to substantial reduction in transaction costs in dematerialised securities as compared to physical securities.