At present, NSDL merely facilitates distribution of cash corporate benefits like dividend etc., to shareholders. Details in respect of all beneficial owners of the security as on the record date of the concerned company are provided by NSDL to the company/ its registrar and share transfer agent (R & T agent). Thereafter, the company/ R & T agent dispatches dividend entitlements to the eligible beneficial owners in the same way as is done for shareholders holding physical certificates.
NSDL intends to extend the service of distributing cash benefits directly to beneficial owners. On a pilot basis NSDL had extended the dividend distribution service to shareholders of certain companies. Keeping in view this successful experiment, NSDL, in future, may consider extending this service to other issuers too who have joined the NSDL depository system.
- Issuer will be giving a single cheque to NSDL.
- Savings in administrative cost for printing of paper instruments in MICR format and dispatching by registered post.
- Loss of instrument in-transit and fraudulent encashment thereof can be totally eliminated.
- Effortless receipt for investor - no need to visit the bank for depositing the warrant.
- Reconciliation will be smooth.
- Investor grievances will be handled by NSDL.
- Issuer can ensure better investor service.
Dividend distribution scheme of NSDL
- The Issuer will execute an agreement with NSDL for the purpose of dividend distribution and furnish to NSDL details of the dividend payment. The Issuer will write to the shareholders holding demat shares intimating them that NSDL's Dividend Distribution Scheme for direct distribution of dividend will be used and give them an opportunity to update their bank details with the DP. This should happen atleast one month before the dividend distribution so that modifications/ corrections will get updated in the beneficiary position (benpos) of the record date.
- The bank details given by the beneficial owners to their DPs at the time of account opening or as updated later, will be used for crediting the dividend.
- As per the bank details available, the dividend amount will be credited directly into the account of the shareholder using ECS (of RBI) or direct payment into the account. Direct deposit method will be used for crediting dividends for institutional investors. Wherever ECS is being used, NSDL/Bank will enter MICR code using bank details furnished by the beneficial owner.
- NSDL will be taking the services of a Bank for distributing dividend to the beneficial owners.
- The Issuer will give to NSDL, the benpos download file of shareholders who are eligible to receive the dividend.
- The Issuer shall give a single cheque to NSDL for the whole amount of dividend payable to the shareholders holding shares in dematerialised form to whom NSDL will be distributing the dividend.
- Dividend amounts above Rs. 5 lakhs, especially payable to institutions, etc., will be paid directly into their bank accounts on the day following the day on which Issuer has made clear funds available to NSDL.
- On scrutinising the beneficiary positions data received from the Issuer, NSDL will return those records to the Issuer for which NSDL cannot distribute the dividend owing to insufficient bank details, the number of beneficial owners in a center being very low or for any other reason. The Issuer shall issue dividend warrants to these shareholders directly.
- The Issuer will intimate the details of credit of dividend amount given directly in the bank account of the beneficial owners.
- NSDL will return to the Issuer those records for which the credits failed due to wrong account nos. being given by the client, the account being no longer operational or due to any other reason.
- On completion of the dividend distribution process, NSDL will issue a certificate to the Issuer stating the same.