A Study On
DEMATERIALISATION OF SECURITIES
XXXX FINANCE LTD,
Project submitted in !rti!" #u"#i""ment #or t$e !%!rd o# t$e de&ree o# 'MASTER OF (USINESS ADMINISTRATION)
DECLARATION
I here by declare that the project work entitled “ DEMATERIALISATION OF
SECURITIES) IN 'XXXX FINANCE LTD”, XXXXXX, is an original work carried out by
me availing the guidance of my project guide And it has been submitted to XXXXX in partial fulfillment for the award of the degree of MASTER OF (USINESS ADMINISTRATION *M+(+A, of !!!! It has not been submitted to any other "niversity or Institution for the award of #egree$#iploma to the best of my knowledge
PLACEDATE-
%our& sincerely,
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INDEX
CHAPTER-I: INTRODUCTION: ? Objectives of study ? Scope of study ? Methodology of study ? Limitations of study CHAPTER-II: REVIEW OF LI ER! "RE
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CHAPTER-III; #OM$!%& $ROFILE CHAPTER-IV; '! ! !%!L&SIS ( $RESE% ! IO%) ? *isto+ical bac,g+ound of 'EM! ? #u++ent scena+io ? !ccount opening and maintenance ? Settlements ? Remate+ialisation CHAPTER-V: #O%#L"SIO% -I-LIO.R!$*& !$$E%'I#ES
)
CHAPTER-I
INTRODUCTION
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FINANCE: Finance is the p+ocess of conve+sion of accumulated funds to p+oductive usage/ Finance helps to di+ect the flo0 of economic ( facilitate in the fi+m1s smooth ope+ations/ !cco+ding to *OW!R' !%' O$ IO%S Finance is defined as 2the administ+ation a+ea of set of administ+ative functions in an o+gani3ation 0hich has to do 0ith the management of flo0 of cash so that the o+gani3ation 0ill have the means 4 ca++y out its objectives as satisfacto+y as possible and at the same time meet the obligations as they become due2/ FINANCIAL SYSTEMS: It is a set of ma+,ets and institutions to facilitate the e5change of assets and +is,s/ Indian financial system comp+ises of th+ee pa+ts vi3/6 FI%!%#I!L I%S I " IO%S o+ I% ERME'I!RIES6 FI%!%#I!L M!R7E S6 FI%!%#I!L I%S R"ME% S/ Financial Inte+media+ies6 p+ovide funds by pooling the funds f+om investo+s/ hey a+e the comme+cial ban,s6 mutual funds6 insu+ance companies6 p+ovident funds6 facto+s (non ban,ing financial institutions etc///Financial inst+uments6 th+ough 0hich the fi+m can +aise funds f+om public o+ institutions/ Some of them a+e e8uity sha+es6 p+efe+ential sha+es6 bonds6 comme+cial pape+s6 ce+tificate of deposits etc/// FINANCIAL MARKETS: Financial ma+,ets consist of t0o pa+ts/ 9: #apital ma+,et 4: Money ma+,et
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Money ma+,et is a ma+,et fo+ dealing in moneta+y assets of sho+t;te+m natu+e fo+ meeting the tempo+a+y cash +e8ui+ements/ #apital ma+,et is a ma+,et fo+ long;te+m funds/ #apital ma+,et has t0o segments/ 9: $+ima+y ma+,et <%e0 Issues Ma+,et: 4: Seconda+y ma+,et he %e0 Issue Ma+,et deals in ne0 secu+ities i/e/ Secu+ities6 0hich a+e not p+eviously offe+ed to the investo+s/ he p+ima+y ma+,et does not have any o+gani3ational setup and is +ecogni3ed only by the specialist institutional se+vices that it +ende+s to the lende+s and bo++o0e+s of capital funds/ he seconda+y ma+,et deals in old=e5isting secu+ities6 0hich 0e+e g+anted in stoc, e5change listing/ Stoc, e5changes p+ovide li8uidity to investments/ It has a physical e5istence and a geog+aphical a+ea/
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OBJECTIVES OF THE PROJECT: • • • • • • • o ,no0 the mechanism in the 'emat o study the activities in $+ima+y Ma+,et and Seconda+y Ma+,et in the conte5t of 'emate+iali3ation o study the activities of 'eposito+y $a+ticipants o study the p+ocess of Settlement o study the p+ocess of 'EM! o ,no0 the advantages of the 'EM! o ,no0 the se+vices p+ovided by the 'eposito+y $a+ticipant
SCOPE OF THE STUDY: he scope of the study is confined to the p+ocess of demate+iali3ation of secu+ities and its advantages/ he scope of the p+oject is limited to the deposito+y pa+ticipant se+vices th+ough deposito+s/
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METHODOLOGY OF THE STUDY: he study is based on both the p+ima+y and the seconda+y sou+ces of data/ he sou+ce of p+ima+y data is f+om the unst+uctu+ed inte+vie0 of the officials in the company/ he seconda+y data is collected f+om the 0ebsites) • 000/nseindia/com • 000/moneycont+ol/com
LIMITATIONS OF THE PROJECT:
? -y not conside+ing the enti+e deposito+y pa+ticipant1s implications elating to the patte+n of t+ading may have been missed in the study/ he study is confined to only deposito+y pa+ticipants se+vices th+ough 'eposito+ies
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? %S'L/ E5haustive analysis6 p+oblems of listing and management of t+ade and SE-I guidelines of +elating the+e lot a+e not cove+ed due to limited & ,eep the study in manageable limits
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CHAPTER-II
REVIEW OF LITERATURE
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DEMATERIALISATION
DEFINITION: 'emate+iali3ation is the p+ocess by 0hich a -O can get his physical secu+ities conve+ted into elect+onic fo+m/ $+e;+e8uisites fo+ demate+iali3ation a+e) 9/ Investo+ should have a demat account 0ith any '$ of #'SL/ 4/ Secu+ities to be demate+iali3ed must have been admitted in #'SL i/e/ ISI% fo+ the secu+ities should be available in #'SL >/ Investo+ should be the +egiste+ed holde+ fo+ the secu+ities in the boo,s of the company/ he -O submits a +e8uest to the '$ in the 'emate+iali3ation Re8uest Fo+m <'RF: along 0ith the ce+tificates/ he '$ ve+ifies the info+mation on the 'RF and physical ce+tificates and ente+s the details in the system to setup a +e8uest elect+onically/ he '$ sends the physical documents to the conce+ned issue+=R !/ If the Issue+=R ! find the 'RF and ce+tificates in o+de+6 it +egiste+s #'SL as the +egiste+ed holde+ of the secu+ities and confi+ms the 'R% elect+onically to #'SL/ On +eceiving such confi+mation6 #'SL c+edits the -O account/ given belo0) he p+ocess flo06 of a demat +e8uest is
'0
If the issue+=R ! +ejects all o+ some of the ce+tificates in a demat +e8uest then the same a+e sent bac, to the '$ mentioning the +ejection +eason<s:/ '$ 0ill then as, the -O to +ectify the +eason of +ejection and send the ce+tificates again fo+ demate+iali3ation unde+ a f+esh demat +e8uest/ 'emate+iali3ation can be no+mal demate+iali3ation as e5plained above o+ it can be 2 +ansfe+;cum;'emate+iali3ation < #':2 o+ 2 +ansposition;cum; 'emate+iali3ation2/
TRANSFER-CUM-DEMATERIALIZATION: When physical secu+ities a+e sent to the issue+ = R ! fo+ t+ansfe+s by the buye+6 the Issue+=R ! completes the t+ansfe+ p+ocess and +eco+ds the secu+ities in the name of the conce+ned buye+ in the Registe+ of Membe+s/ If the Issue+=R ! is p+oviding t+ansfe+ cum demate+iali3ation facility6 the ce+tificates a+e not dispatched to the conce+ned buye+/ Instead the Issue+=R ! intimate the buye+ about the t+ansfe+ and gives the buye+ an option to hold the t+ansfe++ed secu+ities in demat fo+m by issuing an 2Option lette+2/ he investo+ on +eceiving such an option lette+ may opt fo+ holding the t+ansfe++ed secu+ities in demats fo+m/ In such a case6 the investo+ has to open a demat account6 if not al+eady opened6 fill up a 'RF6 attach the option lette+ along 0ith the 'RF and submit it to the '$/ Rest of the p+ocess +emains same as e5plained above fo+ no+mal demat/
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+ansfe+;cum;demat +e8uest can be set;up fo+ a 8uantity up to ?@@ secu+ities only/ In case the Issue+=R ! does not +eceive demat +e8uest 0ithin >@ days of the date of issuing the option lette+ then the physical secu+ities may be dispatched to the conce+ned buye+ di+ectly/ TRANSPOSITION-CUM-DEMATERIALISATION: +ansposition is applicable in situation 0he+e the demat account has been opened in the name of !6-6# and some of the ce+tificates a+e in any othe+ o+de+ of holde+ names such as !6#6- o+ -6#6 ! o+ #6-6! etc/6 i/e/ holde+s names a+e same but o+de+ in 0hich they appea+ is diffe+ent/ DEMATERIALIZATION PROCEDURE: ACTION BYB.O.; NORMAL DEMAT: Fo+ demate+iali3ation -O should submit the follo0ing documents to the '$ 9/ 'uly filled 'RF giving all details as +e8ui+ed on the fo+m/ he 'RF should be signed by account holde+<s: o+ po0e+ of atto+ney <if any:/ 4/ $hysical ce+tificates
'emat +e8uests fo+ loc,;in secu+ities cannot be set up along 0ith the f+ee secu+ities i/e/ the -O 0ill have to fill sepa+ate 'RF fo+ secu+ities 0hich a+e
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f+ee <0ithout encumb+ances: and a sepa+ate 'RF fo+ secu+ities unde+ loc,; in 0ith diffe+ent loc,;,n +easons and diffe+ent loc,;in e5pi+y dates/ Lo !-"# $%&'o# &# (% &#) o* +,% *o--o."#/: 9/ 'i+ecto+ = Relative Auota 4/ Employee Auota >/ $+efe+ential allotment B/ $+omote+s Auota ?/ "nde+0+ite+s Auota C/ $+ivate $lacement D/ ?BE <a: of I !ct 9EC9 F/ ?BE<b
f I !ct 9EC9
TRANSFER CUM DEMAT: In case of +ansfe+;cum;'emat6 -O should submit the follo0ing documents to the '$/ 9/ 4/ 'uly filled 'RF O+iginal option lette+ +eceived f+om the Issue+=R !
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TRANSPOSITION CUM DEMAT: In case the -O intends to t+anspose and demat the secu+ities follo0ing documents have to the submitted to the '$ 9/ 'uly filled 'RF 4/ 'uly filled R$F ACTION BY DP: On +eceiving a 'RF along 0ith othe+ documents f+om the -O6 '$ must ensu+e the follo0ing befo+e accepting the same) 9/ he secu+ities intended fo+ demate+iali3ation a+e admitted by #'SL/ If not then the '$ shall info+m the same to the investo+/ 4/ #o++ect ISI% is selected 0he+e the secu+ity of an Issue+ has mo+e then one ISI%/
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#e+tificates a+e in names of ma5imum th+ee holde+s only/
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T,% DP 01'+ 2%$"*) +,% *o--o."#/: 9/ 4/ >/ he 'RF6 the R$F <if applicable: a+e filled completely/ he ce+tificate details mentioned on the 'RF and on the ce+tificates enclosed6 tally/ %ame<s: of the holde+<s: appea+ing on the ce+tificates e5actly tally 0ith those +eco+ded unde+ the -O account maintained 0ith #'SL/ B/ !ll the holde+s have signed the 'RF6 the by the '$/ If the+e is any disc+epancy in any of the details6 the '$ 0ill get the same +ectified f+om the investo+ and the e++o+ f+ee 'RF 0ill be ta,en up fo+ fu+the+ p+ocessing by the '$/ Immediately on +eceipt of 'RF along 0ith the ce+tificates6 the '$ should give an ac,no0ledgement to the -O/ R$F <if applicable: and the signatu+e of the account holde+s1 match 0ith those +eco+ded
he details f+om the 'RF ( the ce+tificates a+e ente+ed in the #'SL system/ On successful ent+y of details6 the system gene+ates a uni8ue numbe+ called as 'emat Re8uest %umbe+ <'R%:6 0hich se+ves as a +efe+ence numbe+/ he '$ 0+ites the 'R% on the 'RF/ he 'RF
details a+e immediately available elect+onically to the Issue+=R ! afte+ the 'R% is gene+ated/
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he '$ 0ill deface and mutilate the ce+tificates to avoid misuse in case they a+e lost in t+ansit/ he '$ 0ill autho+i3e the 'RF by putting his seal ( signatu+e/ he ce+tificates ( the o+iginal 'RF is sent to the Issue+=R ! along 0ith a cove+ing lette+/ ! copy of the 'RF is to be maintained by the '$ fo+ its o0n +efe+ence and +eco+ds/ he '$ 0ill then captu+e the dispatch details such as the dispatch +efe+ence no6 dispatch date6 name of the cou+ie+ etc in the #'SL system/ he '$ must dispatch the physical documents 0ithin D 0o+,ing days f+om the date of +eceipt of physical documents by the -O/ ACTION BY ISSUER 3 RTA: he Issue+ = R ! must complete the demate+iali3ation p+ocess 0ithin a pe+iod of 9? days6 o+ any such pe+iod as specified by #'SL f+om time to time6 f+om the date of physical +eceipt of the 'RF/ he p+ocedu+e given belo0 is also applicable to +ansfe+;cum;'emat = +ansposition/ !fte+ +eceiving 'RF along 0ith physical ce+tificates and othe+ documents as the case may be6 the Issue+ = R ! 0ill access elect+onic details f+om the #'SL system/ he Issue+ = R ! 0ill chec, 0hethe+ the) 9/ 4/ >/ 'RF is autho+i3ed by the '$/ 'etails as mentioned on the 'RF and as +eceived elect+onically f+om #'SL6 tally Signatu+e of -O1s on the 'RF tally 0ith the signatu+es +eco+ded by him/
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If the elect+onic and physical details match then the Issue+=R ! gives c+edit in the -O1s demat account and t+ansfe+s the +egiste+ed o0ne+ship of secu+ities in the name of #'SL/ he Issue+ = R ! shall info+m the details of the secu+ities demate+iali3ed to all stoc, e5changes 0he+e the secu+ity is listed <as pe+ the +e8ui+ements of the +espective stoc, e5changes:/ basis/ If the elect+onic and physical details do not tally6 the Issue+=R ! 0ill info+m the '$/ he 'RF6 ce+tificates and any othe+ documents +eceived along 0ith the 'RF 0ill be sent bac, to the '$ unde+ +ejection/ !pp+op+iate +eason of +ejection must be specified so as to enable the '$ to +ectify the same/ he majo+ +easons unde+ 0hich a demat +e8uest can be +ejected by an Issue+=R ! a+e as unde+ 9/ 'RF=#e+tificates<s: not +eceived 0ithin 9? days f+om the date of elect+onic +e8uest logged into the system by the '$ 4/ 'RF not complete he Issue+ = R ! should also fu+nish such a ce+tificate to #'SL on a 8ua+te+ly
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Signatu+e <s: does not match
B/
Fo+ged=Fa,e=Stolen #e+tificate
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'uplicate ce+tificate al+eady issued
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9/ 4/
*olde+s1 name<s: does not match #e+tificate details do not match
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#ou+t injunction
B/
'RF sent to inco++ect Issue+=R !
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Auantity mentioned on the ce+tificates is mo+e o+ less than elect+onic +e8uest
C/
Stop t+ansfe+
D/
#e+tificate of inco++ect ISI% being missed up in the 'RF
F/
#e+tificates1 having diffe+ent loc,;in +elease dates being missed up 0ith the same 'RF
E/
'R% set up unde+ 0+ong ISI9?/ +ansfe+ cum demat ;; #e+tificate<s: sent to -O
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CHAPTER-III
COMPANY PROFILE
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COMPANY PROFILE
India is on the th+eshold of ente+ing a ne0 economic e+a/ !n e+a of fast paces economic g+o0th/ With va+ious ne0 comme+cial oppo+tunities opening up/ hese ne0 indust+ies and business ventu+es a+e often global ;Multi nationals6 collabo+ations6 joint ventu+es6 technology t+ansfe+s a+e the ne0 bu33 0o+ds/ Establishing and developing these gen+es of companies is a complicated p+ocess/ In today1s scena+io of f+enetic activity6 the need fo+ 8uality financial se+vices is acute/ o c+ystalli3e these p+ojects a financial company that unde+stands the individual needs is +e8ui+ed/ hus the need fo+ "S*!7IR!% FI%!%#E LIMI E' is it p+oviding co+po+ate finance o+ in management of issues o+ in dealing 0ith the secu+ities ma+,et/ "S*!7IR!% FI%!%#E LIMI E' is an e5isting p+ofit ma,ing company/ It is an integ+ated finance company established essentially as a fund based financial se+vice o+gani3ation as dive+sified its +ange of activities f+om fund based to non fund based activities and fu+the+ stepped up and e5panded the fund based activities and othe+ financial se+vices/ It is a p+ofessionally managed company comp+ising cha+te+ed accountants6 #ompany Sec+eta+ies6 M-!s6 #ost !ccountants and soft0a+e p+ofessionals/ With an inf+ast+uctu+e that matches 0ith the inte+national standa+ds and p+actices6 staff suppo+t and st+ong net0o+,6 the company efficiently cate+s financial se+vices to its dive+se clientele/
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he -oa+d of 'i+ecto+s of the company comp+ises eminent and e5pe+ienced p+ofessionals 0ho have got abundant e5pe+ience by vi+tue of thei+ association ea+lie+ 0ith public secto+ unde+ta,ings and multi national unde+ ta,ings/ Sh+i /!'I%!R!&!%! the chief p+omote+ is a membe+ of the Institute of #ha+te+ed !ccountants of India6 the I#W! of India and I#S of India/ *e 0as associated 0ith the financial institute fo+ about E yea+s and is 0ell ve+sed in all aspects of te+m lending6 p+oject financing6 and p+oject adviso+y se+vices/ Many Leading indust+ial conglome+ated has used the se+vices pa+ticula+ly in the a+eas of finance6 ta5ation6 sec+eta+ial and public issues +elated matte+s/ *e is also a membe+ of the *yde+abad Stoc, E5change Limited/
he company cate+s mainly to the +e8ui+ements of co+po+ate clients in the va+iety of activities 0hich include the follo0ing) • • • • • • • • • • • • • • • • • • • • Leasing and *i+e pu+chase finance Inte+ co+po+ate deposits -ill 'iscounting Loans Syndication $lacement of #omme+cial pape+s Me+ge+s6 !malgamations and !c8uisitions $+oject #ounseling and !dviso+y Se+vices $+oject !pp+aisals "nde+ 0+itings Me+chant -an,ing Issue Management $lacement of Secu+ities Ma+,eting of $ublic issues -+ought out deals $lacement of sha+e to %RGs=O#-s6 FIs6 and FIIs Fund Management E8uity Resea+ch !nalysis Investment -an,ing Stoc, -+o,ing and #ommodities t+ading Goint Ventu+es
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CHAPTER-IV
DATA ANALYSIS 4 INTERPRETATION
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HISTROCIAL BACKGROUND OF DEMATERIALISATION: Ea+liest +eco+ds of secu+ities t+ading in India a+e available f+om the end of the eighteenth centu+y/ -efo+e 9F?@6 the+e 0as business conducted in Mumbai in sha+es of ban,s and the secu+ities of the East India #ompany6 0hich 0e+e conside+ed as Secu+ities fo+ buying6 selling and e5change/ he sha+es of the comme+cial -an,6 Me+cantile -an, and -an, of -ombay 0e+e some of the p+ominent sha+es t+aded/ he business 0as conducted unde+ a sp+a0ling banyan t+ee in f+ont of the o0n *all6 0hich is no0 in the *o+niman #i+cle $a+, In 9F?@6 the #ompanies !ct 0as passed and that he+alded the commencement of the joint stoc, companies in India6 it 0as the !me+ican civil 0as that helped Indians to establish b+o,ing business/ p+ocedu+e to be follo0ed 0hile dealing in sha+es/ In 9FDB6 the 'alai St+eet became the p+ominent place fo+ meeting of the b+o,e+s to conduct thei+ business/ he b+o,e+s o+gani3ed an association on Eth Guly 9FD? ,no0n as 2%ative Sha+e and Stoc, -+o,e+s !ssociation2 to p+otect the cha+acte+6 status and inte+est of the native b+o,e+s/ hat 0as the foundation of he Stoc, E5change6 Mumbai/ he E5change 0as established 0ith >9F membe+s/ he leading b+o,e+6 S,$" P$%0 , Ro) , designed and developed the
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he Stoc, E5change6 Mumbai did not have to loo, bac, as it sta+ted +iding high in the ladde+ of g+o0th/ he Stoc, E5change is a ma+,et place6 li,e any othe+ cent+ali3ed ma+,et6 0he+e buye+s and selle+s can t+ansact business in secu+ities at a given point of time in a convenient and competitive manne+ at the fai+est possible p+ice/ In Ganua+y 9FEE6 M+/ Games M/ MacLean6 M/$/6 inaugu+ated the -+o,e+s1 *all/ !fte+ the Fi+st Wo+ld Wa+6 the Stoc, E5change 0as housed p+ope+ty at an old building nea+ the o0n *all/ In 9E4F6 the p+esent p+emises 0e+e ac8ui+ed su++ounded by 'alai St+eet6 -ombay Samacha+ Ma+g and *amam St+eet/ ! ne0 building6 the p+esent location6 0as const+ucted and 0as occupied on 9st 'ecembe+ 9E>@/ In 9E?@ the +egulation of business in secu+ities and stoc, e5changes became an e5clusively #ent+al gove+nment subject follo0ing adoption of the #onstitution of India/ In Secu+ities #ont+acts <Regulation: !ct 0as passed by the $a+liament of India6 to +egulate the secu+ities ma+,et6 SE-I 0as initially established on Octobe+ 946 9EFF as an inte+im boa+d unde+ cont+ol of the Minist+y of Finance6 gove+nment of India/ In 9EE46 the SE-I !ct 0as passed th+ough 0hich the SE-I came into e5istence/ *ence SE-I ac8ui+ed statuto+y status on >@th Ganua+y 9EE4 by passing an o+dinance6 0hich 0as subse8uently conve+ted into an !ct passed by the $a+liament on !p+il B6 9EE4/
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he main objectives of SE-I a+e to p+otect the inte+est of the investo+s6 +egulate and p+omote the capital ma+,et by c+eating an envi+onment6 0hich 0ould facilitate mobili3ation of +esou+ces th+ough efficient allocation6 and to gene+ate confidence among the investo+s/ !s such6 SE-I is +esponsible fo+ +egulating stoc, e5changes and othe+ inte+media+ies 0ho may be associated 0ith the capital ma+,et and the p+ocess of public companies +aising capital by issuing inst+uments that 0ill be t+aded on the capital ma+,et/ SE-I has been empo0e+ed by the #ent+al .ove+nment to develop and +egulate capital ma+,ets in India and the+eby p+otect the inte+est of the investo+s/ In 9EE46 Ove+ the #ounte+ E5change of India <O #E: came into e5istence 0he+e e8uities of small companies a+e listed/ In 9EEB6 %ational Stoc, E5change <%SE: came into e5istence6 0hich b+ought an end to the open cut;c+y system of t+ading secu+ities 0hich 0as in vogue fo+ 9?@ yea+s6 and int+oduced Sc+een -ased +ading <S- : system/ -SE1s On Line +ading System 0as launched on Ma+ch 9B6 9EE?/ %o0 the t+ading in secu+ities is done using sc+een based t+ading method th+ough duly autho+i3ed membe+s of the e5change/ In S- 6 investo+s place buy and sale o+de+s 0ith thei+ b+o,e+s 0ho ente+ the o+de+s in the automated t+ading system/ When buy and sale o+de+s match6 a t+ade is gene+ated and t+ade details a+e given to the +espective b+o,e+s/ !fte+ a t+ade has ta,en place6 the buye+ has to pay money and the selle+ has to delive+ secu+ities/
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On the stoc, e5change<s:6 hund+eds and thousands of t+ades ta,e place eve+y day/ -uye+s and selle+s a+e sp+ead ove+ a la+ge geog+aphicalH a+ea/ 'ue to these p+oblems completing a t+ade by paying cash to selle+ and secu+ities to buye+ immediately in e5ecution of t+ades on an individual basis in vi+tually impossible/ So the stoc, e5changes allo0 t+ading to ta,e place fo+ a specified pe+iod6 0hich is called as a 1 +ading #ycle1/ ! uni8ue settlement numbe+ identifies each t+ading cycle/ Once the t+ading pe+iod is ove+6 buye+ b+o,e+ pays money and selle+ b+o,e+ delive+s secu+ities to the ##=#* on a p+edefined day/ his p+ocess is called as $ay; in/ !fte+ pay;in6 secu+ities a+e given to the buye+ b+o,e+s and the ##=#* gives money to the selle+ b+o,e+/ his p+ocess is called as $ayout/ his p+ocess of pay;in and payout is called settlement/ Initially the t+ading cycle 0as of one fo+tnight6 0hich 0as +educed to one 0ee,/ he t+ansactions ente+ed du+ing this pe+iod6 of a fo+tnight o+ one; 0ee,6 0e+e used to be settled eithe+ by payment fo+ pu+chase o+ by delive+y of sha+e ce+tificates sold on notified days one fo+tnight o+ one 0ee, afte+ the e5pi+y of the t+ading/ he settlement schedules a+e made ,no0n to the membe+s of the e5change in advance/
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he 0ee,ly settlement pe+iod 0as +eplaced by daily settlements6 popula+ly ,no0n as +olling settlements6 in 0hich each day is sepa+ate t+ading day/ With effect f+om 'ecembe+ 4@@96 I? +olling settlement cycles 0as int+oduced fo+ all e8uities 0he+e 1 1 is the 1 +ading 'ay1 and pay;in and $ayout fo+ the settlement 0as done on ?th business day afte+ t+ade day/ Fo+ e5ample6 if 0as Monday6 the pay;in and payout 0e+e done on ne5t I? Monday6 as Satu+day and Sunday a+e not counted as business days/ cycles 0e+e fu+the+ sho+tened to I> settlement cycle 0/e/f/ !p+il 96 4@@4/ CURRENT SCENARIO: SE-I has since int+oduced I4 +olling settlements f+om !p+il 96 4@@>/ I4 settlement cycle means that the final settlement of t+ansactions done on 6 i/e/ t+ade day by e5change of monies and secu+ities bet0een the buye+s and selle+s +espectively occu+s on second business day afte+ the t+ade day e5cluding Satu+days6 Sundays6 ban, holidays and e5change holidays/ DAY • ACTIVITY +ading and daily do0nloading of statements sho0ing details of t+ansaction and ma+gins at the end of each t+ading day • C !=D !J ent+y by the membe+; b+o,e+s=confi+mation I9 by the custodians #onfi+mation of C!=D! data by the custodians up to a specified deadline time/ 'o0nloading of secu+ities and funds obligation statement by membe+s/
(-
I4
$ay;in of funds and secu+ities and payout of funds and secu+ities by $+e;specified deadline times/ he membe+s a+e +e8ui+ed to submit the pay in inst+uctions fo+ funds and secu+ities to ban,s and deposito+ies +espectively/ !uction fo+ sho+tages in delive+y of secu+ities !uction pay;in and pay;out of funds and secu+ities/
I> IB
JC!=D!) ! mechanism 0he+eby the obligation of setting the t+ansactions done by a membe+ b+o,e+ on behalf of a client is passed on to a custodian based on his confi+mation/ he custodian can confi+m the t+ades done by the membe+s on;line/
+ading on the on;line sc+een based system <-SE1s On;Line +ading system6 -OL fo+ -SE and %ational E5change fo+ !utomated +ading6 %E! fo+ %SE: is conducted f+om Monday to F+iday bet0een E)?? a/m/ and >)>@ p/m/ he sc+ipts t+aded on he Stoc, E5change6 Mumbai a+e classified into 1!16 1-916 -4161#16 1F16.16 and 1KLH g+oups/
!6 -96 -4 and # g+oup1s +ep+esent the e8uity ma+,et segment/ F g+oup +ep+esents the debt ma+,et <fi5ed income secu+ities: segment/
-SE has commenced t+ading in .ovt/ Secu+ities fo+ +etail investo+s unde+ .
(.
g+oup 0/e/f/ Ganua+y 9C6 4@@>/ K g+oup cove+s the companies6 0hich have failed to comply 0ith listing +e8ui+ements and=o+ failed to +esolve investo+ complaints o+ have not made the +e8ui+ed a++angements fo+ demate+iali3ation of thei+ secu+ities 0ith both the deposito+ies/ PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT: he capital ma+,et 0as a ma+ginal institution in the financial ma+,et fo+ almost th+ee decades afte+ India1s independence/ *o0eve+6 until late eighties the common man ,ept a0ay f+om capital ma+,ets/ %ot many companies accessed the capital ma+,et and6 thus6 the 8uantum of funds mobili3ed th+ough the ma+,et 0as meage+/ ! majo+ p+oblem6 ho0eve+6 continued to plague the ma+,et/ he Indian ma+,ets 0e+e lite+ally 0eighed do0n by the need to deal 0ith sha+es in the pape+ fo+m/ he+e 0e+e p+oblems galo+e 0ith handling documents ;; fa,e and stolen sha+es6 fa,e signatu+es and signatu+e mismatches6 duplication and mutilation of sha+es6 t+ansfe+ p+oblems etc/ he t+ading volumes 0e+e small due to small investing population/
(/
T,% *o--o."#/ &$% 'o0% o* +,% 0&6o$ 7$o(-%0' *& %5 *o$ 7,)'" &%$+"*" &+%' () +,% "#2%'+o$': a/ Ino+dinate delay in +eceiving secu+ities afte+ t+ansfe+ by the companies/ b/ Retu+n of sha+e ce+tificates as bad delive+ies on account of signatu+e mismatch o+ fo+ged signatu+e of t+ansfe+o+ o+ fa,e ce+tificates/ c/ 'elay in +eceipt of secu+ities afte+ allotment by the companies/ d/ %on +eceipt of secu+ities/ e/ $+ocedu+al delays in getting duplicate sha+es=debentu+e ce+tificates/ f/ Sto+ing physical ce+tificates/
Lac, of mode+ni3ation became a hind+ance to g+o0th of seconda+y ma+,et and +esulted in c+eation of cumbe+some p+ocedu+es and pape+ 0o+,/ *o0eve+6 the +eal g+o0th and change occu++ed f+om mid;eighties in the 0a,e of libe+ali3ation initiatives of the .ove+nment/ he +efo+ms in the financial secto+ 0e+e envisaged in the ban,ing secto+6 capital ma+,et6 secu+ities ma+,et +egulation6 mutual funds6 fo+eign investments and .ove+nment cont+ol/
)0
hese institutions and stoc, e5changes e5pe+ienced that the pape+ ce+tificates a+e the main cause of investo+ dispute+s and a+bit+ation cases/ hus6 the .ove+nment of India decided to set up a fully automated and high technology based model e5change6 0hich 0ould offe+ sc+een based t+ading and deposito+ies as the ultimate ans0e+ to all such +efo+ms/ he+efo+e6 the .ove+nment of India p+omulgated the 'eposito+ies O+dinance in 9EE?/ *o0eve+6 both *ouses of $a+liament passed the 'eposito+ies !ct in 9EEC/ he unpa+alleled success of the int+oduction of the deposito+y concept in the Indian capital ma+,ets is +eflected in the on; going successful +eduction in the pe+iod bet0een t+ading and settlement/ PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT: he capital ma+,et 0as a ma+ginal institution in the financial ma+,et fo+ almost th+ee decades afte+ India1s independence/ *o0eve+6 until late eighties the common man ,ept a0ay f+om capital ma+,ets/ %ot many companies accessed the capital ma+,et and6 thus6 the 8uantum of funds mobili3ed th+ough the ma+,et 0as meage+/ ! majo+ p+oblem6 ho0eve+6 continued to plague the ma+,et/ he Indian ma+,ets 0e+e lite+ally 0eighed do0n by the need to deal 0ith sha+es in the pape+ fo+m/ he+e 0e+e p+oblems galo+e 0ith handling documents ; fa,e and stolen sha+es6 fa,e signatu+es and signatu+e mismatches6 duplication and mutilation of sha+es6 t+ansfe+ p+oblems etc/ he t+ading volumes 0e+e small due to small investing population/
)'
T,% *o--o."#/ &$% 'o0% o* +,% 0&6o$ 7$o(-%0' *& %5 *o$ 7,)'" &%$+"*" &+%' () +,% "#2%'+o$': a/ Ino+dinate delay in +eceiving secu+ities afte+ t+ansfe+ by the companies/ b/ Retu+n of sha+e ce+tificates as bad delive+ies on account of signatu+e mismatch o+ fo+ged signatu+e of t+ansfe+o+ o+ fa,e ce+tificates/ c/ 'elay in +eceipt of secu+ities afte+ allotment by the companies/ d/ %on +eceipt of secu+ities/ e/ $+ocedu+al delays in getting duplicate sha+es=debentu+e ce+tificates/ f/ Sto+ing physical ce+tificates/
Lac, of mode+ni3ation became a hind+ance to g+o0th of seconda+y ma+,et and +esulted in c+eation of cumbe+some p+ocedu+es and pape+ 0o+,/ *o0eve+6 the +eal g+o0th and change occu++ed f+om mid;eighties in the 0a,e of libe+ali3ation initiatives of the .ove+nment/ he +efo+ms in the financial secto+ 0e+e envisaged in the ban,ing secto+6 capital ma+,et6 secu+ities ma+,et +egulation6 mutual funds6 fo+eign investments and .ove+nment cont+ol/
)(
hese institutions and stoc, e5changes e5pe+ienced that the pape+ ce+tificates a+e the main cause of investo+ dispute+s and a+bit+ation cases/ hus6 the .ove+nment of India decided to set up a fully automated and high technology based model e5change6 0hich 0ould offe+ sc+een based t+ading and deposito+ies as the ultimate ans0e+ to all such +efo+ms/ he+efo+e6 the .ove+nment of India p+omulgated the 'eposito+ies O+dinance in 9EE?/ *o0eve+6 both *ouses of $a+liament passed the 'eposito+ies !ct in 9EEC/ he unpa+alleled success of the int+oduction of the deposito+y concept in the Indian capital ma+,ets is +eflected in the on;going successful +eduction in the pe+iod bet0een t+ading and settlement/ ACCOUNT OPENING AND MAINTENANCE: !n individual 0ho 0ants to ,eep his = he+ cash safe in a ban, has to open an account 0ith a ban, as a fi+st step and maintain cash in boo, ent+y fo+m/ Simila+ly6 an investo+ has to open a demat account 0ith any '$ of #'SL as a fi+st step to hold secu+ities in demat fo+m in the deposito+y system/ he investo+ can open an account 0ith any '$ of #'SL/ #'SL system facilitates opening of demat accounts fo+ diffe+ent catego+ies of investo+s/ 'emat accounts opened 0ith #'SL a+e +efe++ed as 1-eneficial O0ne+ !ccounts1 o+ 1-O account1/ !s e5plained ea+lie+6 0hen secu+ities a+e held in physical fo+m name of the investo+ is +eco+ded in the boo,s of the company as 1Registe+ed o0ne+1/ When the same secu+ities a+e conve+ted into elect+onic fo+m and held in a demat account6 the deposito+y becomes +egiste+ed o0ne+ of the secu+ities/
))
Since deposito+y is acting as a custodian of the secu+ities6 o+iginal investo+ is legally entitled fo+ all +ights = liabilities attached 0ith secu+ities and hence a+e called a 1-eneficial O0ne+1/ !ll accounts opened on #'SL system a+e beneficial accounts i++espective of the type of account/ ! demat account may be opened and maintained in the name<s: of one pe+son <sole holde+: o+ mo+e than one pe+sons <joint holde+s:/ !ll the joint; holde+s have to sing the application fo+m and the ag+eement/ he suppo+ting documents and photog+aph should also be p+ovided fo+ all joint;holde+s/ hough the beneficial o0ne+ship of jointly held he dividend and secu+ities vests e8ually in all joint;holde+s6 communications about the joint deposito+y account a+e p+ovided only to the fi+st holde+/ inte+est 0a++ants6 annual +epo+ts and notices fo+ meetings a+e also issued to the fi+st;named joint holde+ only/ !ll -o accounts a+e ope+ated at '$ levelH ho0eve+6 data is maintained at #'SL level/ ! -O does not have di+ect access to #'SL system and must act th+ough his = he+ '$/ While opening an account6 the -O can give a standing inst+uction <#onfi+mation 0aive+ o+ $u+chase 0aive+: to allo0 c+edits automatically to the account 0ithout sepa+ate inst+uctions/
)*
ACCOUNT TYPES T,% &$% +.o 0&"# +)7%' o* & ')'+%0. 9/ 9/ !ccounts to be maintained by '$s/ #lea+ing #o+po+ation = #lea+ing *ouse accounts/ o1#+' +,&+ &# (% o7%#%5 o# CDSL
ACCOUNT OPENING; PROCEDURE: T,% 0&"# o(6% +"2%' o* & o1#+ o7%#"#/ &$% +o &--o. "#2%'+o$' +o 7%$*o$0 +,% *o--o."#/ & +"2"+"%': 9/ 'emate+iali3e physical secu+ities cu++ently held by investo+s and +eflect secu+ities;o0ne+ship by elect+onic boo,;ent+ies in #'SL/ 4/ -uy and sell demate+iali3ed secu+ities6 0hich a+e admitted in #'SL/
>/
Receive statements of all demate+iali3ed holdings of secu+ities as -O/
B/
Receive secu+ities in elect+onic fo+m in case of Initial $ublic Offe+ings6 Rights Issues6 -onus Issues6 Me+ge+s6 !c8uisitions and !malgamations6 etc/
?/
$ledging of secu+ities/
)+
he -O and the '$ 0ill ente+ into an ag+eement and each one 0ill abide by the te+ms and conditions of the ag+eement/ he -O 0ill give the account opening fo+m along 0ith the +elevant documents to the '$/ he '$ 0ill chec, all the documents and in case of any additional info+mation is +e8ui+ed shall call fo+ the same/ If the '$ finds all the pape+s as co++ect6 he 0ill send a confi+mation to the -O/ <E/g/ a tea+ off slip on account opening fo+m as counte+ slip/: he '$ 0ill captu+e details f+om the account opening fo+m filled by the -O in the f+ont;end system p+ovided by #'SL/ he '$ 0ill scan the signatu+e<s: of the -O<s: as 0ell as the po0e+ of atto+ney signatu+es6 if applicable/ Once the '$ commits the t+ansaction6 the data is captu+ed and sto+ed at #'SL/ ! uni8ue -O account numbe+ is gene+ated by the system and this can be seen at the '$ f+ont;end system/ his 0ill be done on;one and the info+mation gets t+ansmitted to #'SL instantaneously/ he '$ 0ill +eco+d the -O I' on the o+iginal application fo+m and on the '$;-O ag+eement fo+ c+oss;+efe+ence/ ! -O 0ill be classified 0ith a -O status/ hese status a+e system
defined/ -O status indicates 0hethe+ the -O/ is an Individual6 %RI and #o+po+ate -ody6 -an, etc/ the info+mation to be captu+ed fo+ each -O status 0ill be diffe+ent/
),
he use+ 0ill fi+st select p+ope+ status code to use fo+ the set;up of -O/ Only those fields6 0hich a+e p+e;defined by #'SL fo+ the status code6 0ill come up on the sc+een fo+ the use+ to ente+/ he -O I' is a combination of the #'SL #ode <9:6 '$ ype<l:6 '$ #ode <B: and -+anch #ode <4:6 Se+ial no<D:6 and the #hec, 'igit <9:/; Figu+es in b+ac,et indicate numbe+ of cha+acte+s/ he system maintains a consistent +unning se8uence of account numbe+s at the '$ f+ont;end system/ he '$ sends the -O a final confi+mation lette+ fo+ having opened the account mentioning the account numbe+ the+ein/ In case of a joint account6 all co++espondence = 8ue+ies +elating to -O account 0ill be sent to the fi+st holde+ only / he account cannot be made active till the -O1s signatu+e<s: have been captu+ed/ he account opening fo+m fo+ Individual Investo+s6 Institutional Investo+s6 #o+po+ate Investo+s6 and #Ms can be common/ *o0eve+6 a '$ may p+int sepa+ate fo+ms fo+ a each type of -O if found necessa+y o+ convenient/= those sections of the application fo+m6 0hich a+e not +elevant to a pa+ticula+ type of -O6 should be ma+,ed 1%ot !pplicable1 <%/!/:/ he documents specified at the end of the account opening fo+m a+e to be submitted along 0ith the account opening fo+m/ he -O1s '$ may also specify additional documents to be supplied 0ith the account opening fo+m/ ! '$ shall6 befo+e opening any account of any -O ma,e in8ui+ies as may be necessa+y and e5e+cise due ca+e and caution in asce+taining the bonafides of the intending -O6 sc+utini3e the documents +elating to the secu+ities in
)-
+espect of 0hich account is intended to be opened6 fo+ thei+ authenticity/ he '$ should ensu+e that a -O having diffe+ent sub;status fo+ diffe+ent ISI%s6 opens a sepa+ate -O a=c fo+ diffe+ent -O sub;status e/g/ di+ecto+ of a company 0ill have a diffe+ent sub;status fo+ sha+es held by him in that company and 0ill have anothe+ -O account/ Fo--o."#/ &$% +,% o00o# 5%+&"-' +o (% 7$o2"5%5 o# & o1#+ o7%#"#/ *o$0 *o$ &-- +)7%' o* & o1#+': 9/ 4/ %ame of the holde+<s: !dd+ess ( phone =fa5 numbe+/
>/
-an, details6 li,e6 name of ban,6 type of account <cu++ent=savings: account numbe+6 -+anch add+ess6 MI#R %o/ etc/
B/ ?/
$!% numbe+6 if applicable/ Specimen signatu+es/
).
DP-BO AGREEMENT Each -O has to sign a '$;-O ag+eement 0ith the '$ befo+e opening a demat account/ *o0eve+6 a -O belonging to any one of the catego+ies specified unde+ the #'SL -yela0s need not ente+ into an ag+eement 0ith the '$/ T,%'% BO &+%/o$"%' &$% &' *o--o.': 9/ ! fo+eign institutional investo+ +egiste+ed 0ith the SE-I6 0ho has ente+ed into an ag+eement 0ith the '$ eithe+ di+ectly o+ th+ough its po0e+ of atto+ney holde+ in acco+dance 0ith the p+ovisions of Regulation 9C of SE-I <Fo+eign Institutional Investo+s: Regulation6 9EE?/ $+ovided that such ag+eement gives the '$ an autho+ity to act on behalf of the fo+eign institutional investo+ fo+ availing the se+vices of the deposito+yH and a copy of such ag+eement has been filed 0ith the SE-I/ 4/ !n Inte+national Multilate+al !gency and .lobal #ustodian 0ho has ente+ed into ag+eement 0ith the '$ pu+suant to Regulation 9D of SE-I <#ustodians of Secu+ities: Regulations6 9EEC and such ag+eement inte+ alias confe+s autho+ity on the '$ to avail of the deposito+y se+vices on behalf of an Inte+national Multilate+al !gency and .lobal #ustodian/
)/
DOCUMENTS
TO
BE
SUBMITTED
WHILE
OPENING
A
DEMATS ACCOUNT List of documents = info+mation to be submitted by diffe+ent catego+ies of -Os along 0ith the account opening fo+m is given belo0/ he '$ should ve+ify copies of the documents against the o+iginal documents/ INDIVIDUAL INVESTORS 9/ Int+oduce+1s %ame6 !dd+ess6 and #ontact %umbe+/ 4/ %ame6 !dd+ess6 el %o/ Etc/ of Magist+ate=%ota+y $ublic=E5ecutive
Magist+ate in case of attestation done by any of them/
>/ $o0e+ of !tto+ney6 if applicable/
B/ $hotocopy
of
d+iving
license=Election
I'
ca+d=$asspo+t=-an,
attestation=$an #a+d to dete+mine intending -O1s identity/
?/ Ration ca+d = passpo+t = vote+1s I' = d+iving license = ban, passboo, as a p+oof of add+ess/ C/ -i+th #e+tificate in case of mino+s/
D/ One passpo+t si3e photog+aph of applicants 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*0
*'
HUF 9/ !ll the above documents as ta,en fo+ Individual investo+s at the time of account opening hold good/ In addition *"F signatu+e unde+ the stamp of *"F/ 4/ List of family membe+s/ CORPORATE INVESTORS: 9/ #e+tified t+ue copy of boa+d +esolution fo+ pe+sons autho+i3ed by the boa+d to act as autho+i3ed signato+ies/ 4/ %ames of the autho+i3ed signato+ies6 designation6 and thei+ specimen signatu+es/
>/
$O! given to the autho+i3ed signato+ies/
B/
%ame6 !dd+ess6
el %o/ etc/ of Magist+ate=%ota+y $ublic=Special
E5ecutive Magist+ate incase of attestation done by any of them/
?/
Memo+andum and !+ticles of !ssociation of the company/
C/
One passpo+t si3e photog+aph of each autho+i3ed signato+y 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*(
CM8 FII8 NRI AND OCB 9/ 4/ #opy of #e+tificate of Regist+ation 0ith SE-I <0he+e applicable:/ $o0e+ of !tto+ney <if applicable:/
>/
#e+tified t+ue copy of boa+d +esolution fo+ pe+sons autho+i3ed by the boa+d to act as autho+i3ed signato+ies/
B/
%ames of the autho+i3ed signato+ies6 designation6 and thei+ specimen signatu+es/
?/
%ame6
!dd+ess6
el
%o/
etc/
of
Magist+ate=%ota+y
$ublic=Special E5ecutive Magist+ate in case of attestation done by any of them/
C/
R-I Regist+ation fo+ FII6 %RI6 O#- <if applicable:/M
D/
-an, !=c details 0ith +espective status li,e %RE6 %RO6 etc/
F/
Memo+andum and !+ticles of !ssociation of the company/
E/
#onduct #e+tificate f+om the stoc, e5changes 0he+e -O is a #M/
9@/
One passpo+t si3e photog+aph of each of the autho+i3ed signato+y 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*)
SETTLEMENTS: When secu+ities a+e pu+chased o+ sold6 the same need to be ta,en into buye+1s account o+ t+ansfe++ed oEut of selle+1s account/ Since settlement of t+ades in all listed secu+ities is to be compulso+ily done in the demate+iali3ed fo+m6 the t+ansaction has to be +outed th+ough the deposito+y system/ he secu+ities could eithe+ be sold o+ pu+chased th+ough the stoc, e5change mechanism o+ outside the stoc, e5change mechanism/ ! demat account can be debited = c+edited only on inst+uctions of the -O/ -O the+efo+e needs to give inst+uctions to his = he+ '$ to effect debit = c+edit of secu+ities out of his = he+ demat account/ *o0eve+6 most of the time inst+uctions a+e +e8ui+ed only fo+ debit since a -O can give a one; time standing inst+uction to the '$6 fo+ c+editing the account 0ithout a c+edit inst+uction6 at the time of account opening/ inst+uction is ,no0n as 2$u+chase 0aive+2/ the account holde+<s:/ T$&#'*%$ o* '% 1$"+"%' "# 3 o1$ o* +,% 5%0&+ & o1#+ &# &$"'% "# +,% *o--o."#/ "#'+&# %' a: Fo+ e5ecution of off ma+,et t+ansaction i/e/ t+ansactions bet0een t0o accounts on mutually ag+eeable te+ms6 i/e/ a t+ansaction done on a pe+son;to;pe+son basic6 0ithout going th+ough the stoc, e5change mechanism/ his one;time he '$ e5ecutes all
inst+uctions in the #'SL system6 only afte+ ve+ification of the signatu+e of
**
b: Fo+ settling on ma+,et t+ades i/e/ t+ades done by the investo+s th+ough stoc, e5change mechanism and settled using the settlement mechanism of the same e5change/ c: Fo+ inte+ deposito+y t+ansfe+s i/e/ t+ansfe+ of secu+ities f+om an account held in one deposito+y to an account held in the othe+ deposito+y/
Fo+ t+ansfe+ of secu+ities6 -O is +e8ui+ed to submit a duly filled in inst+uction slip6 in the fo+mat specified by #'SL6 to his = he+ '$ fo+ e5ecution/ his inst+uction slip can be used fo+ t+ansfe+ of secu+ities necessitated due to any of the above +easons/ -oo,lets of inst+uction slips a+e issued to the -O afte+ an account has been opened/ he inst+uction slips have the -O I' and a se+ial numbe+ p+e; p+inted on them/ he '$ is +e8ui+ed to ,eep a p+ope+ +eco+d in +espect of the +ange of se+ial numbe+s of the inst+uction slips issued to each -O/ he -O should submit the inst+uction slip6 duly filled in and signed by all joint holde+s o+ a duly constituted $O! <if any6 to the '$/ he -O should clea+ly specify the type of t+ansaction fo+ 0hich the inst+uction slip is submitted/ !ny alte+nations= modifications to the inst+uction slips al+eady signed by the holde+<s: should be again authenticated by the holde+<s:/
*+
OFF-MARKET TRANSACTIONS: OffNMa+,et t+ansaction can be used fo+ t+ansfe+ secu+ities f+om 9/ One -O account to othe+ -O !ccount 4/ -O account to #M account fo+ pay;in
>/ #M account to -O account fo+ pay;out he selle+ -O 0ill submit a duly filled in inst+uction slips6 giving details of the buye+ -O6 ISI%/ Auantity etc/6 to the '$/ On +eceipt of the inst+uction slip6 the '$ 0ill ve+ify the same and ente+ the off;ma+,et inst+uction in the #'SL system/ If the buye+ -O has not given one time standing inst+uction i/e/ pu+chase 0aive+6 the buye+ -O 0ill be +e8ui+ed to give +eceipt inst+uction to his '$ fo+ +eceiving secu+ities in the account/ he inst+uction ente+ed by the '$ 0ill be e5ecuted in the 2e5ecution date2 as specified by the -O in the inst+uction slip/ !t the time of e5ecution6 if sufficient balances a+e p+esent in the selle+ -O account6 the account 0ill be debited and co++esponding c+edit 0ill be given in the buye+ -O account/ If the balance in the selle+ -O account is insufficient6 the inst+uction 0ill +emain in the 2Ove+due2 status/ Fo+ all inst+uctions 0ill 2Ove+due2 status6 #'SL system 0ill chec, fo+ availability of balances at p+e;defined
*,
inte+vals till the end of the e5ecution date <till EO':/ !t the end of day of the e5ecution date6 if balances a+e still insufficient the inst+uction 0ill be ma+,ed as failed/ ON MARKET TRANSACTIONS: Investo+s buy = sell secu+ities on the t+ading platfo+m p+ovided by the stoc, e5changes th+ough SE-I +egiste+ed #Ms/ he day on 0hich the t+ade is e5ecuted is called as the +ading day o+ the 2 2 day/ On +eceiving confi+mation6 f+om the #M6 of e5ecution of the t+ade6 the buye+ -O has to delive+ the funs <money: to his = he+ #M and the selle+ -O has to delive+ the secu+ities to his = he+ #M/ he #M delive+s the funds and the secu+ities +eceived f+om the -O to the #* = ## of the stoc, e5change befo+e the stipulated time specified by the stoc, e5change/ he #h = ## of the stoc, e5change then delive+s the secu+ities to the buying #Ms and funds to the selling #Ms6 0ho have e5ecuted t+ades on behalf of thei+ clients/ he activity of the #* = ## of the stoc, e5change of delive+ing funds and secu+ities to the +espective selle+s = buye+s is ,no0n as 2Settlement of ma+,et t+ades2/ 2Settlement date2/ he p+ocess of delive+y of secu+ities by the selle+ #M to the #* = ## fo+ settlement is ,no0n as 2$ay;in of secu+ities2 and the p+ocess of delive+y of secu+ities by the #* = ## to the buye+ #M is ,no0n as 2$ay;out of secu+ities2/ $ay;in and $ayout of secu+ities ta,es place at p+edete+mined timings decided by the stoc, e5changes/ he date on 0hich settlement ta,es place is ,no0n as
*-
Settlement of on ma+,et t+ades is cu++ently done on a I4 basis i/e/ settlement ta,es place on 4nd 0o+,ing day afte+ the t+ade has been e5ecuted by the #M/ ADVANTAGES OF DEMAT: +ansacting the deposito+y 0ay has seve+al advantages ove+ the t+aditional system of sha+e ce+tificates/ 9/ he investo+ can avoid the e5pense of applying fo+ duplicate ce+tificates in case of loss = mutilation of ce+tificates/ 4/ +ading in demat segment completely eliminates the +is, of bad delive+ies6 0hich in tu+n all cost and 0astage of time associated 0ith follo0 up fo+ +ectification/
>/
he investo+ can also +eceive you+ bonuses and +ights into you+ deposito+y account as a di+ect c+edit6 thus eliminating +is, of loss in t+ansit/
B/ In case of t+ansfe+ of elect+onic sha+es6 @/?O can be saved in stamp duty/
?/ #ost of delay=cou+ie+=neut+ali3ation the need fo+ fu+the+ follo0 up 0ith the clea+ing membe+ fo+ sha+es +etu+ned fo+ company1s objection6 0hich happens only in case of physical secu+ities scan6 be avoided/
*.
C/ Facilitation of cash co+po+ate actions such as dividends/ #'SL p+ovides details of beneficial o0ne+s as on a given day <the +eco+d date: to the issue+ company=+egist+a+ so as to enable the company to #alculate the benefits a+ising out of these hoE9dings/ di+ectly/ D/ Lending and bo++o0ing of secu+ities) ! client eithe+ a lende+ o+ a bo++o0e+6 having a beneficia+y account 0ith the '$ can lend o+ bo++o0 '$/ secu+ities in elect+onic fo+m th+ough an app+oved inte+media+y6 0ho has opened a special inte+media+y account 0ith a he company1s +egist+a+ and t+ansfe+ agents fo+0a+d the cash benefits to the investo+
F/
he
c+eation
of
lend=bo++o0
inst+uction
0ill
be
initiated
by
lende+=bo++o0e+ +espectively th+ough his '$/
E/ Investo+ can e5pect a lo0e+ inte+est cha+ge fo+ loans ta,en against demat sha+es as compa+ed to the inte+est fo+ loan against physical sha+es/
*/
REMATERIALISATION: DEFINITION: Remate+ialisation is the p+ocess of conve+ting secu+ities6 held in a demat account <i/e/ elect+onic fo+m: to physical fo+m/ ! -O <-eneficia+y O0ne+: intending to conve+t the secu+ities into physical fo+m submits a 'emat +e8uest to the '$ in a Remate+ialisation Re8uest Fo+m <RRF:/ '$ ve+ifies the info+mation on the RRF and ente+s the details in the system to setup a +e8uest elect+onically/ can be used fo+ futu+e +efe+ence/ Issue+=R !/ If the 'emat +e8uest is in o+de+6 the Issue+=R ! app+oves the same and confi+ms the RR% elect+onically to #'SL/ On +eceiving such confi+mation6 #'SL debits the -O account/ $hysical ce+tificates a+e sent by the Issue+=R ! di+ectly to the investo+/ he system gene+ates a uni8ue se+ial numbe+ called as Remate+ialisation Re8uest %umbe+ <RR%:6 0hich he '$ sends the RRF to the conce+ned
+0
STEPS: 9/ he investo+ +e8uest fo+ the physical ce+tificate to its 'eposito+y $a+ticipants th+ough Remat Re8uest Fo+m <RRF: 4/ he 'eposito+y $a+ticipants 0ill info+m the 'eposito+y of the +e8uest/
>/
he 'eposito+y $a+ticipants in tu+n 0ill also app+aise the Regist+a+ = +ansfe+ agents
B/
he deposito+y 0ill fo+0a+d the same +e8uest to the R (
!gent
?/
he Regist+a+ = +ansfe+ agents afte+ p+inting the physical ce+tificates 0ill update the 'eposito+y/
C/
he deposito+y 0ill update the 'eposito+y $a+ticipants
D/
he physical ce+tificates a+e sent to the investo+s di+ectly by the Regist+a+s/
+'
ACTION BY BO ! -O 0ho 0ishes to have balance in his demat account in #'SL6 +emate+iali3ed6 has to fill up a RRF in duplicate6 sign it and submit the same to his '$/ RRF should be signed by all holde+s = $O! <if any:/ he -O may specify on the RRF that all the 8uantity to be included in only one ce+tificate <Gumbo Lot: o+ the ce+tificates may be fo+ ma+,etable losts/ Sepa+ate RRF is to be submitted fo+ +emat of f+ee 8uantity and 8uantity unde+ loc,;in6 if loc,;in is fo+ diffe+ent +easons then a sepa+ate RRF is to be submitted fo+ each loc,;in +eason/ ACTION BY DP On +eceipt of RRF f+om the -O6 the '$ ve+ifies the details mentioned in the RRF 0ith the -O details maintained 0ith #'SL/ Sufficient 1f+ee balance1 o+ 1loc,;in balance1 must e5ist in the account fo+ +emat/ Signatu+e<s: of the -O<s: o+ $O! holde+ should match 0ith those +eco+ded 0ith the '$/ If all the details on the RRF a+e co++ect then the same a+e ente+ed in the #'SL System by the '$ on the same day o+ latest by the ne5t 0o+,ing day f+om the date of +eceipt of RRF/ When the +e8uest is set up6 #'SL system gene+ates a uni8ue Remate+ialisation Re8uest %umbe+ <RR%: fo+ each +emat +e8uest/
+(
Once a +emat +e8uest is set up6 the balances in the demat account a+e bloc,ed and such secu+ities cannot be t+ansfe++ed/ '$ +eco+ds the RR% on the RRF and autho+i3es the RRF 0ith his seal and signatu+e/ he '$ +etains a copy of the RRF fo+ his +eco+ds and sends the o+iginal RRF to the Issue+ = R ! 0ith othe+ documents6 if any/ he '$ must ensu+e that the +emat +e8uest is sent to the Issue+=R ! 0ithin t0o 0o+,ing days of +e8uest +eceived f+om the -O and is hono+ed 0ith a pe+iod of >@ days f+om the date of physical +eceipt of the RRF by the Issue+=R ! / ACTION BY ISSUER 3 RTA On +eceiving the physical documents6 the Issue+ = R ! access the elect+onic +e8uest f+om #'SL system and ve+ify the details as pe+ RRF/ If the +emat +e8uest is acceptable6 Issue+ = R ! confi+m the same elect+onically th+ough the #'SL system debits the -O account 0ith 8uantity accepted fo+ 'emate+iali3ation/ On ve+ification6 if the details do not match6 the Issue+ = R ! 0ill elect+onically intimate the +ejection of RRF and send the +ejected RRF to the '$6 along 0ith all the documents6 fo+ necessa+y co++ection = +ectification/ Fo+ the +ejected RRF6 the '$ 0ill ca++y out the necessa+y +ectification in consultation 0ith the -O and set up a f+esh +emat +e8uest/
+)
A REMATERIALISATION RE9UEST MAY BE REJECTED FOR REASONS SUCH AS 9/ he details given in RRF do not match 0ith elect+onic intimation +eceived 4/ he RRF is incomplete
>/ he documents a+e sent to 0+ong R ! = Issue+
B/ %ecessa+y documents do not accompany the RRF Fo+ all accepted +emat +e8uests6 the Issue+ = R ! ta,e the follo0ing pa+ticula+s on +eco+d based on RRF 9/ 4/ >/ B/ ?/ C/ D/ F/ E/ 9@/ 99/ %ame of *olde+<s: Fathe+1s %ame=*usband1s %ame of the fi+st holde+ !dd+ess $!% a5 Status !ge -an, !ccount %umbe+ %ame of the #ompany Auantity of secu+ities +emate+iali3ed Signatu+e of all the *olde+s mentioned in the RRF Whethe+ the secu+ities a+e unde+ loc,;in6 if yes6 then the pe+iod up to 0hich such secu+ities a+e unde+ loc,;in and +easons fo+ such loc,;in
+*
94/
E5isting Folio %O/6 if any
9>/ If $O! holde+ ope+ates the -O1s account6 the t+ue copy of the $O! also 0ill be ta,en on +eco+d/ 9B/ Othe+ documents6 if any he Issue+ = R ! gene+ate a folio numbe+ fo+ the -O o+ give the e5isting folio numbe+6 if the -O is al+eady holding the same type of secu+ities of the same Issue+ in the physical fo+m/ he Issue+ = R ! +eco+d the name of the -O as the Registe+ed O0ne+<s: of the +emate+iali3ed secu+ities/ he Issue+ = R ! p+int the ce+tificates in the name of Registe+ed O0ne+<s: and dispatch the same to the -O/ he Issue+ = R ! info+m all the stoc, e5changes6 0he+e the secu+ities a+e listed6 about the ne0s ce+tificate numbe+s6 distinctive numbe+s of the +emate+iali3ed secu+ities <as pe+ the +e8ui+ements of the va+ious stoc, e5changes:/ Such a ce+tificate should also be issued to #'SL on a 8ua+te+ly basis/
++
INTRODUCTION TO DEPOSITORY WHAT IS A DEPOSITORY: he 'eposito+ies !ct defines a deposito+y as 2a company fo+med and +egiste+ed unde+ the #ompanies !ct6 9E?C and 0hich has been g+anted a ce+tificate of +egist+ation unde+ sub;section <9!: of section 94 of Secu+ities and E5change -oa+d of India !ct6 9EE4/2 THE DEPOSITORIES ACT: he 'eposito+ies !ct6 9EEC6 ushe+ed in an e+a of efficient capital ma+,et inf+ast+uctu+e6 imp+oved investo+ p+otection6 +educed +is,s and inc+eased t+anspa+ency of t+ansactions in the secu+ities ma+,et/ It also immensely benefited the issue+ companies6 in te+ms of +educed costs and the effo+t e5pended in managing thei+ sha+eholde+ populace/ $e+haps6 no othe+ single act othe+ than the deposito+ies !ct has had such p+ofound all +ound impact on eve+y single sta,eholde+ in the Indian capital ma+,ets/ his legislation envisaged multiple deposito+ies in India to ensu+e benefits of competition fo+ then use+s of the deposito+y system/ he 'eposito+ies !ct 0hich facilitated establishment of deposito+ies <li,e #'SL: in India sought to effectively cu+b such i++egula+ities6 and p+otect the inte+ests of the investo+s6 and paved a 0ay fo+ an o+de+ly conduct of the financial ma+,ets th+ough f+ee t+ansfe+ability of secu+ities 0ith speed6 accu+acy6 t+anspa+ency etc/
+,
ue to the int+oduction of the deposito+y system6 the investo+s a+e able to enjoy many benefits li,e f+ee and instant t+ansfe+ability in a secu+ed manne+ at lo0e+ costs6 f+ee f+om the p+oblems li,e bad delive+ies6 odd;lots etc/ oday the t+adable lot is +educed to 2one unit2 hence even a common man is able to invest money in one e8uity sha+e o+ bond o+ debentu+e/ he investo+ is able to save a lot on account of stamp fee as gove+nment has e5empted stamp duty on t+ansfe+ of secu+ities at p+esent/ Investo+s a+e also spa+ed f+om the p+oblems of p+ese+ving the secu+ities held in physical fo+m VARIOUS SERVICES OFFERED BY A DEPOSITORY: ! deposito+y in India cannot open a demat account of an investo+ and = o+ p+ovide se+vices to such a pe+son di+ectly/ Fo+ opening a demat account o+ availing the se+vices offe+ed by the deposito+y6 a pe+son is +e8ui+ed to app+oach a 'eposito+y $a+ticipant <'$: 0ho is an agent of the deposito+y6 complete the account opening fo+malities as pe+ the SE-I +egulations6 'eposito+y byela0s/ he+eafte+6 the investo+ can +eceive secu+ities in the demat account as 0ell as tende+ the secu+ities held by him = he+ in physical fo+m fo+ demate+iali3ation to the '$ <as e5plained in the subse8uent pa+t: and hold the same in boo,;ent+y fo+m in the account/ When an investo+ holds secu+ities in physical fo+m6 his = he+ name is +eco+ded as +egiste+ed o0ne+ in the boo,s of the company/ !s pe+ the la0s cu++ently in fo+ce in India6 0hen the secu+ities a+e conve+ted in elect+onic fo+m by 0ay of demate+iali3ation6 name of the deposito+y is +egiste+ed in the boo,s of the company as +egiste+ed o0ne+/
+-
*o0eve+6 the investo+ continues to be the +eal o0ne+ of the secu+ities and is entitled to +eceive all the benefits such as dividend6 inte+est6 bonus sha+es etc/ in +espect of the said secu+ity and as such is called as -eneficial O0ne+ <-O: unde+ the deposito+y system/ oday 2demat2 has become a common 0o+d/ he institutional and
individual investo+s sp+ead all ove+ India a+e found to be ma,ing an e5tensive use of the deposito+y pa+ticipant se+vices fo+ holding thei+ secu+ities in elect+onic fo+m/
FUNCTIONS OF DP:
COMMON FUNCTIONS FOR DP AND RTA: ;.TRANSFER FILES3 UPDATE DATABASE: #'SL system pa+amete+s a+e defined and set up f+om a cent+al point and a+e sto+ed in the *ost system/ hese pa+amete+s a+e the base on 0hich use+ specific pa+amete+s a+e set up6 as such these a+e +e8ui+ed unive+sally to all '$=R ! systems/ his module facilitates the t+ansfe+ of such pa+amete+s to all '$=R ! systems/ his is to be done only once in a day just afte+ the use+ logs in/
+.
<. DATABASE ADMINISTRATION: he 'atabase !dminist+ation module can be used set;up autho+i3ed use+s/ It also allo0s use+ to set up Wo+,station<s:6 #ou+ie+ info+mation and $+inte+/ =. MASTER FILES: Maste+ files module is used to in8ui+e the maste+ files/ ! use+ can only in8ui+e the maste+ data fo+ the follo0ing basic maste+ tables such as list of ISI%6 '$s6 Issue+s6 R !s6 *olidays6 E5changes6 Settlement calenda+ etc/ Info+mation in these files is updated by #'SL/ >. REPORT SCHEDULER: his module helps use+ to gene+ate va+ious +epo+ts fo+ Maste+ files such as list of ISI%s '$s6 Issue+s6 R !s6 *olidays6 E5changes6 Settlement calenda+ etc/ ?. NON-FINANCIAL HISTORY: his in8ui+y module gives the complete audit t+ail of changes made and the t+ansactions causing the changes/ Only those t+ansactions a+e +eflected 0hich do not affect the holdings of a pa+ticula+ -O;ISI% account/
+/
@. RECOVER TRANSACTION INFORMATION: his module is used to +ecove+ -OI's and use+ details in case of +einstallation of the #'LS system/ C R S Indicates communication gate0ay status/ Indicates 0o+,station +egist+ation status/ Indicates use+1s sign;on status/
A. OPERATOR CONC9LE:
T,"' 0o51-% 7$o2"5%' *o--o."#/ *1# +"o#': 9/ 0o 0ay communications bet0een the f+ont end and the bac, end/ 4/ 'o0nloading of +epo+ts at the f+ont end/ B. HOST REPORT MANAGER: his option allo0s the use+ to manage+ the t+ansaction +epo+ts/ It p+ovides facilities fo+ vie0ing6 p+inting6 copying of the +epo+ts/ "se+ can do0nload daily ISI% +ate files fo+ billing activity in bac, office/ "se+ can also do0nload va+ious communi8ues sent by #'SL to '$ = R !/ module is also used fo+ pulling +epo+ts/ C. REPORT PARAMETERS: he module is used to set up diffe+ent +e8uest +epo+ts by using pa+amete+s such as so+t c+ite+ia6 filte+ c+ite+ia etc/ his module also
,0
his
p+ovides facility to gene+ate On;line +epo+ts fo+ actives such as holding statement fo+ his -O1s6 Inte+ deposito+y t+ansactions and t+ansaction jou+nal/ ;D. END OF DAY EEODF SCHEDULER EO' can be decla+ed using this module/ he othe+ options a+e 'S $u+ge and 'atabase -ac,up/ ;;. SIGNATURE DOWNLOAD: his module allo0s the use+ to do0nload signatu+es of -Os and thei+ $O!s fo+ bac, office activity/
,'
CHAPTER-V
CONCLUSION
,(
he study +evealed to us that 2'emate+iali3ation of Sha+es2 has b+ought about +evolutiona+y changes li,e) • • Immediate t+ansfe+ of sha+es6 the+eby minimi3ing time
%o Stamp duties on t+ansfe+ sha+es
•
Elimination
of
+is,
0ith
physical
ce+tificates
such
as
bad
delive+y6
Fa,e ce+tificates etc/6 hough the+e a+e ce+tain sho+tcomings li,e) • Ove+load of 0o+, due to heavy t+ansactions • Lac, of necessa+y inf+ast+uctu+e and pe+sonnel at the deposito+y
pa+ticipant/
It can be ta,en fo+ su+e that these sho+tcomings 0ill be ove+come in the ne5t fe0 yea+s and this p+ocess 0ill cont+ibute to0a+ds the ma,ing of mo+e efficient and investo+ f+iendly ma+,et/
,)
BIBLIOGRAPHY ? .athe+ed info+mation f+om M+/ *!RG $!R *!S!R! *I of
"S*!7IR!% FI%!%#E Ltd ? Refe++ed +elated a+ticles6 +efe+ences6 jou+nals and ce+tain 0ebsites/
? Mate+ial p+ovided by $/#/S Secu+ities Ltd/ W%( S"+%': 000/?paisa/com 000/googlesea+ch/com 000/nationalstoc,e5change/com
?
?
?
?
000/moneycont+ol/com
?
000/sdls/com
,*
APPENDICES A o1#+ C-o'1$%: ! -O 0anting to close a demat account held 0ith any '$ shall ma,e an application in the specified fo+mat/ he -O may close its account if no balances a+e standing to its c+edit in the account/ In case any balance e5ist6 then the account may be closed by +emate+ialisation of all its e5isting balances in its account and = o+6 by t+ansfe++ing its secu+ity balances to its othe+ account held eithe+ 0ith the same '$ o+ 0ith a diffe+ent '$/ he '$ ensu+es that no t+ansactions should be pending fo+ the account
A**"5&2"+ ) is any 0+itten document in 0hich then signe+ s0ea+s unde+ oath befo+e a nota+y public o+ someone autho+i3ed to ta,e oath that the statements in the document a+e t+ue
B%#%*" "&$) A o1#+: !n investo+ o+ a b+o,e+ 0ho 0ants to hold sha+es in demat fo+m and unde+ta,e sc+ipless t+ading must have a deposito+y account called beneficia+y account 0ith '$ of his choice/
BO: he Stoc, e5change6 Mumbai also ,no0n as -SE is one of the oldest stoc, e5changes in !sia 0ith ove+ C6@@@ stoc,s listed/
Co$7o$&+% A +"o#: includes any action +elating to payment of inte+est6 dividend6 +edemption6 0a++ants6 bonus6 me+ge+6 split6 amalgamation and any such othe+ action time to time/
,+
Co$7o$&+% B%#%*"+': means benefits li,e dividends6 inte+est6 bonus sha+es6 +ights6 p+efe+ential allotments6 0a++ants6 discount coupons6 +edemption at p+emium and such othe+ benefits6 acc+uing f+om time to time f+om the issue+ to the -O in +espect of the secu+ities held by such -O/ DRF: In o+de+ to demate+iali3e his physical sha+es the investo+ <+egiste+ed o0ne+: submits a +e8uest to the '$ in the 'emate+iali3ation Re8uest Fo+m <'RF: along 0ith the ce+tificates of secu+ities to be demate+iali3ed/ DRN: Is a uni8ue numbe+ gene+ated by #'SL system 0hen a demat +e8uest is set up/ D%7o'"+o$): ! 'eposito+y is an o+gani3ation 0he+e the secu+ities of an investo+ a+e held in elect+onic fo+m6 at the +e8uest of the investo+ th+ough the medium of a '$/ It is a company fo+med and +egiste+ed unde+ +egist+ation unde+ the +elevant sections of the SE-I !ct6 9EE4 D%7o'"+o$) P&$+" "7&#+: Is an agent of the deposito+y and is autho+i3ed to offe+ deposito+y se+vices to the investo+s/ !cco+ding to SE-I guidelines6 financial institutions6 ban,s6 custodians6 stoc,b+o,e+1s etc/ can become '$ of a deposito+y E-% +$o#" P1(-" O**%$"#/ EEPOF: !n initial public offe+ing6 o+ ne0 issue of sha+es6 in 0hich the p+ocess of applying fo+ sha+es is handled elect+onically <via Website:/ he #ompanies !ct6 9E?C and 0hich has been g+anted a ce+tificate of
,,
I#"+"&- P1(-" O**%$"#/ EIPOF: he fi+st offe+ing of a company1s sha+es to the public/ he sha+es offe+ed may be e5isting ones held p+ivately6 o+ the company may issue ne0 sha+es to the public/ I#+%$ D%7o'"+o$) T$&#'*%$': Inte+ deposito+y t+ansfe+ means t+ansfe+ of secu+ities6 0hich a+e admitted6 fo+ demat on both the deposito+ies f+om an account held in one deposito+y to an account held in the othe+ deposito+y/ ISIN: Means Inte+national Secu+ities Identification %umbe+ <ISI%: is a code that uni8uely identifies a specific secu+ity6 0hich is allocated at the time of admitting the same in the deposito+y system/ I''1%: means the numbe+ of sha+es of a company on sale to the public at a given time/ I''1% P$" %: means the p+ice at 0hich a company1s sha+es a+e offe+ed to the ma+,et fo+ the fi+st time/ When they begin to be t+aded6 the ma+,et p+ice may be above o+ belo0 the issue p+ice IRF: Invocation Re8uest Fo+m PAN: means $e+manent !ccount %umbe+ issued by Income 'epa+tment RRF: Remate+ialisation Re8uest Fo+m/ a5
,-
R%/"'+$&$  T$&#'*%$ A/%#+ ERTAF ) Means a +egist+a+ to an issue of any secu+ities and=o+ a t+ansfe+ agent in +espect of any secu+ities appointed by the Issue+ on its behalf 0ho has been g+anted the ce+tificate of +egist+ation by the Secu+ities and E5change -oa+d of India unde+ Sub;section<l: of Section 94 of the Secu+ities and E5change -oa+d of India !ct6 9EE4 T$&#'*%$&("-"+) o* S,&$%': Sha+es in a company a+e f+eely t+ansfe+able6 subject to ce+tain conditions6 such that no sha+eholde+ is pe+manently o+ necessa+ily 0edded to a company/ When a membe+ t+ansfe+s his sha+es to anothe+ pe+son/ he t+ansfe+ee steps into the shoes of the t+ansfe+o+ and ac8ui+es all +ights of the t+ansfe+o+ in +espect of those sha+es/ Fo+ demate+iali3ed sha+es the '$ debits and c+edits the account of the -O 0ith an autho+i3ation f+om such -O Z%$o (&-&# %: !lso ,no0n as nil balance6 a situation 0hen a deposito+y account has no secu+ities in it/ ! -O account may be opened 0ith any '$ even 0ith 3e+o balance
,.
doc_921332771.doc
DEMATERIALISATION OF SECURITIES
XXXX FINANCE LTD,
Project submitted in !rti!" #u"#i""ment #or t$e !%!rd o# t$e de&ree o# 'MASTER OF (USINESS ADMINISTRATION)
DECLARATION
I here by declare that the project work entitled “ DEMATERIALISATION OF
SECURITIES) IN 'XXXX FINANCE LTD”, XXXXXX, is an original work carried out by
me availing the guidance of my project guide And it has been submitted to XXXXX in partial fulfillment for the award of the degree of MASTER OF (USINESS ADMINISTRATION *M+(+A, of !!!! It has not been submitted to any other "niversity or Institution for the award of #egree$#iploma to the best of my knowledge
PLACEDATE-
%our& sincerely,
'
INDEX
CHAPTER-I: INTRODUCTION: ? Objectives of study ? Scope of study ? Methodology of study ? Limitations of study CHAPTER-II: REVIEW OF LI ER! "RE
(
CHAPTER-III; #OM$!%& $ROFILE CHAPTER-IV; '! ! !%!L&SIS ( $RESE% ! IO%) ? *isto+ical bac,g+ound of 'EM! ? #u++ent scena+io ? !ccount opening and maintenance ? Settlements ? Remate+ialisation CHAPTER-V: #O%#L"SIO% -I-LIO.R!$*& !$$E%'I#ES
)
CHAPTER-I
INTRODUCTION
*
FINANCE: Finance is the p+ocess of conve+sion of accumulated funds to p+oductive usage/ Finance helps to di+ect the flo0 of economic ( facilitate in the fi+m1s smooth ope+ations/ !cco+ding to *OW!R' !%' O$ IO%S Finance is defined as 2the administ+ation a+ea of set of administ+ative functions in an o+gani3ation 0hich has to do 0ith the management of flo0 of cash so that the o+gani3ation 0ill have the means 4 ca++y out its objectives as satisfacto+y as possible and at the same time meet the obligations as they become due2/ FINANCIAL SYSTEMS: It is a set of ma+,ets and institutions to facilitate the e5change of assets and +is,s/ Indian financial system comp+ises of th+ee pa+ts vi3/6 FI%!%#I!L I%S I " IO%S o+ I% ERME'I!RIES6 FI%!%#I!L M!R7E S6 FI%!%#I!L I%S R"ME% S/ Financial Inte+media+ies6 p+ovide funds by pooling the funds f+om investo+s/ hey a+e the comme+cial ban,s6 mutual funds6 insu+ance companies6 p+ovident funds6 facto+s (non ban,ing financial institutions etc///Financial inst+uments6 th+ough 0hich the fi+m can +aise funds f+om public o+ institutions/ Some of them a+e e8uity sha+es6 p+efe+ential sha+es6 bonds6 comme+cial pape+s6 ce+tificate of deposits etc/// FINANCIAL MARKETS: Financial ma+,ets consist of t0o pa+ts/ 9: #apital ma+,et 4: Money ma+,et
+
Money ma+,et is a ma+,et fo+ dealing in moneta+y assets of sho+t;te+m natu+e fo+ meeting the tempo+a+y cash +e8ui+ements/ #apital ma+,et is a ma+,et fo+ long;te+m funds/ #apital ma+,et has t0o segments/ 9: $+ima+y ma+,et <%e0 Issues Ma+,et: 4: Seconda+y ma+,et he %e0 Issue Ma+,et deals in ne0 secu+ities i/e/ Secu+ities6 0hich a+e not p+eviously offe+ed to the investo+s/ he p+ima+y ma+,et does not have any o+gani3ational setup and is +ecogni3ed only by the specialist institutional se+vices that it +ende+s to the lende+s and bo++o0e+s of capital funds/ he seconda+y ma+,et deals in old=e5isting secu+ities6 0hich 0e+e g+anted in stoc, e5change listing/ Stoc, e5changes p+ovide li8uidity to investments/ It has a physical e5istence and a geog+aphical a+ea/
,
OBJECTIVES OF THE PROJECT: • • • • • • • o ,no0 the mechanism in the 'emat o study the activities in $+ima+y Ma+,et and Seconda+y Ma+,et in the conte5t of 'emate+iali3ation o study the activities of 'eposito+y $a+ticipants o study the p+ocess of Settlement o study the p+ocess of 'EM! o ,no0 the advantages of the 'EM! o ,no0 the se+vices p+ovided by the 'eposito+y $a+ticipant
SCOPE OF THE STUDY: he scope of the study is confined to the p+ocess of demate+iali3ation of secu+ities and its advantages/ he scope of the p+oject is limited to the deposito+y pa+ticipant se+vices th+ough deposito+s/
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METHODOLOGY OF THE STUDY: he study is based on both the p+ima+y and the seconda+y sou+ces of data/ he sou+ce of p+ima+y data is f+om the unst+uctu+ed inte+vie0 of the officials in the company/ he seconda+y data is collected f+om the 0ebsites) • 000/nseindia/com • 000/moneycont+ol/com
LIMITATIONS OF THE PROJECT:
? -y not conside+ing the enti+e deposito+y pa+ticipant1s implications elating to the patte+n of t+ading may have been missed in the study/ he study is confined to only deposito+y pa+ticipants se+vices th+ough 'eposito+ies
?
? %S'L/ E5haustive analysis6 p+oblems of listing and management of t+ade and SE-I guidelines of +elating the+e lot a+e not cove+ed due to limited & ,eep the study in manageable limits
.
CHAPTER-II
REVIEW OF LITERATURE
/
DEMATERIALISATION
DEFINITION: 'emate+iali3ation is the p+ocess by 0hich a -O can get his physical secu+ities conve+ted into elect+onic fo+m/ $+e;+e8uisites fo+ demate+iali3ation a+e) 9/ Investo+ should have a demat account 0ith any '$ of #'SL/ 4/ Secu+ities to be demate+iali3ed must have been admitted in #'SL i/e/ ISI% fo+ the secu+ities should be available in #'SL >/ Investo+ should be the +egiste+ed holde+ fo+ the secu+ities in the boo,s of the company/ he -O submits a +e8uest to the '$ in the 'emate+iali3ation Re8uest Fo+m <'RF: along 0ith the ce+tificates/ he '$ ve+ifies the info+mation on the 'RF and physical ce+tificates and ente+s the details in the system to setup a +e8uest elect+onically/ he '$ sends the physical documents to the conce+ned issue+=R !/ If the Issue+=R ! find the 'RF and ce+tificates in o+de+6 it +egiste+s #'SL as the +egiste+ed holde+ of the secu+ities and confi+ms the 'R% elect+onically to #'SL/ On +eceiving such confi+mation6 #'SL c+edits the -O account/ given belo0) he p+ocess flo06 of a demat +e8uest is
'0
If the issue+=R ! +ejects all o+ some of the ce+tificates in a demat +e8uest then the same a+e sent bac, to the '$ mentioning the +ejection +eason<s:/ '$ 0ill then as, the -O to +ectify the +eason of +ejection and send the ce+tificates again fo+ demate+iali3ation unde+ a f+esh demat +e8uest/ 'emate+iali3ation can be no+mal demate+iali3ation as e5plained above o+ it can be 2 +ansfe+;cum;'emate+iali3ation < #':2 o+ 2 +ansposition;cum; 'emate+iali3ation2/
TRANSFER-CUM-DEMATERIALIZATION: When physical secu+ities a+e sent to the issue+ = R ! fo+ t+ansfe+s by the buye+6 the Issue+=R ! completes the t+ansfe+ p+ocess and +eco+ds the secu+ities in the name of the conce+ned buye+ in the Registe+ of Membe+s/ If the Issue+=R ! is p+oviding t+ansfe+ cum demate+iali3ation facility6 the ce+tificates a+e not dispatched to the conce+ned buye+/ Instead the Issue+=R ! intimate the buye+ about the t+ansfe+ and gives the buye+ an option to hold the t+ansfe++ed secu+ities in demat fo+m by issuing an 2Option lette+2/ he investo+ on +eceiving such an option lette+ may opt fo+ holding the t+ansfe++ed secu+ities in demats fo+m/ In such a case6 the investo+ has to open a demat account6 if not al+eady opened6 fill up a 'RF6 attach the option lette+ along 0ith the 'RF and submit it to the '$/ Rest of the p+ocess +emains same as e5plained above fo+ no+mal demat/
''
+ansfe+;cum;demat +e8uest can be set;up fo+ a 8uantity up to ?@@ secu+ities only/ In case the Issue+=R ! does not +eceive demat +e8uest 0ithin >@ days of the date of issuing the option lette+ then the physical secu+ities may be dispatched to the conce+ned buye+ di+ectly/ TRANSPOSITION-CUM-DEMATERIALISATION: +ansposition is applicable in situation 0he+e the demat account has been opened in the name of !6-6# and some of the ce+tificates a+e in any othe+ o+de+ of holde+ names such as !6#6- o+ -6#6 ! o+ #6-6! etc/6 i/e/ holde+s names a+e same but o+de+ in 0hich they appea+ is diffe+ent/ DEMATERIALIZATION PROCEDURE: ACTION BYB.O.; NORMAL DEMAT: Fo+ demate+iali3ation -O should submit the follo0ing documents to the '$ 9/ 'uly filled 'RF giving all details as +e8ui+ed on the fo+m/ he 'RF should be signed by account holde+<s: o+ po0e+ of atto+ney <if any:/ 4/ $hysical ce+tificates
'emat +e8uests fo+ loc,;in secu+ities cannot be set up along 0ith the f+ee secu+ities i/e/ the -O 0ill have to fill sepa+ate 'RF fo+ secu+ities 0hich a+e
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f+ee <0ithout encumb+ances: and a sepa+ate 'RF fo+ secu+ities unde+ loc,; in 0ith diffe+ent loc,;,n +easons and diffe+ent loc,;in e5pi+y dates/ Lo !-"# $%&'o# &# (% &#) o* +,% *o--o."#/: 9/ 'i+ecto+ = Relative Auota 4/ Employee Auota >/ $+efe+ential allotment B/ $+omote+s Auota ?/ "nde+0+ite+s Auota C/ $+ivate $lacement D/ ?BE <a: of I !ct 9EC9 F/ ?BE<b
f I !ct 9EC9TRANSFER CUM DEMAT: In case of +ansfe+;cum;'emat6 -O should submit the follo0ing documents to the '$/ 9/ 4/ 'uly filled 'RF O+iginal option lette+ +eceived f+om the Issue+=R !
')
TRANSPOSITION CUM DEMAT: In case the -O intends to t+anspose and demat the secu+ities follo0ing documents have to the submitted to the '$ 9/ 'uly filled 'RF 4/ 'uly filled R$F ACTION BY DP: On +eceiving a 'RF along 0ith othe+ documents f+om the -O6 '$ must ensu+e the follo0ing befo+e accepting the same) 9/ he secu+ities intended fo+ demate+iali3ation a+e admitted by #'SL/ If not then the '$ shall info+m the same to the investo+/ 4/ #o++ect ISI% is selected 0he+e the secu+ity of an Issue+ has mo+e then one ISI%/
>/
#e+tificates a+e in names of ma5imum th+ee holde+s only/
'*
T,% DP 01'+ 2%$"*) +,% *o--o."#/: 9/ 4/ >/ he 'RF6 the R$F <if applicable: a+e filled completely/ he ce+tificate details mentioned on the 'RF and on the ce+tificates enclosed6 tally/ %ame<s: of the holde+<s: appea+ing on the ce+tificates e5actly tally 0ith those +eco+ded unde+ the -O account maintained 0ith #'SL/ B/ !ll the holde+s have signed the 'RF6 the by the '$/ If the+e is any disc+epancy in any of the details6 the '$ 0ill get the same +ectified f+om the investo+ and the e++o+ f+ee 'RF 0ill be ta,en up fo+ fu+the+ p+ocessing by the '$/ Immediately on +eceipt of 'RF along 0ith the ce+tificates6 the '$ should give an ac,no0ledgement to the -O/ R$F <if applicable: and the signatu+e of the account holde+s1 match 0ith those +eco+ded
he details f+om the 'RF ( the ce+tificates a+e ente+ed in the #'SL system/ On successful ent+y of details6 the system gene+ates a uni8ue numbe+ called as 'emat Re8uest %umbe+ <'R%:6 0hich se+ves as a +efe+ence numbe+/ he '$ 0+ites the 'R% on the 'RF/ he 'RF
details a+e immediately available elect+onically to the Issue+=R ! afte+ the 'R% is gene+ated/
'+
he '$ 0ill deface and mutilate the ce+tificates to avoid misuse in case they a+e lost in t+ansit/ he '$ 0ill autho+i3e the 'RF by putting his seal ( signatu+e/ he ce+tificates ( the o+iginal 'RF is sent to the Issue+=R ! along 0ith a cove+ing lette+/ ! copy of the 'RF is to be maintained by the '$ fo+ its o0n +efe+ence and +eco+ds/ he '$ 0ill then captu+e the dispatch details such as the dispatch +efe+ence no6 dispatch date6 name of the cou+ie+ etc in the #'SL system/ he '$ must dispatch the physical documents 0ithin D 0o+,ing days f+om the date of +eceipt of physical documents by the -O/ ACTION BY ISSUER 3 RTA: he Issue+ = R ! must complete the demate+iali3ation p+ocess 0ithin a pe+iod of 9? days6 o+ any such pe+iod as specified by #'SL f+om time to time6 f+om the date of physical +eceipt of the 'RF/ he p+ocedu+e given belo0 is also applicable to +ansfe+;cum;'emat = +ansposition/ !fte+ +eceiving 'RF along 0ith physical ce+tificates and othe+ documents as the case may be6 the Issue+ = R ! 0ill access elect+onic details f+om the #'SL system/ he Issue+ = R ! 0ill chec, 0hethe+ the) 9/ 4/ >/ 'RF is autho+i3ed by the '$/ 'etails as mentioned on the 'RF and as +eceived elect+onically f+om #'SL6 tally Signatu+e of -O1s on the 'RF tally 0ith the signatu+es +eco+ded by him/
',
If the elect+onic and physical details match then the Issue+=R ! gives c+edit in the -O1s demat account and t+ansfe+s the +egiste+ed o0ne+ship of secu+ities in the name of #'SL/ he Issue+ = R ! shall info+m the details of the secu+ities demate+iali3ed to all stoc, e5changes 0he+e the secu+ity is listed <as pe+ the +e8ui+ements of the +espective stoc, e5changes:/ basis/ If the elect+onic and physical details do not tally6 the Issue+=R ! 0ill info+m the '$/ he 'RF6 ce+tificates and any othe+ documents +eceived along 0ith the 'RF 0ill be sent bac, to the '$ unde+ +ejection/ !pp+op+iate +eason of +ejection must be specified so as to enable the '$ to +ectify the same/ he majo+ +easons unde+ 0hich a demat +e8uest can be +ejected by an Issue+=R ! a+e as unde+ 9/ 'RF=#e+tificates<s: not +eceived 0ithin 9? days f+om the date of elect+onic +e8uest logged into the system by the '$ 4/ 'RF not complete he Issue+ = R ! should also fu+nish such a ce+tificate to #'SL on a 8ua+te+ly
>/
Signatu+e <s: does not match
B/
Fo+ged=Fa,e=Stolen #e+tificate
?/
'uplicate ce+tificate al+eady issued
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9/ 4/
*olde+s1 name<s: does not match #e+tificate details do not match
>/
#ou+t injunction
B/
'RF sent to inco++ect Issue+=R !
?/
Auantity mentioned on the ce+tificates is mo+e o+ less than elect+onic +e8uest
C/
Stop t+ansfe+
D/
#e+tificate of inco++ect ISI% being missed up in the 'RF
F/
#e+tificates1 having diffe+ent loc,;in +elease dates being missed up 0ith the same 'RF
E/
'R% set up unde+ 0+ong ISI9?/ +ansfe+ cum demat ;; #e+tificate<s: sent to -O
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CHAPTER-III
COMPANY PROFILE
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COMPANY PROFILE
India is on the th+eshold of ente+ing a ne0 economic e+a/ !n e+a of fast paces economic g+o0th/ With va+ious ne0 comme+cial oppo+tunities opening up/ hese ne0 indust+ies and business ventu+es a+e often global ;Multi nationals6 collabo+ations6 joint ventu+es6 technology t+ansfe+s a+e the ne0 bu33 0o+ds/ Establishing and developing these gen+es of companies is a complicated p+ocess/ In today1s scena+io of f+enetic activity6 the need fo+ 8uality financial se+vices is acute/ o c+ystalli3e these p+ojects a financial company that unde+stands the individual needs is +e8ui+ed/ hus the need fo+ "S*!7IR!% FI%!%#E LIMI E' is it p+oviding co+po+ate finance o+ in management of issues o+ in dealing 0ith the secu+ities ma+,et/ "S*!7IR!% FI%!%#E LIMI E' is an e5isting p+ofit ma,ing company/ It is an integ+ated finance company established essentially as a fund based financial se+vice o+gani3ation as dive+sified its +ange of activities f+om fund based to non fund based activities and fu+the+ stepped up and e5panded the fund based activities and othe+ financial se+vices/ It is a p+ofessionally managed company comp+ising cha+te+ed accountants6 #ompany Sec+eta+ies6 M-!s6 #ost !ccountants and soft0a+e p+ofessionals/ With an inf+ast+uctu+e that matches 0ith the inte+national standa+ds and p+actices6 staff suppo+t and st+ong net0o+,6 the company efficiently cate+s financial se+vices to its dive+se clientele/
(0
he -oa+d of 'i+ecto+s of the company comp+ises eminent and e5pe+ienced p+ofessionals 0ho have got abundant e5pe+ience by vi+tue of thei+ association ea+lie+ 0ith public secto+ unde+ta,ings and multi national unde+ ta,ings/ Sh+i /!'I%!R!&!%! the chief p+omote+ is a membe+ of the Institute of #ha+te+ed !ccountants of India6 the I#W! of India and I#S of India/ *e 0as associated 0ith the financial institute fo+ about E yea+s and is 0ell ve+sed in all aspects of te+m lending6 p+oject financing6 and p+oject adviso+y se+vices/ Many Leading indust+ial conglome+ated has used the se+vices pa+ticula+ly in the a+eas of finance6 ta5ation6 sec+eta+ial and public issues +elated matte+s/ *e is also a membe+ of the *yde+abad Stoc, E5change Limited/
he company cate+s mainly to the +e8ui+ements of co+po+ate clients in the va+iety of activities 0hich include the follo0ing) • • • • • • • • • • • • • • • • • • • • Leasing and *i+e pu+chase finance Inte+ co+po+ate deposits -ill 'iscounting Loans Syndication $lacement of #omme+cial pape+s Me+ge+s6 !malgamations and !c8uisitions $+oject #ounseling and !dviso+y Se+vices $+oject !pp+aisals "nde+ 0+itings Me+chant -an,ing Issue Management $lacement of Secu+ities Ma+,eting of $ublic issues -+ought out deals $lacement of sha+e to %RGs=O#-s6 FIs6 and FIIs Fund Management E8uity Resea+ch !nalysis Investment -an,ing Stoc, -+o,ing and #ommodities t+ading Goint Ventu+es
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CHAPTER-IV
DATA ANALYSIS 4 INTERPRETATION
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HISTROCIAL BACKGROUND OF DEMATERIALISATION: Ea+liest +eco+ds of secu+ities t+ading in India a+e available f+om the end of the eighteenth centu+y/ -efo+e 9F?@6 the+e 0as business conducted in Mumbai in sha+es of ban,s and the secu+ities of the East India #ompany6 0hich 0e+e conside+ed as Secu+ities fo+ buying6 selling and e5change/ he sha+es of the comme+cial -an,6 Me+cantile -an, and -an, of -ombay 0e+e some of the p+ominent sha+es t+aded/ he business 0as conducted unde+ a sp+a0ling banyan t+ee in f+ont of the o0n *all6 0hich is no0 in the *o+niman #i+cle $a+, In 9F?@6 the #ompanies !ct 0as passed and that he+alded the commencement of the joint stoc, companies in India6 it 0as the !me+ican civil 0as that helped Indians to establish b+o,ing business/ p+ocedu+e to be follo0ed 0hile dealing in sha+es/ In 9FDB6 the 'alai St+eet became the p+ominent place fo+ meeting of the b+o,e+s to conduct thei+ business/ he b+o,e+s o+gani3ed an association on Eth Guly 9FD? ,no0n as 2%ative Sha+e and Stoc, -+o,e+s !ssociation2 to p+otect the cha+acte+6 status and inte+est of the native b+o,e+s/ hat 0as the foundation of he Stoc, E5change6 Mumbai/ he E5change 0as established 0ith >9F membe+s/ he leading b+o,e+6 S,$" P$%0 , Ro) , designed and developed the
()
he Stoc, E5change6 Mumbai did not have to loo, bac, as it sta+ted +iding high in the ladde+ of g+o0th/ he Stoc, E5change is a ma+,et place6 li,e any othe+ cent+ali3ed ma+,et6 0he+e buye+s and selle+s can t+ansact business in secu+ities at a given point of time in a convenient and competitive manne+ at the fai+est possible p+ice/ In Ganua+y 9FEE6 M+/ Games M/ MacLean6 M/$/6 inaugu+ated the -+o,e+s1 *all/ !fte+ the Fi+st Wo+ld Wa+6 the Stoc, E5change 0as housed p+ope+ty at an old building nea+ the o0n *all/ In 9E4F6 the p+esent p+emises 0e+e ac8ui+ed su++ounded by 'alai St+eet6 -ombay Samacha+ Ma+g and *amam St+eet/ ! ne0 building6 the p+esent location6 0as const+ucted and 0as occupied on 9st 'ecembe+ 9E>@/ In 9E?@ the +egulation of business in secu+ities and stoc, e5changes became an e5clusively #ent+al gove+nment subject follo0ing adoption of the #onstitution of India/ In Secu+ities #ont+acts <Regulation: !ct 0as passed by the $a+liament of India6 to +egulate the secu+ities ma+,et6 SE-I 0as initially established on Octobe+ 946 9EFF as an inte+im boa+d unde+ cont+ol of the Minist+y of Finance6 gove+nment of India/ In 9EE46 the SE-I !ct 0as passed th+ough 0hich the SE-I came into e5istence/ *ence SE-I ac8ui+ed statuto+y status on >@th Ganua+y 9EE4 by passing an o+dinance6 0hich 0as subse8uently conve+ted into an !ct passed by the $a+liament on !p+il B6 9EE4/
(*
he main objectives of SE-I a+e to p+otect the inte+est of the investo+s6 +egulate and p+omote the capital ma+,et by c+eating an envi+onment6 0hich 0ould facilitate mobili3ation of +esou+ces th+ough efficient allocation6 and to gene+ate confidence among the investo+s/ !s such6 SE-I is +esponsible fo+ +egulating stoc, e5changes and othe+ inte+media+ies 0ho may be associated 0ith the capital ma+,et and the p+ocess of public companies +aising capital by issuing inst+uments that 0ill be t+aded on the capital ma+,et/ SE-I has been empo0e+ed by the #ent+al .ove+nment to develop and +egulate capital ma+,ets in India and the+eby p+otect the inte+est of the investo+s/ In 9EE46 Ove+ the #ounte+ E5change of India <O #E: came into e5istence 0he+e e8uities of small companies a+e listed/ In 9EEB6 %ational Stoc, E5change <%SE: came into e5istence6 0hich b+ought an end to the open cut;c+y system of t+ading secu+ities 0hich 0as in vogue fo+ 9?@ yea+s6 and int+oduced Sc+een -ased +ading <S- : system/ -SE1s On Line +ading System 0as launched on Ma+ch 9B6 9EE?/ %o0 the t+ading in secu+ities is done using sc+een based t+ading method th+ough duly autho+i3ed membe+s of the e5change/ In S- 6 investo+s place buy and sale o+de+s 0ith thei+ b+o,e+s 0ho ente+ the o+de+s in the automated t+ading system/ When buy and sale o+de+s match6 a t+ade is gene+ated and t+ade details a+e given to the +espective b+o,e+s/ !fte+ a t+ade has ta,en place6 the buye+ has to pay money and the selle+ has to delive+ secu+ities/
(+
On the stoc, e5change<s:6 hund+eds and thousands of t+ades ta,e place eve+y day/ -uye+s and selle+s a+e sp+ead ove+ a la+ge geog+aphicalH a+ea/ 'ue to these p+oblems completing a t+ade by paying cash to selle+ and secu+ities to buye+ immediately in e5ecution of t+ades on an individual basis in vi+tually impossible/ So the stoc, e5changes allo0 t+ading to ta,e place fo+ a specified pe+iod6 0hich is called as a 1 +ading #ycle1/ ! uni8ue settlement numbe+ identifies each t+ading cycle/ Once the t+ading pe+iod is ove+6 buye+ b+o,e+ pays money and selle+ b+o,e+ delive+s secu+ities to the ##=#* on a p+edefined day/ his p+ocess is called as $ay; in/ !fte+ pay;in6 secu+ities a+e given to the buye+ b+o,e+s and the ##=#* gives money to the selle+ b+o,e+/ his p+ocess is called as $ayout/ his p+ocess of pay;in and payout is called settlement/ Initially the t+ading cycle 0as of one fo+tnight6 0hich 0as +educed to one 0ee,/ he t+ansactions ente+ed du+ing this pe+iod6 of a fo+tnight o+ one; 0ee,6 0e+e used to be settled eithe+ by payment fo+ pu+chase o+ by delive+y of sha+e ce+tificates sold on notified days one fo+tnight o+ one 0ee, afte+ the e5pi+y of the t+ading/ he settlement schedules a+e made ,no0n to the membe+s of the e5change in advance/
(,
he 0ee,ly settlement pe+iod 0as +eplaced by daily settlements6 popula+ly ,no0n as +olling settlements6 in 0hich each day is sepa+ate t+ading day/ With effect f+om 'ecembe+ 4@@96 I? +olling settlement cycles 0as int+oduced fo+ all e8uities 0he+e 1 1 is the 1 +ading 'ay1 and pay;in and $ayout fo+ the settlement 0as done on ?th business day afte+ t+ade day/ Fo+ e5ample6 if 0as Monday6 the pay;in and payout 0e+e done on ne5t I? Monday6 as Satu+day and Sunday a+e not counted as business days/ cycles 0e+e fu+the+ sho+tened to I> settlement cycle 0/e/f/ !p+il 96 4@@4/ CURRENT SCENARIO: SE-I has since int+oduced I4 +olling settlements f+om !p+il 96 4@@>/ I4 settlement cycle means that the final settlement of t+ansactions done on 6 i/e/ t+ade day by e5change of monies and secu+ities bet0een the buye+s and selle+s +espectively occu+s on second business day afte+ the t+ade day e5cluding Satu+days6 Sundays6 ban, holidays and e5change holidays/ DAY • ACTIVITY +ading and daily do0nloading of statements sho0ing details of t+ansaction and ma+gins at the end of each t+ading day • C !=D !J ent+y by the membe+; b+o,e+s=confi+mation I9 by the custodians #onfi+mation of C!=D! data by the custodians up to a specified deadline time/ 'o0nloading of secu+ities and funds obligation statement by membe+s/
(-
I4
$ay;in of funds and secu+ities and payout of funds and secu+ities by $+e;specified deadline times/ he membe+s a+e +e8ui+ed to submit the pay in inst+uctions fo+ funds and secu+ities to ban,s and deposito+ies +espectively/ !uction fo+ sho+tages in delive+y of secu+ities !uction pay;in and pay;out of funds and secu+ities/
I> IB
JC!=D!) ! mechanism 0he+eby the obligation of setting the t+ansactions done by a membe+ b+o,e+ on behalf of a client is passed on to a custodian based on his confi+mation/ he custodian can confi+m the t+ades done by the membe+s on;line/
+ading on the on;line sc+een based system <-SE1s On;Line +ading system6 -OL fo+ -SE and %ational E5change fo+ !utomated +ading6 %E! fo+ %SE: is conducted f+om Monday to F+iday bet0een E)?? a/m/ and >)>@ p/m/ he sc+ipts t+aded on he Stoc, E5change6 Mumbai a+e classified into 1!16 1-916 -4161#16 1F16.16 and 1KLH g+oups/
!6 -96 -4 and # g+oup1s +ep+esent the e8uity ma+,et segment/ F g+oup +ep+esents the debt ma+,et <fi5ed income secu+ities: segment/
-SE has commenced t+ading in .ovt/ Secu+ities fo+ +etail investo+s unde+ .
(.
g+oup 0/e/f/ Ganua+y 9C6 4@@>/ K g+oup cove+s the companies6 0hich have failed to comply 0ith listing +e8ui+ements and=o+ failed to +esolve investo+ complaints o+ have not made the +e8ui+ed a++angements fo+ demate+iali3ation of thei+ secu+ities 0ith both the deposito+ies/ PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT: he capital ma+,et 0as a ma+ginal institution in the financial ma+,et fo+ almost th+ee decades afte+ India1s independence/ *o0eve+6 until late eighties the common man ,ept a0ay f+om capital ma+,ets/ %ot many companies accessed the capital ma+,et and6 thus6 the 8uantum of funds mobili3ed th+ough the ma+,et 0as meage+/ ! majo+ p+oblem6 ho0eve+6 continued to plague the ma+,et/ he Indian ma+,ets 0e+e lite+ally 0eighed do0n by the need to deal 0ith sha+es in the pape+ fo+m/ he+e 0e+e p+oblems galo+e 0ith handling documents ;; fa,e and stolen sha+es6 fa,e signatu+es and signatu+e mismatches6 duplication and mutilation of sha+es6 t+ansfe+ p+oblems etc/ he t+ading volumes 0e+e small due to small investing population/
(/
T,% *o--o."#/ &$% 'o0% o* +,% 0&6o$ 7$o(-%0' *& %5 *o$ 7,)'" &%$+"*" &+%' () +,% "#2%'+o$': a/ Ino+dinate delay in +eceiving secu+ities afte+ t+ansfe+ by the companies/ b/ Retu+n of sha+e ce+tificates as bad delive+ies on account of signatu+e mismatch o+ fo+ged signatu+e of t+ansfe+o+ o+ fa,e ce+tificates/ c/ 'elay in +eceipt of secu+ities afte+ allotment by the companies/ d/ %on +eceipt of secu+ities/ e/ $+ocedu+al delays in getting duplicate sha+es=debentu+e ce+tificates/ f/ Sto+ing physical ce+tificates/
Lac, of mode+ni3ation became a hind+ance to g+o0th of seconda+y ma+,et and +esulted in c+eation of cumbe+some p+ocedu+es and pape+ 0o+,/ *o0eve+6 the +eal g+o0th and change occu++ed f+om mid;eighties in the 0a,e of libe+ali3ation initiatives of the .ove+nment/ he +efo+ms in the financial secto+ 0e+e envisaged in the ban,ing secto+6 capital ma+,et6 secu+ities ma+,et +egulation6 mutual funds6 fo+eign investments and .ove+nment cont+ol/
)0
hese institutions and stoc, e5changes e5pe+ienced that the pape+ ce+tificates a+e the main cause of investo+ dispute+s and a+bit+ation cases/ hus6 the .ove+nment of India decided to set up a fully automated and high technology based model e5change6 0hich 0ould offe+ sc+een based t+ading and deposito+ies as the ultimate ans0e+ to all such +efo+ms/ he+efo+e6 the .ove+nment of India p+omulgated the 'eposito+ies O+dinance in 9EE?/ *o0eve+6 both *ouses of $a+liament passed the 'eposito+ies !ct in 9EEC/ he unpa+alleled success of the int+oduction of the deposito+y concept in the Indian capital ma+,ets is +eflected in the on; going successful +eduction in the pe+iod bet0een t+ading and settlement/ PROBLEMS WITH PHYSICAL MODE OF SETTLEMENT: he capital ma+,et 0as a ma+ginal institution in the financial ma+,et fo+ almost th+ee decades afte+ India1s independence/ *o0eve+6 until late eighties the common man ,ept a0ay f+om capital ma+,ets/ %ot many companies accessed the capital ma+,et and6 thus6 the 8uantum of funds mobili3ed th+ough the ma+,et 0as meage+/ ! majo+ p+oblem6 ho0eve+6 continued to plague the ma+,et/ he Indian ma+,ets 0e+e lite+ally 0eighed do0n by the need to deal 0ith sha+es in the pape+ fo+m/ he+e 0e+e p+oblems galo+e 0ith handling documents ; fa,e and stolen sha+es6 fa,e signatu+es and signatu+e mismatches6 duplication and mutilation of sha+es6 t+ansfe+ p+oblems etc/ he t+ading volumes 0e+e small due to small investing population/
)'
T,% *o--o."#/ &$% 'o0% o* +,% 0&6o$ 7$o(-%0' *& %5 *o$ 7,)'" &%$+"*" &+%' () +,% "#2%'+o$': a/ Ino+dinate delay in +eceiving secu+ities afte+ t+ansfe+ by the companies/ b/ Retu+n of sha+e ce+tificates as bad delive+ies on account of signatu+e mismatch o+ fo+ged signatu+e of t+ansfe+o+ o+ fa,e ce+tificates/ c/ 'elay in +eceipt of secu+ities afte+ allotment by the companies/ d/ %on +eceipt of secu+ities/ e/ $+ocedu+al delays in getting duplicate sha+es=debentu+e ce+tificates/ f/ Sto+ing physical ce+tificates/
Lac, of mode+ni3ation became a hind+ance to g+o0th of seconda+y ma+,et and +esulted in c+eation of cumbe+some p+ocedu+es and pape+ 0o+,/ *o0eve+6 the +eal g+o0th and change occu++ed f+om mid;eighties in the 0a,e of libe+ali3ation initiatives of the .ove+nment/ he +efo+ms in the financial secto+ 0e+e envisaged in the ban,ing secto+6 capital ma+,et6 secu+ities ma+,et +egulation6 mutual funds6 fo+eign investments and .ove+nment cont+ol/
)(
hese institutions and stoc, e5changes e5pe+ienced that the pape+ ce+tificates a+e the main cause of investo+ dispute+s and a+bit+ation cases/ hus6 the .ove+nment of India decided to set up a fully automated and high technology based model e5change6 0hich 0ould offe+ sc+een based t+ading and deposito+ies as the ultimate ans0e+ to all such +efo+ms/ he+efo+e6 the .ove+nment of India p+omulgated the 'eposito+ies O+dinance in 9EE?/ *o0eve+6 both *ouses of $a+liament passed the 'eposito+ies !ct in 9EEC/ he unpa+alleled success of the int+oduction of the deposito+y concept in the Indian capital ma+,ets is +eflected in the on;going successful +eduction in the pe+iod bet0een t+ading and settlement/ ACCOUNT OPENING AND MAINTENANCE: !n individual 0ho 0ants to ,eep his = he+ cash safe in a ban, has to open an account 0ith a ban, as a fi+st step and maintain cash in boo, ent+y fo+m/ Simila+ly6 an investo+ has to open a demat account 0ith any '$ of #'SL as a fi+st step to hold secu+ities in demat fo+m in the deposito+y system/ he investo+ can open an account 0ith any '$ of #'SL/ #'SL system facilitates opening of demat accounts fo+ diffe+ent catego+ies of investo+s/ 'emat accounts opened 0ith #'SL a+e +efe++ed as 1-eneficial O0ne+ !ccounts1 o+ 1-O account1/ !s e5plained ea+lie+6 0hen secu+ities a+e held in physical fo+m name of the investo+ is +eco+ded in the boo,s of the company as 1Registe+ed o0ne+1/ When the same secu+ities a+e conve+ted into elect+onic fo+m and held in a demat account6 the deposito+y becomes +egiste+ed o0ne+ of the secu+ities/
))
Since deposito+y is acting as a custodian of the secu+ities6 o+iginal investo+ is legally entitled fo+ all +ights = liabilities attached 0ith secu+ities and hence a+e called a 1-eneficial O0ne+1/ !ll accounts opened on #'SL system a+e beneficial accounts i++espective of the type of account/ ! demat account may be opened and maintained in the name<s: of one pe+son <sole holde+: o+ mo+e than one pe+sons <joint holde+s:/ !ll the joint; holde+s have to sing the application fo+m and the ag+eement/ he suppo+ting documents and photog+aph should also be p+ovided fo+ all joint;holde+s/ hough the beneficial o0ne+ship of jointly held he dividend and secu+ities vests e8ually in all joint;holde+s6 communications about the joint deposito+y account a+e p+ovided only to the fi+st holde+/ inte+est 0a++ants6 annual +epo+ts and notices fo+ meetings a+e also issued to the fi+st;named joint holde+ only/ !ll -o accounts a+e ope+ated at '$ levelH ho0eve+6 data is maintained at #'SL level/ ! -O does not have di+ect access to #'SL system and must act th+ough his = he+ '$/ While opening an account6 the -O can give a standing inst+uction <#onfi+mation 0aive+ o+ $u+chase 0aive+: to allo0 c+edits automatically to the account 0ithout sepa+ate inst+uctions/
)*
ACCOUNT TYPES T,% &$% +.o 0&"# +)7%' o* & ')'+%0. 9/ 9/ !ccounts to be maintained by '$s/ #lea+ing #o+po+ation = #lea+ing *ouse accounts/ o1#+' +,&+ &# (% o7%#%5 o# CDSL
ACCOUNT OPENING; PROCEDURE: T,% 0&"# o(6% +"2%' o* & o1#+ o7%#"#/ &$% +o &--o. "#2%'+o$' +o 7%$*o$0 +,% *o--o."#/ & +"2"+"%': 9/ 'emate+iali3e physical secu+ities cu++ently held by investo+s and +eflect secu+ities;o0ne+ship by elect+onic boo,;ent+ies in #'SL/ 4/ -uy and sell demate+iali3ed secu+ities6 0hich a+e admitted in #'SL/
>/
Receive statements of all demate+iali3ed holdings of secu+ities as -O/
B/
Receive secu+ities in elect+onic fo+m in case of Initial $ublic Offe+ings6 Rights Issues6 -onus Issues6 Me+ge+s6 !c8uisitions and !malgamations6 etc/
?/
$ledging of secu+ities/
)+
he -O and the '$ 0ill ente+ into an ag+eement and each one 0ill abide by the te+ms and conditions of the ag+eement/ he -O 0ill give the account opening fo+m along 0ith the +elevant documents to the '$/ he '$ 0ill chec, all the documents and in case of any additional info+mation is +e8ui+ed shall call fo+ the same/ If the '$ finds all the pape+s as co++ect6 he 0ill send a confi+mation to the -O/ <E/g/ a tea+ off slip on account opening fo+m as counte+ slip/: he '$ 0ill captu+e details f+om the account opening fo+m filled by the -O in the f+ont;end system p+ovided by #'SL/ he '$ 0ill scan the signatu+e<s: of the -O<s: as 0ell as the po0e+ of atto+ney signatu+es6 if applicable/ Once the '$ commits the t+ansaction6 the data is captu+ed and sto+ed at #'SL/ ! uni8ue -O account numbe+ is gene+ated by the system and this can be seen at the '$ f+ont;end system/ his 0ill be done on;one and the info+mation gets t+ansmitted to #'SL instantaneously/ he '$ 0ill +eco+d the -O I' on the o+iginal application fo+m and on the '$;-O ag+eement fo+ c+oss;+efe+ence/ ! -O 0ill be classified 0ith a -O status/ hese status a+e system
defined/ -O status indicates 0hethe+ the -O/ is an Individual6 %RI and #o+po+ate -ody6 -an, etc/ the info+mation to be captu+ed fo+ each -O status 0ill be diffe+ent/
),
he use+ 0ill fi+st select p+ope+ status code to use fo+ the set;up of -O/ Only those fields6 0hich a+e p+e;defined by #'SL fo+ the status code6 0ill come up on the sc+een fo+ the use+ to ente+/ he -O I' is a combination of the #'SL #ode <9:6 '$ ype<l:6 '$ #ode <B: and -+anch #ode <4:6 Se+ial no<D:6 and the #hec, 'igit <9:/; Figu+es in b+ac,et indicate numbe+ of cha+acte+s/ he system maintains a consistent +unning se8uence of account numbe+s at the '$ f+ont;end system/ he '$ sends the -O a final confi+mation lette+ fo+ having opened the account mentioning the account numbe+ the+ein/ In case of a joint account6 all co++espondence = 8ue+ies +elating to -O account 0ill be sent to the fi+st holde+ only / he account cannot be made active till the -O1s signatu+e<s: have been captu+ed/ he account opening fo+m fo+ Individual Investo+s6 Institutional Investo+s6 #o+po+ate Investo+s6 and #Ms can be common/ *o0eve+6 a '$ may p+int sepa+ate fo+ms fo+ a each type of -O if found necessa+y o+ convenient/= those sections of the application fo+m6 0hich a+e not +elevant to a pa+ticula+ type of -O6 should be ma+,ed 1%ot !pplicable1 <%/!/:/ he documents specified at the end of the account opening fo+m a+e to be submitted along 0ith the account opening fo+m/ he -O1s '$ may also specify additional documents to be supplied 0ith the account opening fo+m/ ! '$ shall6 befo+e opening any account of any -O ma,e in8ui+ies as may be necessa+y and e5e+cise due ca+e and caution in asce+taining the bonafides of the intending -O6 sc+utini3e the documents +elating to the secu+ities in
)-
+espect of 0hich account is intended to be opened6 fo+ thei+ authenticity/ he '$ should ensu+e that a -O having diffe+ent sub;status fo+ diffe+ent ISI%s6 opens a sepa+ate -O a=c fo+ diffe+ent -O sub;status e/g/ di+ecto+ of a company 0ill have a diffe+ent sub;status fo+ sha+es held by him in that company and 0ill have anothe+ -O account/ Fo--o."#/ &$% +,% o00o# 5%+&"-' +o (% 7$o2"5%5 o# & o1#+ o7%#"#/ *o$0 *o$ &-- +)7%' o* & o1#+': 9/ 4/ %ame of the holde+<s: !dd+ess ( phone =fa5 numbe+/
>/
-an, details6 li,e6 name of ban,6 type of account <cu++ent=savings: account numbe+6 -+anch add+ess6 MI#R %o/ etc/
B/ ?/
$!% numbe+6 if applicable/ Specimen signatu+es/
).
DP-BO AGREEMENT Each -O has to sign a '$;-O ag+eement 0ith the '$ befo+e opening a demat account/ *o0eve+6 a -O belonging to any one of the catego+ies specified unde+ the #'SL -yela0s need not ente+ into an ag+eement 0ith the '$/ T,%'% BO &+%/o$"%' &$% &' *o--o.': 9/ ! fo+eign institutional investo+ +egiste+ed 0ith the SE-I6 0ho has ente+ed into an ag+eement 0ith the '$ eithe+ di+ectly o+ th+ough its po0e+ of atto+ney holde+ in acco+dance 0ith the p+ovisions of Regulation 9C of SE-I <Fo+eign Institutional Investo+s: Regulation6 9EE?/ $+ovided that such ag+eement gives the '$ an autho+ity to act on behalf of the fo+eign institutional investo+ fo+ availing the se+vices of the deposito+yH and a copy of such ag+eement has been filed 0ith the SE-I/ 4/ !n Inte+national Multilate+al !gency and .lobal #ustodian 0ho has ente+ed into ag+eement 0ith the '$ pu+suant to Regulation 9D of SE-I <#ustodians of Secu+ities: Regulations6 9EEC and such ag+eement inte+ alias confe+s autho+ity on the '$ to avail of the deposito+y se+vices on behalf of an Inte+national Multilate+al !gency and .lobal #ustodian/
)/
DOCUMENTS
TO
BE
SUBMITTED
WHILE
OPENING
A
DEMATS ACCOUNT List of documents = info+mation to be submitted by diffe+ent catego+ies of -Os along 0ith the account opening fo+m is given belo0/ he '$ should ve+ify copies of the documents against the o+iginal documents/ INDIVIDUAL INVESTORS 9/ Int+oduce+1s %ame6 !dd+ess6 and #ontact %umbe+/ 4/ %ame6 !dd+ess6 el %o/ Etc/ of Magist+ate=%ota+y $ublic=E5ecutive
Magist+ate in case of attestation done by any of them/
>/ $o0e+ of !tto+ney6 if applicable/
B/ $hotocopy
of
d+iving
license=Election
I'
ca+d=$asspo+t=-an,
attestation=$an #a+d to dete+mine intending -O1s identity/
?/ Ration ca+d = passpo+t = vote+1s I' = d+iving license = ban, passboo, as a p+oof of add+ess/ C/ -i+th #e+tificate in case of mino+s/
D/ One passpo+t si3e photog+aph of applicants 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*0
*'
HUF 9/ !ll the above documents as ta,en fo+ Individual investo+s at the time of account opening hold good/ In addition *"F signatu+e unde+ the stamp of *"F/ 4/ List of family membe+s/ CORPORATE INVESTORS: 9/ #e+tified t+ue copy of boa+d +esolution fo+ pe+sons autho+i3ed by the boa+d to act as autho+i3ed signato+ies/ 4/ %ames of the autho+i3ed signato+ies6 designation6 and thei+ specimen signatu+es/
>/
$O! given to the autho+i3ed signato+ies/
B/
%ame6 !dd+ess6
el %o/ etc/ of Magist+ate=%ota+y $ublic=Special
E5ecutive Magist+ate incase of attestation done by any of them/
?/
Memo+andum and !+ticles of !ssociation of the company/
C/
One passpo+t si3e photog+aph of each autho+i3ed signato+y 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*(
CM8 FII8 NRI AND OCB 9/ 4/ #opy of #e+tificate of Regist+ation 0ith SE-I <0he+e applicable:/ $o0e+ of !tto+ney <if applicable:/
>/
#e+tified t+ue copy of boa+d +esolution fo+ pe+sons autho+i3ed by the boa+d to act as autho+i3ed signato+ies/
B/
%ames of the autho+i3ed signato+ies6 designation6 and thei+ specimen signatu+es/
?/
%ame6
!dd+ess6
el
%o/
etc/
of
Magist+ate=%ota+y
$ublic=Special E5ecutive Magist+ate in case of attestation done by any of them/
C/
R-I Regist+ation fo+ FII6 %RI6 O#- <if applicable:/M
D/
-an, !=c details 0ith +espective status li,e %RE6 %RO6 etc/
F/
Memo+andum and !+ticles of !ssociation of the company/
E/
#onduct #e+tificate f+om the stoc, e5changes 0he+e -O is a #M/
9@/
One passpo+t si3e photog+aph of each of the autho+i3ed signato+y 0ith thei+ signatu+es ac+oss the face of the photog+aph/
*)
SETTLEMENTS: When secu+ities a+e pu+chased o+ sold6 the same need to be ta,en into buye+1s account o+ t+ansfe++ed oEut of selle+1s account/ Since settlement of t+ades in all listed secu+ities is to be compulso+ily done in the demate+iali3ed fo+m6 the t+ansaction has to be +outed th+ough the deposito+y system/ he secu+ities could eithe+ be sold o+ pu+chased th+ough the stoc, e5change mechanism o+ outside the stoc, e5change mechanism/ ! demat account can be debited = c+edited only on inst+uctions of the -O/ -O the+efo+e needs to give inst+uctions to his = he+ '$ to effect debit = c+edit of secu+ities out of his = he+ demat account/ *o0eve+6 most of the time inst+uctions a+e +e8ui+ed only fo+ debit since a -O can give a one; time standing inst+uction to the '$6 fo+ c+editing the account 0ithout a c+edit inst+uction6 at the time of account opening/ inst+uction is ,no0n as 2$u+chase 0aive+2/ the account holde+<s:/ T$&#'*%$ o* '% 1$"+"%' "# 3 o1$ o* +,% 5%0&+ & o1#+ &# &$"'% "# +,% *o--o."#/ "#'+&# %' a: Fo+ e5ecution of off ma+,et t+ansaction i/e/ t+ansactions bet0een t0o accounts on mutually ag+eeable te+ms6 i/e/ a t+ansaction done on a pe+son;to;pe+son basic6 0ithout going th+ough the stoc, e5change mechanism/ his one;time he '$ e5ecutes all
inst+uctions in the #'SL system6 only afte+ ve+ification of the signatu+e of
**
b: Fo+ settling on ma+,et t+ades i/e/ t+ades done by the investo+s th+ough stoc, e5change mechanism and settled using the settlement mechanism of the same e5change/ c: Fo+ inte+ deposito+y t+ansfe+s i/e/ t+ansfe+ of secu+ities f+om an account held in one deposito+y to an account held in the othe+ deposito+y/
Fo+ t+ansfe+ of secu+ities6 -O is +e8ui+ed to submit a duly filled in inst+uction slip6 in the fo+mat specified by #'SL6 to his = he+ '$ fo+ e5ecution/ his inst+uction slip can be used fo+ t+ansfe+ of secu+ities necessitated due to any of the above +easons/ -oo,lets of inst+uction slips a+e issued to the -O afte+ an account has been opened/ he inst+uction slips have the -O I' and a se+ial numbe+ p+e; p+inted on them/ he '$ is +e8ui+ed to ,eep a p+ope+ +eco+d in +espect of the +ange of se+ial numbe+s of the inst+uction slips issued to each -O/ he -O should submit the inst+uction slip6 duly filled in and signed by all joint holde+s o+ a duly constituted $O! <if any6 to the '$/ he -O should clea+ly specify the type of t+ansaction fo+ 0hich the inst+uction slip is submitted/ !ny alte+nations= modifications to the inst+uction slips al+eady signed by the holde+<s: should be again authenticated by the holde+<s:/
*+
OFF-MARKET TRANSACTIONS: OffNMa+,et t+ansaction can be used fo+ t+ansfe+ secu+ities f+om 9/ One -O account to othe+ -O !ccount 4/ -O account to #M account fo+ pay;in
>/ #M account to -O account fo+ pay;out he selle+ -O 0ill submit a duly filled in inst+uction slips6 giving details of the buye+ -O6 ISI%/ Auantity etc/6 to the '$/ On +eceipt of the inst+uction slip6 the '$ 0ill ve+ify the same and ente+ the off;ma+,et inst+uction in the #'SL system/ If the buye+ -O has not given one time standing inst+uction i/e/ pu+chase 0aive+6 the buye+ -O 0ill be +e8ui+ed to give +eceipt inst+uction to his '$ fo+ +eceiving secu+ities in the account/ he inst+uction ente+ed by the '$ 0ill be e5ecuted in the 2e5ecution date2 as specified by the -O in the inst+uction slip/ !t the time of e5ecution6 if sufficient balances a+e p+esent in the selle+ -O account6 the account 0ill be debited and co++esponding c+edit 0ill be given in the buye+ -O account/ If the balance in the selle+ -O account is insufficient6 the inst+uction 0ill +emain in the 2Ove+due2 status/ Fo+ all inst+uctions 0ill 2Ove+due2 status6 #'SL system 0ill chec, fo+ availability of balances at p+e;defined
*,
inte+vals till the end of the e5ecution date <till EO':/ !t the end of day of the e5ecution date6 if balances a+e still insufficient the inst+uction 0ill be ma+,ed as failed/ ON MARKET TRANSACTIONS: Investo+s buy = sell secu+ities on the t+ading platfo+m p+ovided by the stoc, e5changes th+ough SE-I +egiste+ed #Ms/ he day on 0hich the t+ade is e5ecuted is called as the +ading day o+ the 2 2 day/ On +eceiving confi+mation6 f+om the #M6 of e5ecution of the t+ade6 the buye+ -O has to delive+ the funs <money: to his = he+ #M and the selle+ -O has to delive+ the secu+ities to his = he+ #M/ he #M delive+s the funds and the secu+ities +eceived f+om the -O to the #* = ## of the stoc, e5change befo+e the stipulated time specified by the stoc, e5change/ he #h = ## of the stoc, e5change then delive+s the secu+ities to the buying #Ms and funds to the selling #Ms6 0ho have e5ecuted t+ades on behalf of thei+ clients/ he activity of the #* = ## of the stoc, e5change of delive+ing funds and secu+ities to the +espective selle+s = buye+s is ,no0n as 2Settlement of ma+,et t+ades2/ 2Settlement date2/ he p+ocess of delive+y of secu+ities by the selle+ #M to the #* = ## fo+ settlement is ,no0n as 2$ay;in of secu+ities2 and the p+ocess of delive+y of secu+ities by the #* = ## to the buye+ #M is ,no0n as 2$ay;out of secu+ities2/ $ay;in and $ayout of secu+ities ta,es place at p+edete+mined timings decided by the stoc, e5changes/ he date on 0hich settlement ta,es place is ,no0n as
*-
Settlement of on ma+,et t+ades is cu++ently done on a I4 basis i/e/ settlement ta,es place on 4nd 0o+,ing day afte+ the t+ade has been e5ecuted by the #M/ ADVANTAGES OF DEMAT: +ansacting the deposito+y 0ay has seve+al advantages ove+ the t+aditional system of sha+e ce+tificates/ 9/ he investo+ can avoid the e5pense of applying fo+ duplicate ce+tificates in case of loss = mutilation of ce+tificates/ 4/ +ading in demat segment completely eliminates the +is, of bad delive+ies6 0hich in tu+n all cost and 0astage of time associated 0ith follo0 up fo+ +ectification/
>/
he investo+ can also +eceive you+ bonuses and +ights into you+ deposito+y account as a di+ect c+edit6 thus eliminating +is, of loss in t+ansit/
B/ In case of t+ansfe+ of elect+onic sha+es6 @/?O can be saved in stamp duty/
?/ #ost of delay=cou+ie+=neut+ali3ation the need fo+ fu+the+ follo0 up 0ith the clea+ing membe+ fo+ sha+es +etu+ned fo+ company1s objection6 0hich happens only in case of physical secu+ities scan6 be avoided/
*.
C/ Facilitation of cash co+po+ate actions such as dividends/ #'SL p+ovides details of beneficial o0ne+s as on a given day <the +eco+d date: to the issue+ company=+egist+a+ so as to enable the company to #alculate the benefits a+ising out of these hoE9dings/ di+ectly/ D/ Lending and bo++o0ing of secu+ities) ! client eithe+ a lende+ o+ a bo++o0e+6 having a beneficia+y account 0ith the '$ can lend o+ bo++o0 '$/ secu+ities in elect+onic fo+m th+ough an app+oved inte+media+y6 0ho has opened a special inte+media+y account 0ith a he company1s +egist+a+ and t+ansfe+ agents fo+0a+d the cash benefits to the investo+
F/
he
c+eation
of
lend=bo++o0
inst+uction
0ill
be
initiated
by
lende+=bo++o0e+ +espectively th+ough his '$/
E/ Investo+ can e5pect a lo0e+ inte+est cha+ge fo+ loans ta,en against demat sha+es as compa+ed to the inte+est fo+ loan against physical sha+es/
*/
REMATERIALISATION: DEFINITION: Remate+ialisation is the p+ocess of conve+ting secu+ities6 held in a demat account <i/e/ elect+onic fo+m: to physical fo+m/ ! -O <-eneficia+y O0ne+: intending to conve+t the secu+ities into physical fo+m submits a 'emat +e8uest to the '$ in a Remate+ialisation Re8uest Fo+m <RRF:/ '$ ve+ifies the info+mation on the RRF and ente+s the details in the system to setup a +e8uest elect+onically/ can be used fo+ futu+e +efe+ence/ Issue+=R !/ If the 'emat +e8uest is in o+de+6 the Issue+=R ! app+oves the same and confi+ms the RR% elect+onically to #'SL/ On +eceiving such confi+mation6 #'SL debits the -O account/ $hysical ce+tificates a+e sent by the Issue+=R ! di+ectly to the investo+/ he system gene+ates a uni8ue se+ial numbe+ called as Remate+ialisation Re8uest %umbe+ <RR%:6 0hich he '$ sends the RRF to the conce+ned
+0
STEPS: 9/ he investo+ +e8uest fo+ the physical ce+tificate to its 'eposito+y $a+ticipants th+ough Remat Re8uest Fo+m <RRF: 4/ he 'eposito+y $a+ticipants 0ill info+m the 'eposito+y of the +e8uest/
>/
he 'eposito+y $a+ticipants in tu+n 0ill also app+aise the Regist+a+ = +ansfe+ agents
B/
he deposito+y 0ill fo+0a+d the same +e8uest to the R (
!gent
?/
he Regist+a+ = +ansfe+ agents afte+ p+inting the physical ce+tificates 0ill update the 'eposito+y/
C/
he deposito+y 0ill update the 'eposito+y $a+ticipants
D/
he physical ce+tificates a+e sent to the investo+s di+ectly by the Regist+a+s/
+'
ACTION BY BO ! -O 0ho 0ishes to have balance in his demat account in #'SL6 +emate+iali3ed6 has to fill up a RRF in duplicate6 sign it and submit the same to his '$/ RRF should be signed by all holde+s = $O! <if any:/ he -O may specify on the RRF that all the 8uantity to be included in only one ce+tificate <Gumbo Lot: o+ the ce+tificates may be fo+ ma+,etable losts/ Sepa+ate RRF is to be submitted fo+ +emat of f+ee 8uantity and 8uantity unde+ loc,;in6 if loc,;in is fo+ diffe+ent +easons then a sepa+ate RRF is to be submitted fo+ each loc,;in +eason/ ACTION BY DP On +eceipt of RRF f+om the -O6 the '$ ve+ifies the details mentioned in the RRF 0ith the -O details maintained 0ith #'SL/ Sufficient 1f+ee balance1 o+ 1loc,;in balance1 must e5ist in the account fo+ +emat/ Signatu+e<s: of the -O<s: o+ $O! holde+ should match 0ith those +eco+ded 0ith the '$/ If all the details on the RRF a+e co++ect then the same a+e ente+ed in the #'SL System by the '$ on the same day o+ latest by the ne5t 0o+,ing day f+om the date of +eceipt of RRF/ When the +e8uest is set up6 #'SL system gene+ates a uni8ue Remate+ialisation Re8uest %umbe+ <RR%: fo+ each +emat +e8uest/
+(
Once a +emat +e8uest is set up6 the balances in the demat account a+e bloc,ed and such secu+ities cannot be t+ansfe++ed/ '$ +eco+ds the RR% on the RRF and autho+i3es the RRF 0ith his seal and signatu+e/ he '$ +etains a copy of the RRF fo+ his +eco+ds and sends the o+iginal RRF to the Issue+ = R ! 0ith othe+ documents6 if any/ he '$ must ensu+e that the +emat +e8uest is sent to the Issue+=R ! 0ithin t0o 0o+,ing days of +e8uest +eceived f+om the -O and is hono+ed 0ith a pe+iod of >@ days f+om the date of physical +eceipt of the RRF by the Issue+=R ! / ACTION BY ISSUER 3 RTA On +eceiving the physical documents6 the Issue+ = R ! access the elect+onic +e8uest f+om #'SL system and ve+ify the details as pe+ RRF/ If the +emat +e8uest is acceptable6 Issue+ = R ! confi+m the same elect+onically th+ough the #'SL system debits the -O account 0ith 8uantity accepted fo+ 'emate+iali3ation/ On ve+ification6 if the details do not match6 the Issue+ = R ! 0ill elect+onically intimate the +ejection of RRF and send the +ejected RRF to the '$6 along 0ith all the documents6 fo+ necessa+y co++ection = +ectification/ Fo+ the +ejected RRF6 the '$ 0ill ca++y out the necessa+y +ectification in consultation 0ith the -O and set up a f+esh +emat +e8uest/
+)
A REMATERIALISATION RE9UEST MAY BE REJECTED FOR REASONS SUCH AS 9/ he details given in RRF do not match 0ith elect+onic intimation +eceived 4/ he RRF is incomplete
>/ he documents a+e sent to 0+ong R ! = Issue+
B/ %ecessa+y documents do not accompany the RRF Fo+ all accepted +emat +e8uests6 the Issue+ = R ! ta,e the follo0ing pa+ticula+s on +eco+d based on RRF 9/ 4/ >/ B/ ?/ C/ D/ F/ E/ 9@/ 99/ %ame of *olde+<s: Fathe+1s %ame=*usband1s %ame of the fi+st holde+ !dd+ess $!% a5 Status !ge -an, !ccount %umbe+ %ame of the #ompany Auantity of secu+ities +emate+iali3ed Signatu+e of all the *olde+s mentioned in the RRF Whethe+ the secu+ities a+e unde+ loc,;in6 if yes6 then the pe+iod up to 0hich such secu+ities a+e unde+ loc,;in and +easons fo+ such loc,;in
+*
94/
E5isting Folio %O/6 if any
9>/ If $O! holde+ ope+ates the -O1s account6 the t+ue copy of the $O! also 0ill be ta,en on +eco+d/ 9B/ Othe+ documents6 if any he Issue+ = R ! gene+ate a folio numbe+ fo+ the -O o+ give the e5isting folio numbe+6 if the -O is al+eady holding the same type of secu+ities of the same Issue+ in the physical fo+m/ he Issue+ = R ! +eco+d the name of the -O as the Registe+ed O0ne+<s: of the +emate+iali3ed secu+ities/ he Issue+ = R ! p+int the ce+tificates in the name of Registe+ed O0ne+<s: and dispatch the same to the -O/ he Issue+ = R ! info+m all the stoc, e5changes6 0he+e the secu+ities a+e listed6 about the ne0s ce+tificate numbe+s6 distinctive numbe+s of the +emate+iali3ed secu+ities <as pe+ the +e8ui+ements of the va+ious stoc, e5changes:/ Such a ce+tificate should also be issued to #'SL on a 8ua+te+ly basis/
++
INTRODUCTION TO DEPOSITORY WHAT IS A DEPOSITORY: he 'eposito+ies !ct defines a deposito+y as 2a company fo+med and +egiste+ed unde+ the #ompanies !ct6 9E?C and 0hich has been g+anted a ce+tificate of +egist+ation unde+ sub;section <9!: of section 94 of Secu+ities and E5change -oa+d of India !ct6 9EE4/2 THE DEPOSITORIES ACT: he 'eposito+ies !ct6 9EEC6 ushe+ed in an e+a of efficient capital ma+,et inf+ast+uctu+e6 imp+oved investo+ p+otection6 +educed +is,s and inc+eased t+anspa+ency of t+ansactions in the secu+ities ma+,et/ It also immensely benefited the issue+ companies6 in te+ms of +educed costs and the effo+t e5pended in managing thei+ sha+eholde+ populace/ $e+haps6 no othe+ single act othe+ than the deposito+ies !ct has had such p+ofound all +ound impact on eve+y single sta,eholde+ in the Indian capital ma+,ets/ his legislation envisaged multiple deposito+ies in India to ensu+e benefits of competition fo+ then use+s of the deposito+y system/ he 'eposito+ies !ct 0hich facilitated establishment of deposito+ies <li,e #'SL: in India sought to effectively cu+b such i++egula+ities6 and p+otect the inte+ests of the investo+s6 and paved a 0ay fo+ an o+de+ly conduct of the financial ma+,ets th+ough f+ee t+ansfe+ability of secu+ities 0ith speed6 accu+acy6 t+anspa+ency etc/
+,
ue to the int+oduction of the deposito+y system6 the investo+s a+e able to enjoy many benefits li,e f+ee and instant t+ansfe+ability in a secu+ed manne+ at lo0e+ costs6 f+ee f+om the p+oblems li,e bad delive+ies6 odd;lots etc/ oday the t+adable lot is +educed to 2one unit2 hence even a common man is able to invest money in one e8uity sha+e o+ bond o+ debentu+e/ he investo+ is able to save a lot on account of stamp fee as gove+nment has e5empted stamp duty on t+ansfe+ of secu+ities at p+esent/ Investo+s a+e also spa+ed f+om the p+oblems of p+ese+ving the secu+ities held in physical fo+m VARIOUS SERVICES OFFERED BY A DEPOSITORY: ! deposito+y in India cannot open a demat account of an investo+ and = o+ p+ovide se+vices to such a pe+son di+ectly/ Fo+ opening a demat account o+ availing the se+vices offe+ed by the deposito+y6 a pe+son is +e8ui+ed to app+oach a 'eposito+y $a+ticipant <'$: 0ho is an agent of the deposito+y6 complete the account opening fo+malities as pe+ the SE-I +egulations6 'eposito+y byela0s/ he+eafte+6 the investo+ can +eceive secu+ities in the demat account as 0ell as tende+ the secu+ities held by him = he+ in physical fo+m fo+ demate+iali3ation to the '$ <as e5plained in the subse8uent pa+t: and hold the same in boo,;ent+y fo+m in the account/ When an investo+ holds secu+ities in physical fo+m6 his = he+ name is +eco+ded as +egiste+ed o0ne+ in the boo,s of the company/ !s pe+ the la0s cu++ently in fo+ce in India6 0hen the secu+ities a+e conve+ted in elect+onic fo+m by 0ay of demate+iali3ation6 name of the deposito+y is +egiste+ed in the boo,s of the company as +egiste+ed o0ne+/
+-
*o0eve+6 the investo+ continues to be the +eal o0ne+ of the secu+ities and is entitled to +eceive all the benefits such as dividend6 inte+est6 bonus sha+es etc/ in +espect of the said secu+ity and as such is called as -eneficial O0ne+ <-O: unde+ the deposito+y system/ oday 2demat2 has become a common 0o+d/ he institutional and
individual investo+s sp+ead all ove+ India a+e found to be ma,ing an e5tensive use of the deposito+y pa+ticipant se+vices fo+ holding thei+ secu+ities in elect+onic fo+m/
FUNCTIONS OF DP:
COMMON FUNCTIONS FOR DP AND RTA: ;.TRANSFER FILES3 UPDATE DATABASE: #'SL system pa+amete+s a+e defined and set up f+om a cent+al point and a+e sto+ed in the *ost system/ hese pa+amete+s a+e the base on 0hich use+ specific pa+amete+s a+e set up6 as such these a+e +e8ui+ed unive+sally to all '$=R ! systems/ his module facilitates the t+ansfe+ of such pa+amete+s to all '$=R ! systems/ his is to be done only once in a day just afte+ the use+ logs in/
+.
<. DATABASE ADMINISTRATION: he 'atabase !dminist+ation module can be used set;up autho+i3ed use+s/ It also allo0s use+ to set up Wo+,station<s:6 #ou+ie+ info+mation and $+inte+/ =. MASTER FILES: Maste+ files module is used to in8ui+e the maste+ files/ ! use+ can only in8ui+e the maste+ data fo+ the follo0ing basic maste+ tables such as list of ISI%6 '$s6 Issue+s6 R !s6 *olidays6 E5changes6 Settlement calenda+ etc/ Info+mation in these files is updated by #'SL/ >. REPORT SCHEDULER: his module helps use+ to gene+ate va+ious +epo+ts fo+ Maste+ files such as list of ISI%s '$s6 Issue+s6 R !s6 *olidays6 E5changes6 Settlement calenda+ etc/ ?. NON-FINANCIAL HISTORY: his in8ui+y module gives the complete audit t+ail of changes made and the t+ansactions causing the changes/ Only those t+ansactions a+e +eflected 0hich do not affect the holdings of a pa+ticula+ -O;ISI% account/
+/
@. RECOVER TRANSACTION INFORMATION: his module is used to +ecove+ -OI's and use+ details in case of +einstallation of the #'LS system/ C R S Indicates communication gate0ay status/ Indicates 0o+,station +egist+ation status/ Indicates use+1s sign;on status/
A. OPERATOR CONC9LE:
T,"' 0o51-% 7$o2"5%' *o--o."#/ *1# +"o#': 9/ 0o 0ay communications bet0een the f+ont end and the bac, end/ 4/ 'o0nloading of +epo+ts at the f+ont end/ B. HOST REPORT MANAGER: his option allo0s the use+ to manage+ the t+ansaction +epo+ts/ It p+ovides facilities fo+ vie0ing6 p+inting6 copying of the +epo+ts/ "se+ can do0nload daily ISI% +ate files fo+ billing activity in bac, office/ "se+ can also do0nload va+ious communi8ues sent by #'SL to '$ = R !/ module is also used fo+ pulling +epo+ts/ C. REPORT PARAMETERS: he module is used to set up diffe+ent +e8uest +epo+ts by using pa+amete+s such as so+t c+ite+ia6 filte+ c+ite+ia etc/ his module also
,0
his
p+ovides facility to gene+ate On;line +epo+ts fo+ actives such as holding statement fo+ his -O1s6 Inte+ deposito+y t+ansactions and t+ansaction jou+nal/ ;D. END OF DAY EEODF SCHEDULER EO' can be decla+ed using this module/ he othe+ options a+e 'S $u+ge and 'atabase -ac,up/ ;;. SIGNATURE DOWNLOAD: his module allo0s the use+ to do0nload signatu+es of -Os and thei+ $O!s fo+ bac, office activity/
,'
CHAPTER-V
CONCLUSION
,(
he study +evealed to us that 2'emate+iali3ation of Sha+es2 has b+ought about +evolutiona+y changes li,e) • • Immediate t+ansfe+ of sha+es6 the+eby minimi3ing time
%o Stamp duties on t+ansfe+ sha+es
•
Elimination
of
+is,
0ith
physical
ce+tificates
such
as
bad
delive+y6
Fa,e ce+tificates etc/6 hough the+e a+e ce+tain sho+tcomings li,e) • Ove+load of 0o+, due to heavy t+ansactions • Lac, of necessa+y inf+ast+uctu+e and pe+sonnel at the deposito+y
pa+ticipant/
It can be ta,en fo+ su+e that these sho+tcomings 0ill be ove+come in the ne5t fe0 yea+s and this p+ocess 0ill cont+ibute to0a+ds the ma,ing of mo+e efficient and investo+ f+iendly ma+,et/
,)
BIBLIOGRAPHY ? .athe+ed info+mation f+om M+/ *!RG $!R *!S!R! *I of
"S*!7IR!% FI%!%#E Ltd ? Refe++ed +elated a+ticles6 +efe+ences6 jou+nals and ce+tain 0ebsites/
? Mate+ial p+ovided by $/#/S Secu+ities Ltd/ W%( S"+%': 000/?paisa/com 000/googlesea+ch/com 000/nationalstoc,e5change/com
?
?
?
?
000/moneycont+ol/com
?
000/sdls/com
,*
APPENDICES A o1#+ C-o'1$%: ! -O 0anting to close a demat account held 0ith any '$ shall ma,e an application in the specified fo+mat/ he -O may close its account if no balances a+e standing to its c+edit in the account/ In case any balance e5ist6 then the account may be closed by +emate+ialisation of all its e5isting balances in its account and = o+6 by t+ansfe++ing its secu+ity balances to its othe+ account held eithe+ 0ith the same '$ o+ 0ith a diffe+ent '$/ he '$ ensu+es that no t+ansactions should be pending fo+ the account
A**"5&2"+ ) is any 0+itten document in 0hich then signe+ s0ea+s unde+ oath befo+e a nota+y public o+ someone autho+i3ed to ta,e oath that the statements in the document a+e t+ue
B%#%*" "&$) A o1#+: !n investo+ o+ a b+o,e+ 0ho 0ants to hold sha+es in demat fo+m and unde+ta,e sc+ipless t+ading must have a deposito+y account called beneficia+y account 0ith '$ of his choice/
BO: he Stoc, e5change6 Mumbai also ,no0n as -SE is one of the oldest stoc, e5changes in !sia 0ith ove+ C6@@@ stoc,s listed/
Co$7o$&+% A +"o#: includes any action +elating to payment of inte+est6 dividend6 +edemption6 0a++ants6 bonus6 me+ge+6 split6 amalgamation and any such othe+ action time to time/
,+
Co$7o$&+% B%#%*"+': means benefits li,e dividends6 inte+est6 bonus sha+es6 +ights6 p+efe+ential allotments6 0a++ants6 discount coupons6 +edemption at p+emium and such othe+ benefits6 acc+uing f+om time to time f+om the issue+ to the -O in +espect of the secu+ities held by such -O/ DRF: In o+de+ to demate+iali3e his physical sha+es the investo+ <+egiste+ed o0ne+: submits a +e8uest to the '$ in the 'emate+iali3ation Re8uest Fo+m <'RF: along 0ith the ce+tificates of secu+ities to be demate+iali3ed/ DRN: Is a uni8ue numbe+ gene+ated by #'SL system 0hen a demat +e8uest is set up/ D%7o'"+o$): ! 'eposito+y is an o+gani3ation 0he+e the secu+ities of an investo+ a+e held in elect+onic fo+m6 at the +e8uest of the investo+ th+ough the medium of a '$/ It is a company fo+med and +egiste+ed unde+ +egist+ation unde+ the +elevant sections of the SE-I !ct6 9EE4 D%7o'"+o$) P&$+" "7&#+: Is an agent of the deposito+y and is autho+i3ed to offe+ deposito+y se+vices to the investo+s/ !cco+ding to SE-I guidelines6 financial institutions6 ban,s6 custodians6 stoc,b+o,e+1s etc/ can become '$ of a deposito+y E-% +$o#" P1(-" O**%$"#/ EEPOF: !n initial public offe+ing6 o+ ne0 issue of sha+es6 in 0hich the p+ocess of applying fo+ sha+es is handled elect+onically <via Website:/ he #ompanies !ct6 9E?C and 0hich has been g+anted a ce+tificate of
,,
I#"+"&- P1(-" O**%$"#/ EIPOF: he fi+st offe+ing of a company1s sha+es to the public/ he sha+es offe+ed may be e5isting ones held p+ivately6 o+ the company may issue ne0 sha+es to the public/ I#+%$ D%7o'"+o$) T$&#'*%$': Inte+ deposito+y t+ansfe+ means t+ansfe+ of secu+ities6 0hich a+e admitted6 fo+ demat on both the deposito+ies f+om an account held in one deposito+y to an account held in the othe+ deposito+y/ ISIN: Means Inte+national Secu+ities Identification %umbe+ <ISI%: is a code that uni8uely identifies a specific secu+ity6 0hich is allocated at the time of admitting the same in the deposito+y system/ I''1%: means the numbe+ of sha+es of a company on sale to the public at a given time/ I''1% P$" %: means the p+ice at 0hich a company1s sha+es a+e offe+ed to the ma+,et fo+ the fi+st time/ When they begin to be t+aded6 the ma+,et p+ice may be above o+ belo0 the issue p+ice IRF: Invocation Re8uest Fo+m PAN: means $e+manent !ccount %umbe+ issued by Income 'epa+tment RRF: Remate+ialisation Re8uest Fo+m/ a5
,-
R%/"'+$&$  T$&#'*%$ A/%#+ ERTAF ) Means a +egist+a+ to an issue of any secu+ities and=o+ a t+ansfe+ agent in +espect of any secu+ities appointed by the Issue+ on its behalf 0ho has been g+anted the ce+tificate of +egist+ation by the Secu+ities and E5change -oa+d of India unde+ Sub;section<l: of Section 94 of the Secu+ities and E5change -oa+d of India !ct6 9EE4 T$&#'*%$&("-"+) o* S,&$%': Sha+es in a company a+e f+eely t+ansfe+able6 subject to ce+tain conditions6 such that no sha+eholde+ is pe+manently o+ necessa+ily 0edded to a company/ When a membe+ t+ansfe+s his sha+es to anothe+ pe+son/ he t+ansfe+ee steps into the shoes of the t+ansfe+o+ and ac8ui+es all +ights of the t+ansfe+o+ in +espect of those sha+es/ Fo+ demate+iali3ed sha+es the '$ debits and c+edits the account of the -O 0ith an autho+i3ation f+om such -O Z%$o (&-&# %: !lso ,no0n as nil balance6 a situation 0hen a deposito+y account has no secu+ities in it/ ! -O account may be opened 0ith any '$ even 0ith 3e+o balance
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doc_921332771.doc