I. General

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

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

II. Benefits

1. What are the benefits of participation in a depository?
The benefits of participation in a depository are:
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad delivery , fake securities , etc.
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
Nomination facility;
Change in address recorded with DP gets registered electronically with all companies in which investor holds securities eliminating the need to correspond with each of them separately;
Transmission of securities is done by DP eliminating correspondence with companies;
Convenient method of consolidation of folios/accounts ;
Holding investments in equity, debt instruments and Government securities in a single account;
Automatic credit into demat account, of shares, arising out of split/consolidation/merger etc.

III. Services

1. What are the facilities offered by CDSL?
Ans. CDSL offers following facilities: –

  • Dematerialisation i.e., converting physical certificates to electronic form;
  • Rematerialisation i.e., conversion of securities in demat form into physical certificates;
  • Facilitating repurchase / redemption of units of mutual funds;
  • Electronic settlement of trades in stock exchanges connected to CDSL;
  • Pledging/hypothecation of dematerialised securities against loan;
  • Electronic credit of securities allotted in public issues, rights issue;
  • Receipt of non-cash corporate benefits such as bonus, in electronic form;
  • Freezing of demat accounts, so that the debits from the account are not permitted;
  • Nomination facility for demat accounts;
  • Services related to change of address;
  • Effecting transmission of securities;
  • Instructions to your DP over Internet through SPEED-e facility. (Please check with your DP for availing the facility);
  • Account monitoring facility over Internet for clearing members through SPEED facility;
  • Other facilities viz. holding debt instruments in the same account, availing stock lending/borrowing facility, etc.

IV. Account Opening

1. You mentioned that I would have to open an account with a DP if I want to participate in the depository. Who is a DP?
CDSL provides its services to investors through its agents called depository participants (DPs). These agents are appointed by CDSL with the approval of SEBI. According to SEBI regulations, amongst others, three categories of entities i.e. Banks, Financial Institutions and Members of Stock Exchanges [brokers] registered with SEBI can become DPs. You can get a list of DPs from CDSL’s office or from our website at www.nsdl.co.in.

2. How do I select a DP?
You can select your DP to open a demat account just like you select a bank for opening a savings account. Some of the important factors for selection of a DP can be:
Convenience – Proximity to your office/residence, business hours.
Comfort – Reputation of the DP, past association with the organisation, whether the DP is in a position to give the specific service you may need?
Cost – The service charges levied by DP and the service standards.
In order to obtain the complete list of DP locations and their comparative charge structure, you may log on to www.nsdl.co.in or else you may write to NSDL for the same.

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

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