a project report on customer satisfaction towards depository participants at hdfc
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“A Study On Customer Satisfaction Towards Depository Participants”
ContentsSl. No. Titles Page No.I Chapter 1
Executive summary Introduction Design of the study
- Statement of the Problem- Objective- Methodology
Sampling design Data Collection Method
- Limitation of the study
3
5
7
II Chapter 2 Organization Profile Introduction to Dematerlisation
- Accounting Opening- Clearing member account- Market Type & Settlements Number- Depository- Function of Depository- Depository Participant- Procedure for Dematerialisation- Demat process- Closure of account- Trading & Settlement- Selling And Buying Of Shares- Other Services- Demat Shares: Are They 100% Safe
92429343741424344485051535455
III Chapter 3 Results & discussion with Charts & graphs 63
IV Chapter 4 Appendix
Questionnaire Bibliography
8898
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EXECUTIVE SUMMARY
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HDFC has developed significant expertise in retail mortgage loans to different market
segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong market reputation,
large shareholder base and unique consumer franchise, HDFC was ideally positioned
to promote a bank in the Indian environment. In addition it also provides demat
services, mutual funds etc.
Dematerialization or "Demat" is a process whereby your securities
like shares, debentures etc, are converted into electronic data and stored in computers
by a Depository. Securities registered in your name are surrendered to depository
participant (DP) and these are sent to the respective companies who will cancel them
after "Dematerialization" and credit your depository account with the DP.
The project emphasis on “Customer satisfaction towards depository
participants” .
Objectives of the Study:
To know the concept of dematerialization, depository and depository
participants.
To know the percentage of people satisfied with the services of DP.
To know the investment habit of people in securities
To know how Demat account is helping in trading..
To find out the behavior of respondents towards shares
Research Methodology:
Data source:
Primary Data: Through Questionnaire
Secondary Data: HDFC Bank’s reports, Magazines & Websites.
Sample size: 100 customers of HDFC BANK
Area Covered for research: Only Belgaum HDFC BANKS customers.
Sampling Procedure: Random sampling method from available database.
Findings:
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Most of the investors are small investors (that is about 51%. And about 32%
are long term investors , and 17% are traders.
The respondents aware of the new services provided by HDFC BANK are
mainly from agents that is about 39%,and from friends is 21%,and from
newspaper is 17%, and broker is 17% and from others is 6%.
From the analysis it is clear that 33% of the respondents are extremely
satisfied with Demat services and 36% are satisfied and 13% are neither
satisfied/Nor satisfied and 18% of them are unsatisfied.
From the analysis it clearly states that 16% of the respondents are extremely
satisfied with the service of settlement(Selling/Buying) and 37% are satisfied
and 28% are neither satisfied/Nor unsatisfied,15% are unsatisfied and 4% are
extremely unsatisfied.
20% of the respondents are extremely satisfied with the service of sell ‘n’
cash and35% are satisfied,33% are neither satisfied nor unsatisfied, 7% are
unsatisfied and 3% are extremely unsatisfied
46% of the respondents are satisfied by telephone queries,9% are extremely
satisfied,25% are neither satisfied ,11% are unsatisfied,9% are extremely
unsatisfied.
21% of the respondents are extremely satisfied regarding the co-operation by
staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4% are
unsatisfied.
24% of the respondents are 20% satisfied with the services of DP,25% of the
respondents are 40% satisfied with the services of DP, and 32% are 60%
satisfied with the services of DP.
30.4% of the respondents prefer DP over other DP’s because of quality
service,9.8% because of rates charged,34.8% for nothing in particular, and
25% for safety.
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Introduction
India has two hundred years old tradition in Securities. Infact that first India stock
exchange established in Bombay is the oldest in Asia. The earliest security dealings
were Transactions in loan securities of East India Company, the dominant institution
of those days. Corporate Shares came into the picture by 1830’s and assumed
significance with the Companies Act of 1956. In 1887 the broker community gave
birth to the “Native share and stock brokers Association” which is now known as the
Bombay Stock Exchange.
The Indian Capital grew at a very moderate rate from 1951 to 1980. However it
registered an impressive growth in 1980s. the process of liberalization and the
transparency in operation has raised the interest of foreign investors in India. Till
1978 there were only 8 recognized exchanges in India. Initially the exchange operated
on an outcry system i.e. manual system of trading Due to increase in the trading
volumes, the number of issuer increased substantially, and the birth of NSE highly
transparent automated system come into existence Even then there was an increase in
paper work causing a gridlock at every stage in the stock market This delays the
clearance and settlement of traders, registration of securities in the shareholder name
and due this it increased the back office paper work intermediaries These outdated
systems have increased settlement risks and have rendered the implementation of a
delivery of a versus payment system impossible. National Stock Exchange of India
Limited to provide electronic depository facilities for securities traded in the equity
and the debt market. NSDL commenced its operations in the year 1996 and is the first
depository in Indi
Design of the study
Tile of the project:
“Customer satisfaction towards depository participants”
Statement of the Problem: HDFC BANK is providing the Demat service. Hence in
this report an attempt is made to know the present customer satisfaction towards
depository participants
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RESEARCH OBJECTIVES:
To know the concept of dematerialization, depository and depository
participants.
To know the percentage of people satisfied with the services of DP.
To know the investment habit of people in securities
To know how Demat account is helping in trading..
To find out the behavior of respondents towards shares
Methods and Methodology
Sampling Design:
Sampling since segment wise investors in HDFC BANK were available the
overall customers were considered for the study... Hence random sampling
survey method was adopted for the purpose of the study.
Sampling Size: A sample of 100 was chosen for the purpose of the study.
Sample consisted of small investor, large investors and traders of HDFC
BANK.
Field Study: Directly approached respondents.
DATA COLLECTION METHOD:
1. PRIMARY DATA: For a study of this nature primary data is
collected through Questionnaire.
2. SECOUNDARY DATA: This is been is collected through
HDFC Bank’s Report, Magazine & Websites.
MEASUREMENT TECHNIQUE:
For this purpose measurement technique used for survey is
questionnaire to collect information from the respondent
ANALYTICAL TECHNIQUE:
Statistical technique used for measuring the response is in terms of
percentage
Limitations of study
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Since Sample size is only 100,it does give the entire picture..
Information is partly based on secondary data and hence the authenticity of the
study can be visualized and is measurable.
Level of accuracy of the results of research is restricted to the accuracy level
with which the customers have given their answers and the accuracy level of
the answers cannot be predicted.
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ORGANISATION PROFILE
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HDFC is India's premier housing finance company and enjoys an impeccable track
record in India as well as in international markets. Since its inception in 1977, the
Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well over
a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name of
'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.
BROAD AREAS IN WHICH IT OPERATES
The Bank operates in three segments: retail banking, wholesale banking and treasury
services. The retail banking segment serves retail customers through a branch network
and other delivery channels. The wholesale banking provides loans and transaction
services to corporate and institutional customers. The treasury services segment
undertakes trading operations on the proprietary account, foreign exchange operations
and derivatives trading. The Bank operates in India.
Retail Banking
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This segment raises deposits from customers and makes loans and provides advisory
services to such customers. The objective of the Retail Bank is to provide its target
market customers a range of financial products and banking services, giving the
customer a one-stop window for all his/her banking requirements. The products are
backed by service and delivered to the customers through the growing branch
network, as well as through alternative delivery channels like automated teller
machines (ATMs), phone banking, net banking and mobile banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank
Plus and the Investment Advisory Services programs have been designed keeping in
mind needs of customers who seek distinct financial solutions, information and advice
on various investment avenues. The Bank also has an array of retail loan products,
including auto loans, loans against marketable securities, personal loans and loans for
two-wheelers. It is also a provider of depository participant (DP) services for retail
customers, providing customers the facility to hold their investments in electronic
form.
HDFC Bank has launched an international debit card in association with VISA (VISA
Electron) and also issues the MasterCard Maestro debit card. The Bank launched its
credit card business during the fiscal year ended March 31, 2001. By September 30,
2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The
Bank is also engaged in the merchant acquiring business with over 50,000 point-of-
sale (POS) terminals for debit/credit cards acceptance at merchant establishments.
Wholesale Banking
, The Bank's target market ranges from large, blue-chip manufacturing companies in
the Indian corporate to small and mid-sized corporates and agri-based businesses. For
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these customers, the Bank provides a range of commercial and transactional banking
services, including working capital finance, trade services, transactional services and
cash management. The bank is also a provider of structured solutions, which combine
cash management services with vendor and distributor finance for facilitating superior
supply chain management for its corporate customers. It provides cash management
and transactional banking solutions to corporate customers
Treasury Services
Within this business, the bank has three main product areas: Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. Risk
management information, advice and product structures, as well as fine pricing on
various treasury products are provided through the Bank's Treasury team. The
Treasury business is responsible for managing the returns and market risk on this
investment portfolio
CUSTOMER FOCUS
HDFC Bank's mission is to be a World-Class Indian Bank.
The objective is to build sound customer franchises across distinct businesses so as to
be the preferred provider of banking services for target retail and wholesale customer
segments, and to achieve healthy growth in profitability, consistent with the bank's
risk appetite. The bank is committed to maintain the highest level of ethical standards,
professional integrity, corporate governance and regulatory compliance. HDFC
Bank's business philosophy is based on four core values - Operational Excellence,
Customer Focus, Product Leadership and People
CAPITAL STRUCTURE
Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the
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bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect
of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity
is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000
shareholders. The shares are listed on the The Stock Exchange, Mumbai and the
National Stock Exchange. The bank's American Depository Shares are listed on the
New York Stock Exchange (NYSE) under the symbol "HDB
VARIOUS SERVICES
FOREX AND TRADE SERVICES
., HDFC Bank has a range of products and services that one can choose from to
transact smoothly.
The following are different methods of transacting in foreign exchange and remitting
money.
Travellers cheques
Foreign currency cash.
Foreign currency drafts
Cheque deposits
Remittances
Cash to master
Trade services
Foreign services branch locator
Important guidelines and schedules
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All Foreign Exchange transactions are conducted by strictly adhering to RBI guidelines. Depending on
the nature of your transaction or point of travel, you will need to understand your Foreign Exchange
limits.
LOANS
Home Loans
Personal Loans
Two Wheeler Loans
New Car Loans
Used Car Loans
Overdraft Against Car
Express Loans
Loans Against Securities
Loans Against Property
PERSONAL BANKING
Savings Accounts
These Accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever may be the occupation, bank is
confident that customer will find the perfect banking solution. Open an account in
your name (customer’s name) or register for one jointly with a family member today.
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Current Accounts
Now, with an HDFC Bank Current Account, experience the freedom of multi-city
banking! Customer can have the power of multi-location access to his account from
any of banks 500 branches in 220 cities. Not only that, he can do most of his banking
transactions from the comfort of his office or home without stepping out.
At HDFC Bank, it understand that running a business requires time and money, also
that customers business needs are constantly evolving. That's where it come in. It
provides him with a choice of Current Account options to exclusively suit his
business - whatever the size or scope.
Fixed Deposits
Long-term investments form the chunk of everybody's future plans. An alternative to
simply applying for loans, fixed deposits allow the customer to borrow from his own
funds for a limited period, thus fulfilling his needs as well as keeping his savings
secure.
As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs,
Charges or Fees Brochures will attract Service Tax @10% & Education Cess @2% of
the service tax amount effective 10th September 2004. The same will appear as
separate debits in the statements.
PRIVATE BANKING
HDFC Bank offers Private Banking services to high net worth individuals and
institutions. Banks team of seasoned financial and investment professionals provide
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objective guidance backed by thorough research and in-depth analysis keeping in
mind customers financial goals.
Multiple Recognition from Euro money
At HDFC Bank, they have always strived towards providing exceptional service to
each of their esteemed customers. As testament to this dedication, they have earned
the following ranks in a recently conducted Euromoney Survey.
Rated as the best private bank in the super effluent category in India
HDFC Bank Investment Advisory Services - Helping you take your Investment
portfolio further.
Dedicated investment advisor
HDFC Private Banking service involves a high degree of personalization. When
customer avail of this facility, a dedicated Investment Advisor serves him. This
seasoned finance professional adds value to his portfolio by keeping him up to
date with financial markets and investment opportunities
.PAYMENT SERVICES
With HDFC Bank's payment services, one can bid goodbye to queues and paper
work. Its range of payment options make it easy for customer to pay for a variety of
utilities and services.
Verified by visa
If one wants to be worry free for his online purchases. Now he can shop securely
online with yhis existing Visa Debit/Credit card.
Net safe
Now shop online without revealing your(customers) HDFC Bank Credit Card
number.
Prepaid refill
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If a person is a HDFC Bank Account holder and a prepaid customer, he can now
refill his Prepaid Mobile card with this service.
Bill pay
One can pay his telephone, electricity and mobile phone bills at his convenience.
Through the Internet, ATMs, his mobile phone and telephone - with Bill Pay, bank’s
comprehensive bill payments solution
Visa Bill Pay
One can pay his utility bills from the comfort of his home! Pay using his HDFC
Bank Visa credit card and forget long queue and late payments forever
Insta pay
One can Pay his bills, make donations and subscribe to magazines without going
through the hassles of any registration.
Direct pay
Shop or Pay bills online without cash or card. Debit your(customers ) account
directly with bank’s Direct Pay service!
Smart pay(with credit cards)
With Smart Pay, paying customers r electricity, telephone, mobile phone, water
bills, gas and insurance premia payments becomes easy like never before
Visa money transfer
One can transfer funds to any Visa Card (debit or credit) within India at his own
convenience through HDFC Bank's Net Banking facility.
e-Monies Electronic Funds Transfer
Transfer funds from customers account to any account in any Bank in India at
15 locations - FREE of cost!
Online payment of excise and service tax
One can make his Excise and Service Tax payments at his own convenience.
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PREFFERED/CLASSIC BANKING
If a customer expects more from everything, even HDFC bank, will invite him
into the world of exclusive banking. Where he will never again have to wait to be
served. With HDFC Bank Preferred Programme, his comfort always comes first.
Ideal for seasoned professionals or businessmen, this programme will provide him
with a banker dedicated to take care of all his banking and investment needs. It
also means he get preferential rates on various banking products and other
exclusive benefits.
HDFC BANK CLASSIC BANKING
If a person wants to experience banking beyond the ordinary, our HDFC Bank
Classic Programme is just for him.
Becoming an HDFC Bank Classic customer entitles him to a host of benefits,
including a bouquet of preferentially priced products and specialized wealth
management solutions.
AWARDS AND ACHIEVMENTS
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class
Indian Bank". They realized that only a single-minded focus on product quality and
service excellence would help them get there. Today, they are proud to say that they
are well on the way towards that goal.
2006
Business Today Best Bank in India.
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Forbes Magazine One of Asia Pacific's Best 50 companies.
Businessworld Best listed Bank of India.
The Asset Magazine's Triple A Country Awards
Best Domestic Bank.
Asiamoney Awards Best Local Cash Management Bank in Large and Medium segments.
Euromoney Awards "Best Bank" in India.
2005
Asia money Awards Best Domestic Commercial Bank
Asia money Awards Best Cash Management Bank - India .
The Asian Banker Excellence
Retail Banking Risk Management Award in India.
Hong Kong-based Finance Asia magazine
Best Bank India
Economic Times Awards
"Company of the Year" Award for Corporate Excellence.
Asiamoney also named the bank:
Best Local Cash Management Bank in India 2004 - US$11-100m
Best Local Cash Management Bank in India 2004 - >US$501m
Best Local Cash Management Bank in India 1989-2004 (poll of polls)
Best Overall Domestic Trade Finance Services in India 2004
Most Improved company for Best Management Practices in India 2004
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The Business Today-KPMG Survey published in the leading Indian business
magazine Business Today has named HDFC Bank "Best Bank in India" for the third
consecutive year in 2005.
The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best
Trade Finance Bank" in India, in 2006.
HDFC Bank named the "Most Customer Responsive Company - Banking and
Financial Services in The Economic Times - Avaya Global Connect Customer
Responsiveness Awards 2005"
HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A
Country Awards 2005.
HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple
A Country Awards 2004 and 2003.
In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most
Respected Companies" as part of The Business World Most Respected Company
Awards 2004.
In 2004, Forbes Global again named us in its listing of Best Under a Billion, 100 Best
Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.
In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial
Services" - India as part of the Asian Banker Awards 2003.
In 2003, Forbes Global named us in its ranking of "Best Under a Billion, 200 Best
Small Companies for 2003".
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Leading business newspaper The Financial Express named HDFC Bank the "Best
New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.
Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the
"Best Bank in the Private Sector" for the year 2003.
Leading Indian business magazine Business Today in a survey rated us "Best Bank in
India" 2003, and "Best Private Sector Bank" in India in 1999.
NASSCOM and economictimes.com have named us the 'Best IT User in Banking' at
the IT Users Awards 2003.
There have been some other proud moments as well:
London-based Euromoney magazine gave us the award for "Best Bank - India" in
1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001
and 2002
Asiamoney magazine has named us "Best Commercial Bank in India 2002".
For our use of information technology we have been recognized as a
"Computerworld Honors Laureate" and awarded the 21st Century Achievement
Award in 2002 for Finance, Insurance & Real Estate category by Computerworld,
Inc., USA.
Our technology initiative has been included as a case study in their online global
archives.The Economic Times has conferred on us The Economic Times Awards
for Corporate Excellence as the Emerging Company of the Year 2000-01.
Leading Indian business magazine Business India named us "India's Best Bank" in
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2000.
In the year 2000, leading financial magazine Forbes Global named us in its list of
"The 300 Best Small Companies" in the world and as one of the "20 for 2001" best
small companies in the world.
CORPORATE GOVERNARCE
HDFC Bank recognizes the importance of good corporate governance, which is
generally accepted as a key factor in attaining fairness for all stakeholders and
achieving organizational efficiency. This Corporate Governance Policy, therefore, is
established to provide a direction and framework for managing and monitoring the
bank in accordance with the principles of good corporate governance.
BOARD OF DIRECTORS
Mr. Jagdish Capoor, Chairman
Mr. Aditya Puri , Managing Director
Mr. Keki Mistry
Dr. (Mrs.) Amla Samanta
Mr.Anil Ahuja
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Dr. Venkat Rao Gadwai
Mr.Vineet Jain
Renu Karnad
Mr.Aravind Pande
Mr. Ranjan Kanpur(w.e.f January 9, 2004)
Mr. Bobby Parikh (w.e.f.January 9,2004)
VICE PRESIDENT(LEGAL)& COMPANY SECRETARY
Mr. Sanjay Dongre
AUDITOTS
Mr. P.C. Hansotia&Co
(Chartered accountants)
REGISTERED OFFICE
HDFC BANK House
Senapati Bapat Marg
Lower Parel
Mumbai 400013
Tel No: 56521000
Fax No: 24960739
Web –site : www.hdfcbank.co
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INTRODUCTION
Dematerialization or "Demat" is a process whereby your securities like shares,
debentures etc, are converted into electronic data and stored in computers by a
Depository. Securities registered in your name are surrendered to depository
participant (DP) and these are sent to the respective companies who will cancel them
after "Dematerialization" and credit your depository account with the DP. The
securities on Dematerialization appear as balances in your depository account. These
balances are transferable like physical shares. If at a later date, you wish to have these
"Demat" securities converted back into paper certificates, the Depose Depository
functions like a securities bank, where the dematerialized physical securities are
traded and held in custody. This facilitates faster, risk free and low cost settlement.
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In order to dematerialize certificates; an investor will have to first open an
account with a DP & then request for the dematerialization of certificate by filling up
a dematerialization request form (DRF), which is available with DP & submitting the
same along with the physical certificates. The investor has to ensure that before the
certificate are handled over to the DP For demat, they are defaced by marking
“Surrendered for dematerialisation” on the face of the certificates. Depository is
much like a bank and perform many activities that are similar to a bank.
Just as one opens a bank account in order to avail of the services of a bank, an
investor opens a depository account with a depository participant in order to avail of
depository facilities.
Following table compares the two.
Bank Depository
Holds funds in accounts Holds securities in account
Transfers funds between accounts Transfers securities between accounts
Transfers without handling money Transfers without handling securities
Safekeeping of money Safekeeping of securities
Transacting the depository way has several advantages over the traditional system
of transacting using share certificates. Some of the benefits are:
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Trading in demat segment completely eliminates the risk of bad deliveries,
which in turn eliminates all cost and wastage of time associated with follow up
for rectification. This reduction in risk associated with bad delivery has lead to
reduction in brokerage to the extent of 0.5% by quite a few brokerage firms.
In case of transfer of electronic shares, you save 0.5% in stamp duty.
You also avoid the cost of courier/ notarization/ the need for further follow-up
with your broker for shares returned for company objection
In case the certificates are lost in transit or when the share certificates become
mutilated or misplaced, to obtain duplicate certificates, you may have to spend
at least Rs500 for indemnity bond, newspaper advertisement etc, which can be
completely eliminated in the demat form.
You can also receive your bonuses and rights into your depository account as
a direct credit, thus eliminating risk of loss in transit.
You can also expect a lower interest charge for loans taken against demat
shares as compared to the interest for loan against physical shares. This could
result in a saving of about 0.25% to 1.5%. Some banks have already
announced this.
RBI has increased the limit of loans against dematerialized securities as
collateral to Rs2mn per borrower as against Rs1mn per borrower in case of
loans against physical securities.
RBI has also reduced the minimum margin to 25% for loans against
dematerialized securities as against 50% for loans against physical securities.
In short the advantages of opening a demat account are
Shorter settlements thereby enhancing liquidity
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No stamp duties on transfer of securities held in demat form.
Elimination of risk associated with physical certificated such as bad
delivery, fake securities.
Reduction in handling large volume of paper;
Nomination facility
Transmission of securities (such as shares, debentures, bonds and
units) is done by DP eliminating the need to correspond with each
company separately.
Change of name, address, dividend mandate, registration of power of
attorney, transmission etc. can be effected across companies held in
demat form by a single instruction to the DP
Though under the Depositories Act, 1996, there is no compulsion and the
investor can hold shares either in physical or in dematerialized form. But according to
Sebi’s directive certain shares have to be traded compulsorily in dematerialized form
where the seller cannot sell in physical form. However, after he has bought the shares
the investor can ask for rematerialization of the shares.
The Depository Account must be opened with a Depository Participant. NSDL
interfaces with investor trough Depository Participants (DPS). A list of names and
addresses of all Authorized DP’s is available with the NSDL and CDSL and one can
meet any of these DP’s place and make a choice at your based on your comfort and
convenience. Opening a depository account is as simple as opening a bank account.
One can open a depository account with any DP.
To open a Depository Account, you have to submit the duly filled in Account
Opening form along with the following documents:
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Fill up the account opening form, which is available with the DP.
Residential Proof - Copy of Ration Card, Passport, Driving License,
Telephone Bill, Electricity Bill or Rental Agreement.
Sign the DP-client agreement, which defines the rights and duties of the DP
and the person wishing to open the account.
Receive your client account number (client ID).
This client ID along with your DP ID gives you a unique identification in the
depository system.
There is no restriction on the number of depository accounts a person can
open. However, if your existing physical shares are in joint names, you have to open
the account in the same order of names before you submit your share certificates for
demat. A sole holder of the share certificates cannot add more names as joint holders
at the time of dematerializing his share certificates.
However, if the investor wants to transfer the ownership from his individual
name to a joint name, he should first open an account as the sole holder (account A)
and dematerialize the share certificates. He should then open another depository
account (account B) in which he is the first holder and the other person is the second
holder and make an off market transfer of the shares from the account A to account B.
The investor will incur a charge on this transaction. Alternatively, the certificates can
be transferred to the joint ownership and then sent for Dematerialization.
Right now, as per the Companies Act, there is no nomination facility for
shares (whether in the physical or in the electronic form). The nomination facility for
shares can be availed of only when the relevant provisions in the Companies Act are
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amended. NSDL captures the details of the nominee when the account is opened so as
to offer the facility as soon as the relevant amendments are effected in the Law.
A client can choose to open more than one account with same DP. In addition
to this, he has a choice of opening accounts with more than one DP. However a broker
can open just one Clearing Member account per card/ stock exchange for clearing
purpose, but he can still open multiple beneficiary accounts Beneficiary is the
personal account wherein brokers can keep their personal holdings.
Account opening
Any investor who wishes to avail depository services must first open an
account with a depository participant of NSDL The process of opening a Demat
account is very similar to a bank account The investor can open an account with any
depository participant of NSDL An investor may open an account with several DPs or
he may open several account with single There are several DPs offering various
depositary related services. Each DP is free to fix its own fee structure Investors have
the freedom to choose a DP based on criteria like convenience , comfort has to enter
into an agreement with the DP The form and contents of this agreement are specified
by the business rules of NSLD
Types of depositary account depends on the operation to be performed There are
three types of Demat accounts which can be opened with a depositary participant viz
(a) Beneficiary Account (b) Clearing member Accounts and (c) intermediary account
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Types of accounts
Beneficial owner Clearing member Intermediary
Account Account Account
House Non-House
A DP may be required to open three categories of accounts for client –
beneficiary account, clearing member account and intermediary account
A beneficiary account is an ownership account The holder/s of securities in
this type of account own those securities
The clearing member account and intermediary account are transitory account
The securities in these are held for commercial purpose only
A clearing member account is opened by a broker or a clearing member for the
purpose of settlement of trades
An intermediary account can opened by a SEBI registered intermediary for the
purpose of stock leading and borrowing
Beneficiary account
This is an account opened by investor to hold their securities in
dematerialized from with a depository and to carry out the transactions of sale
purchase of such securities in book entry form through the depositary system A
beneficiary account holder is legally entitled for all rights and liabilities attached
to the securities held in that account Therefore, the account is called “beneficial
owner account” a beneficial account can be in the name of individual, corporate,
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HUF, minor, bank, financial institution , trust etc or the broker himself for the
purpose of his personal investments in demat form . The account is opened with a
DP
House account vs. non –house account opened by a DP for the custody
of and transactions in its own investment is referred to as a house account DPS
Are required to open house accounts for their own investments to prevent co-
mingling of asset with that of their clients
Neither the depositories ACT nor the regulations made under the act
lay down any specifications about who can open a beneficiary account since all
beneficial owners are deemed to be member of a company (under section 41 (3) of
the companies act) only those who are eligible to become members of a company
act can open a beneficiary account with a depository Thus all legal entities with
the exception of partnership firms can open an account in the depository system
Documents for verification: For the purpose of verification, all
investors have to submit the following documents along with the
prescribed account opening form
Proof of identity- a beneficiary account must be opened only after obtaining a
proof of identity of the applicant The applicants signature and photograph must be
authenticated by an existing account holder or by the applicant bank or after due
verification made with the original of the applicants valid passport , voter id , driving
license or PAN card with photograph and further
Proof of address- The account opening form should be supported with proof of
address such as verified copies of ration card/ passport/ voter ID/ PAN card/driving
license / bank passbook an authorized official of the participant, under his signature,
shall verify the original documents
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In case any account holder fails o produce the original documents for
verification within the foreside period of 30 days, it must be immediately brought to
the notice of NSDL Failure to produce the original within the prescribed time would
invite appropriate action against such account holder, which could even include
freezing of their accounts
Common information: The process of opening an account with a depository,
nature of such an account, and various factors to be considered for opening a
depository account are explained below. Some details are common to all types of
accounts. These are:
1. Name of the holder
2. Date of birth (for individual accounts)
3. Occupation
4. Address & phone / fax number
5. Bank details like name of the bank, type of the account (current/savings),
accounts number, branch address, MICR, etc
6. PAN number, if applicable
7. Details of nomination
8. Specimen signatures
Beneficiary account- procedure for opening an account
Investor have the choice of selecting a DP based on their convenience ,
comfort ,service, levels , safety, reputation charges , etc they have flexibility to
have more than one account with the same DP or any other DPS No minimum
balance is required for opening a depository account Investor also have the
freedom to close an account with one DP and open another one with any other DP
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The type of the account opening from to field by an investor and the list of
documents required depend on the type of beneficiary account to be opened –
whether it is for NRI’s or corporate or individual Further, the individual account
can be in a signal name or joint name clearing members and brokers have to open
in a beneficiary account if they have to deal with their own holdings
There are several client types in the depository system and different codes are
allotted to them. These are listed below
1. Resident
o Ordinary
HUF
2. Financial institutions
Government –sponsored FI
State financial corporation
Other
3. FIIS
Mauritius –based
Others
4. NRI
Repatriable
Non-Repatriable
Depository receipt
5. Body corporate
Domestic company
Overseas corporate body Repatriable
Government company
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Central government
State government
Co-operative body
NBFC
Non –NBFC
Broker
Foreign bodies
Group companies
Others
OCB-Nonrepatriable
Depository receipt
6. CM (clearing member)
7. Foreign national – national /depository receipt
8. Mutual fund –depository receipt
9. Trust, Bank
10. Intermediary
Clearing Member Account
The entities that are authorized to pay out from a clearing corporation/ clearing
house against traders done by them or their clients are known as clearing members.
CMs are identified in the system through their CM-BP ID. All pay-in and pay-out
transactions are carried out through their accounts.
There are two types of clearing members:
1. All members of a stock exchange popularly know as brokers, are clearing
members;
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2. Custodians who are permitted by the stock exchange to act as a clearing
members.
Procedure to open a clearing member Account
The steps undertaken to open the account are same as those of the individuals,
difference lies in the type of the clearing members has to first register itself with the
depository and obtain a business partner identification number (CM-BP-ID). The
clearing member is identified by the combination of CC-CM-ID given by the DP.
Immediately after opening a clearing account, the DP should inform the
depository the details of clearing members name, CM-BP-ID, client-ID, and date of
the opening the account in DPM system.
The clearing account should only be for clearing and settlement purpose and
nit for any other purpose, e.g., holding of securities received in a settlement received
in a settlement account should be transferred to the transferred to respective beneficial
accounts as soon as possible, but in no case later than the time prescribed by the
depository/ stock exchange/ SEBI in this regard. The opening of clearing members
account constitutes a “standing instruction” to receive credits from the clearing
corporation when there is a pay-out.
The Clearing House deals with ONLY ONE designated account for pay-in
and pay-out with the Broker. This single account allows you to know to which
account securities must be delivered and received from. One Clearing Member Pool
Account is opened per card / Stock Exchange to settle trades in the Dematerialised
form.
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STRUCTURE OF CLEARING ACCOUNT
The clearing account is identified in the depository system by its CM-BP-ID. The
internal structure of the Clearing Account consists of three parts to facilitate easy
book keeping
Arrangement of clearing account
Pool Account
Delivery Account
Receipt Account
Clearing Corporation (CC)/Clearing House (CH)
Clearing Account
Delivery Account Pool AccountReceipt Account
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Selling client
BuyingClient
“A Study On Customer Satisfaction Towards Depository Participants”
a) Pool Account: It has two roles in clearing of Securities, viz., before pay-in,
the selling client of the clearing member transfers securities from his client
Account to the Clearing Account. After receiving pay-out, the clearing
member transfers securities from his Clearing Account to the account of the
buying client.
b) Delivery Account: The securities before pay-in, the securities move from the
Pool Account To the Delivery Account. The movement will be automatic if
clearing member has given such an undertaking to its Clearing If the Clearing
Corporation. It will be effected on the basis of instruction received from the
Clearing house/ Clearing Corporation. If the clearing house/ Clearing
Corporation has not taken such undertaking, the clearing member to its DP
must submit a delivery instruction form. At the time of pay-in, NSDL flushes
out the securities in the Delivery Account & transfers the same to the Clearing
house/ Clearing Corporation.
c) Receipt Account: On pay-out day, the Clearing house/ Clearing Corporation
transfers securities to the Pool Account (to The extent of net receipt) through
the Receipt Account. This account can be used to trace details of settlement-
wise receipt of the clearing member.
Market Type & Settlements Number : A clearing account can be broken into
compartment and sub-compartments. Each compartment can be called as
market type and be as settlement number. Hence, if securities are moved from
any clearing account, apart from the CM-BP-ID, the combination of market
type and settlement number must be provided. A diagrammatic illustration of
the internal structure of a clearing account is depicted below
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Settlement calendar: Settlement calendar is decided by the stock exchange. It
contains details for each market type & settlement number. The detail for each
settlement consists of the date of trading, pay-in time, pay-out date, settlement
number etc. Clearing member can obtain the settlement calendar from its own stock
exchange. This is also available in the depository software of the DP.
MARKET TRANSFERS: Any trade, which is cleared & settled by
the clearing house/ Clearing Corporation of the stock exchange,
is considered as a market trade in the depository. Consequently,
the transfers routed through the clearing account. Typically, a
market trade has the following legs of transactions.
a. Receiving securities for pay-in from clients (client to clearing members)
b. Delivering securities to the clearing house/clearing corporation for pay-in.
(clearing house/clearing corporation)
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Physical Rolling Action Rolling
2000014Delivery Pool Receipt
2000015Delivery Pool Receipt
2000248Delivery Pool Receipt
9000152Delivery Pool Receipt
9000153Delivery Pool Receipt
9000152Delivery Pool Receipt
2000016Delivery Pool Receipt
2000249Delivery Pool Receipt
2000248Delivery Pool Receipt
Clearing Account(IN503265)
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c. Receiving pay-out from the clearing house/clearing corporation. (Clearing
House/clearing Corporation to clearing member)
d. Distribution of pay-out to clients. (Clearing member to client)
A diagrammatic illustration of the settlement of a market trade in a depository is
depicted below:
D C
A B
Receiving securities for pay-in from clients (client to clearing member)
A selling client of a clearing member (broker) would transfer securities
from his beneficial owner account to the clearing account of the clearing
member for onwards delivery to the clearing house/clearing corporation. This
transfer is effected by his DP on the basis of a delivery instruction provided by
the selling client. A diagrammatic Illustration for securities received for pay-in
from clients is depicted below:
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DP of Seller’s CM
DP of Buyer’s CM
DP of Seller
NSDL CH/CC
DP of buyer
NSDL
DP1 DP2
Clearing Member
“A Study On Customer Satisfaction Towards Depository Participants”
Indicates flow of securities
Indicates paper /electronic instruction given.
OFF MARKET TRANSFERS: Any trade, which is not cleared and settled
by the clearing house/clearing corporation of the stock exchange, is considered
as an off-market trade in the depository. Consequently, the transfer is not
routed through the clearing account. Such transfers take place directly between
two beneficiary accounts. Both buyer and seller may open account either with
the same DP or with different DPs. The buyer and seller will trade amongst
themselves and later on will exchange money, i.e., settle funds amongst
themselves. The selling client would deliver securities from its beneficiary
account to the beneficiary account of the buying client. This transfer is
effected by the DP of the selling client on the basis of a delivery instruction
provided by the selling clients. A diagrammatic illustration of the settlement of
an off-market trade in depository is depicted below:
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Seller A
AAAller A
Seller C
Seller B
“A Study On Customer Satisfaction Towards Depository Participants”
Indicates flow of securities
Indicates paper /electronic instruction given.
Depository:
A Depository is a Company where the shares of an individual are held in the
electronic form, at the request of the shareholder. This eliminates the physical form of
holding. IDBI, UTI, SBI and NSE promoted the National Securities Depository
Limited (NSDL). The Central Securities Depository Limited (CDSL) was promoted
by BSE.
Your money may be held in the form of liquid cash at your home or may be
deposited in a bank. The bank holds your funds in the electronic form and
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subsequently debits or credits the account. Depending on your issuance of cheques or
deposit of cheques. The advantages of safety and convenience of dealing with a Bank
overweigh the reasons for holding liquid cash in your home. Your financial assets
such as Equity Shares may be compared to the above example. You may hold
physical share certificates in your home and be exposed to the various risks of lack of
safety, mutilation, loss etc. Alternatively, you may deposit your shares in an
organization called a Depository, which holds your shares in the electronic form. You
can dematerialize shares of only those companies that have signed agreement to
dematerialize their shares with the depository. You cannot dematerialize shares if they
are not in your name, i.e. shares held in street name (market deliveries) cannot be
dematerialized. However, when you send shares to the registrar to be transferred to
your name you can request that you want those shares in dematerialized form.
In India depositories are required to be registered with SEBI and are governed
by the provision of the Depositories Act, 1996 and regulation and bylaws framed for
depositories by the SEBI.
The depositories work in a completely computerized environment with
electronic linkages with the point of origination for the transactions that may cause
the change in ownership of securities. A depository will be electrically linked with
the Register of the members maintained by the company/registrar, clearing and
settlement system in the stock exchanges, stock lending organization (if in existence),
custodians of securities, depository participants and brokers.
Functions of Depository
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Dematerlisation: one of the primary functions of depository is to eliminate or
minimize the movement of the physical securities in the market. This is achieved
through dematerialization of securities. Dematerlisation is the process of converting
securities held in physical form into holdings in book entry form.
Account Transfer: The depository gives effect to all transfers resulting from the
settlement of trade and other transactions between various beneficial owners by
recording entries in the accounts of such beneficial owners.
Transfer and Registration: A transfer is the legal change of ownership of a security in
the records of the issuer. For effecting a transfer, certain legal steps have to be taken
like endorsement, execution of a transfer of security occurs merely by passing book
entries in the records of the depositories, on the instructions of the beneficial owners.
Corporate Actions: A depository may handle corporate actions in two ways. In the
first case, it merely provides information to the issuer about the persons entitled to
receive corporate benefits. In the other case, depository itself takes the responsibility
of distribution of corporate benefits.
Pledge and hypothecation: Depositories allow the securities placed with them to be
used as collateral securities in physical form to the lender or its custodian. These
securities are verified for authenticity and often need to be transferred in the name of
lender. This has a time and money cost by way of transfer fees or stamp duty. If the
borrower wants to substitute the Pledging/Hypothecating the securities makes the
process very simple and collateral accounting through book entries in the records of
the depository.
Linkage with clearing system: whether it is a separating clearing corporation attached
to a stock exchange or a clearing house (department) of a stock exchange, the clearing
system performs the function of ascertaining the pay-in (sell) or pay-out (buy) of
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brokers who have traded on the stock exchange. Actual delivery of securities to the
clearing system from the selling and delivery of securities from the clearing system to
the buying broker is done by the depository. To achieve this, depositories and the
clearing system should be electronically linked
Depository Participant:
Depository Participant (DP) is an organization that acts as an Agent of the
Depository and interacts with the investor. A DP is responsible for maintaining your
securities account and operating it only under your written instructions. The
Depositories Acts mandates that investors can use Depository facilities only through
DP’s. The distribution channel and geographical spread of the DP’s offices allows
you to access the Depository at a low cost. DP can only access their own clients'
information. They cannot access the client information of any other DP. The
information of your holdings in the account is completely confidential& it is similar
to your account balance in a bank.
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:
1. Convenience - Proximity to your office/residence, business hours.
2. Comfort - Reputation of the DP, past association with the organization,
whether the DP is in a position to give the specific service you may need?
3. Cost - The service charges levied by DP and the service standards.
Individual accounts can be opened by Ordinary Resident, HUF, NRI ~
Repatriable and NRI Non-Repatriable. Body Corporate, Banks, Trusts, Financial
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Institutions, Foreign Institutional Investors, and Overseas Commercial Banks etc can
open corporate Accounts. An account can be opened in the name of HUF in a similar
way to individual account and mentioning the account category as HUF. However,
Kartha of HUF will sign the application, agreement and all transactions under the
account
An account cannot be opened in the name of the firm. It has to be opened in
the name of any of the Partner as an Individual account only.
Procedure for Dematerialization
Dematerialisation Process1
2A 2 5
3
4
Steps:
1. Client/ investor submits the DRF (Demat Request Form) and Physical certificates
to DP. DP checks whether the securities are available for demat. Client defaces the
certificates by stamping ‘Surrender for Dematerlisation’. DP punches two holes on the
name of the company and draws two parallel lines across the face of the certificate.
2.DP enters the demat request in his system to be sent to NSDL. DP dispatches the
physical certificates along with the DRF to the R & T Agent.
3.NSDL records the details of the electronic request in the system and forwards the
request to the R&T Agent.
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Investor
R & T Agent
DP
NSDL
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4.R&T Agent, on receiving the physical documents and the electronic request, verifies
and checks them. Once the R&T Agent is satisfied, Dematerialization of the
concerned securities is electronically confirmed to NSDL.
5.NSDL credits the dematerialized securities to the beneficiary account of the investor
and intimates the DP electronically. The DP issues a statement of transaction to the
client.
A. DPs provide Dematerlisation request forms (DRF) to their clients.
B. The client completes the DRF in all respect 7 submits to the DP along with the
security certificates to be dematerialized.
C. The DP checks the DRF for validity, completeness and correctness. The following
points should be checked particularly:
The security certificate sought to be dematerialized are attached
to DRF.
The attached security certificates are marked (defaced) with the
words ‘surrendered for dematerialization’. This is a
precautionary measure to prevent misuse of share certificates
by anyone.
The certificate are not mutilated or defaced in a manner
affecting any material information.
The name of client on DRF and the certificates is exactly the
same as in the client’s account in DPM. However, minor
variations in the name (like abbreviated name, initials in the
place of first name, middle name, minor name mistake in the
name) may be permitted if it can be reasonably established that
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both names are of the same person. The permitted variations
refer to initials not being spelt out fully or put prior to after the
surname. In such cases, if the signature on the DRF matches the
specimen signature available with the DP, the securities can be
considered for demat.
Details like security type, face value, paid-up value, pari passu
status, certificate numbers, distinctive numbers, number of
certificates, total quantity of securities and lock-in statues are
filled-in correctly.
D. If the DRF & the accompanying security certificates are found in order, the DP
should accept the DRF and certificates.
E. If DRF and the accompanying security certificates are not found in order, the DP
should return the DRF and certificates.
F. The DP should enter the dematerialization request in the DPM. DPM generates a
request number (DRN), which should be mentioned on DRF.
G. An authorized person, other than one who entered the DRF details in the DPM,
should verify the details of DRN and release a request to NSDL.
H. Once the DP has received the certificates defaced by investor, the DP punches two
holes on the name of the issuer or its R&T Agent for dematerialization. DRF and
enclosures have to be sent at the “address to which physical certificate to be sent”
communicated by NSDL. The forwarding letter should refer to the allotted DRN and
should refer to the allotted DRN and should Be sent within seven days of accepting it
from the client.
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I. The issuer or its R&T Agent verify the DRF & the accompanying certificate for
validity, completeness and correctness. They also match the details with the
intimation received from NSDL against the same DRN.
J. In case DRF is not found in order, the issuer or its R&T Agent send an objection
memo to the DP, with or without DRF & security certificates depending upon the
reason for rejection.
K. DRFs & Certificate are sent back on the following grounds:
DRN does not match with message from DM
Quantity of actual securities is less than DRF
Quantity of actual securities is more than DRF
L. DRF & certificate are not sent back:
If the certificate is fake
If the certificate has been reported to be stolen
If the duplicates of the original certificates sent for demat have already been
issued
If the endorsements are forged
If the securities are not in the name of the account holder as per DRF
If the details of the certificates do not pertain to the R&T Agent
If the signatures differ
If there is any court order on the securities
If the certificate are received after 15 days of the electronic request.
M. The DP informs the client accordingly & requests removal of reasons for
objection. The DP removes these or provides additional information to the
issuer or its R & T Agent within 15days of receiving the objection memo.
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N. The DP, if the client so requires, may generate a new dematerialisation request &
send the securities again to the issuer or R &T Agent.
Precaution to be taken while processing DRF
Ensure account to have the same sequence of names of holders and name
structure as printed on the physical certificate.
Ensure ISIN is activated
Separate DRF for:
Partly & fully paid-up shares
Locked & free holding
Holdings locked in for different reasons
Locked in holdings having different release date
Different ISINs of the company
ISIN to be entered by DP.
All joint holders to sign DRF.
Check DRF form with details on certificate.
Demat process
The demat process requires defacing of securities which will make the security
certificate undeliverable unless the demat formalities are completed. Therefore, the
client should be assisted in ascertaining whether the securities in question are
available for demineralisation. Clients should be helped in filling up the demat request
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properly. Demat rejection causes great inconvenience to the client. DP should attend
to this area with care and caution. One of the important reasons for demat rejection is
signature mismatch. Taking the following precaution can reduce this:
If the client is aware that the signature with the company& signature of the
client should be advised to the register the new signature.
If the signature is slightly different, client should be advised to sign as per the
signature that was recorded by the company and as recorded with the DP.
Ensure dispatch of DRFs and certificate to R &T Agents within seven days.
Client may be encouraged to use the Transfer-cum-demat facility if it is
offered by the company. They should be made aware of the procedures of the
scheme.
In case of joint holdings, the clients should be informed about the availability
of Transposition cum Demat facility.
Closure of account:
Closure on Client’s Request- A DP can close a depository account on receipt of an
application in the prescribed format. The application should be made by the account.
In case joint-holders. An account can be closed sought to be closed, the following
steps are necessary.
a. Re-materialization of all securities standing to the credit of the same account
making the application for closure; or
b. Transferring the balance to the credit of another account opened by the same
account holder(s) either with the same participant or with a different participant.
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Before closing the account the DP should ensure that all pending transactions have
been settled. The request for closure should be processed only after ensuring that there
is no balance lying in the account.
Consolidations of accounts- Some clients have opened multiple accounts to
dematerialize their shares held in multiple combination and sequence of names.
However, they may not need so many accounts after they have dematerialized their
shares and may want to bring all their share holdings into one or fewer accounts. This
can be achieved by using normal off Market transfer instruction.
Closure by DP – the DP may also initiate closure of a client’s account if the client has
defaulted in performing should give sufficient notice to the client before initiating
closure of his account. The notice should clearly state the reasons for closure of his
account. The notice should clearly state the reasons for closure of account. The
process of closing account in such a case is the same that of client-initiated closure.
Closure/ Shifting of Clearing Account –A clearing member may transfer its clearing
account from one DP to another DP. For this, simultaneously applications have to be
made for closure of account to the earlier DP and for opening of new clearing member
account to the new DP. On receipt of the application, the new DP forwards the
application to the depository for approval and allotment of a new CM-BP-ID is
allotted, the new DP opens a new Clearing account and intimates the depository about
the new client- ID. On receipt of intimation from the intimates the clearing member.
All pay-out of securities, subsequent to the closure of old clearing account, take place
in the new account. Pg-17-3
Trading & Settlement:
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This is the an area where the DP must the DP must take immense care while accepting
and processing request listed below should from the account of his client to another
account. The aspects listed below should be kept in mind.
Ensure that the delivery instruction book given to each client has pre-printed
serial number and client-ID.
Inform clients about the pay-in deadline of the stock exchange and the
deadline of the DP.
Settlement
The settlement of trades in the stock exchanges is undertaken by the clearing
corporation (CC)/ clearing house (CH) of the corresponding stock exchanges. While
the settlement of dematerialized securities is effected through depository, the funds
settlement is effected through the clearing banks. The clearing members directly with
the CC/ CH settle the physical securities.
Exclusive demat segment follows rolling settlement (T+5) cycle and the unified
(erstwhile - physical) segment follows account period settlement cycle. In case of
rolling settlement cycle, the account period is reduced to one day.
In case of settlement of trades done in exclusive demat segments, the pay-in
and pay out of funds and securities are effected on the same day afternoon and
evening (same day) thus reducing the blockage of funds and limiting exposure
to the clearing corporation.
Settlement of funds is effected through the clearing banks and depository
plays no role in this.
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Settlement of securities is effected through NSDL depository system.
Clearing and settlement of the regular market trades is effected through the
clearing members of the clearing houses of respective stock exchanges. All
trading members of stock exchanges are clearing members of clearing houses.
In addition, for settlement of institutional trades, custodians are also allowed
to act as clearing members.
Clearing members of clearing house, dealing in dematerialized securities are
expected to open a clearing account with any DP for the purpose of settling
trades in dematerialized securities. As, in the mixed (unified) segment, there is
a possibility for all clearing members to receive dematerialized securities, they
are expected to open clearing accounts.
If there is any short delivery at the time of pay-in of securities, these short
positions are auctioned in the Demat segment as done in the Unified (erstwhile-
physical) segment.
Selling And Buying Of Shares: Selling dematerialized shares in stock exchanges
is similar to the procedure for selling physical shares. Instead of delivering physical
shares to the broker, you instruct your DP to debit your account with the number of
shares sold by you and credit your broker's clearing account.
For this, a delivery instruction has to be given to your DP in a standardized format,
which will be available with your DP.
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In short, for selling demat shares;
You can sell shares in any of the stock exchanges linked to a depository
through a broker of your choice.
Give an instruction to your DP to debit your account and credit your broker's
clearing member pool account. (this is a depository account used exclusively
for settling transactions by a broker)
On the pay-in day, your broker gives instruction to his DP for delivery of the
shares to clearing corporation of the relevant stock exchange.
The broker receives payment from the clearing corporation
You receive payment from your broker for the sale in the same manner you
would receive payment for a sale in the physical mode.
Buying Demat Shares: The procedure for buying dematerialized shares in stock
exchanges is similar to the procedure for buying physical shares. When you want to
purchase shares in electronic form, you have to instruct your broker to purchase the
dematerialized shares from the stock exchanges linked to a depository.
Once the order is executed, you have to instruct your DP (vide a simple format
which is available with the DP) to receive securities from your broker's clearing
account.
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Alternatively, you may give a standing instruction to receive credits into your
account and do away with giving a separate receipt instruction each time you expect a
credit. You have to ensure that your broker too gives a matching instruction to his DP
to transfer the shares purchased on your behalf into your depository account.
You should also ensure that your broker transfers the shares purchased from
his clearing account to your depository account, before the book closure. This is really
important because shares that remain in the clearing account of the broker on the book
closure/ record date will not be eligible for corporate benefits.
In brief, the transactions relating to purchase of shares are:
You can purchase shares in any of the stock exchanges connected to a
depository through a broker of your choice and make a payment to your
broker;
Your broker receives credit in his clearing account with his DP on the pay-out
day;
Broker gives instructions to his DP to debit his clearing account and credit
your account;
You instruct your DP for receiving credit into your depository account either
through a specific receipt instruction or using the "standing instruction"
facility.
In case you are not using the "standing instruction" facility then, your
depository account is credited only if the instructions given by you and your
broker match.
Other Services
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Besides demat and trading Depositories also offer other services, these are:
o Pledging/ hypothecation of dematerialized securities.
o Electronic credit in public offerings of companies.
o Receipt of non-cash corporate benefits such as bonus, rights in electronic
form.
o Stock lending and borrowing.
o Transmission of securities.
Pledging: Dematerialized shares could be pledged; in fact, this is more advantageous
as compared to pledging share certificates.
To pledge your Demat shares
Both you (pledgor) as well as the lender (pledgee) must have depository
accounts.
You must initiate the pledge by submitting the details of the securities to be
pledged in a standard format (available with DPs).
The pledgee should confirm the request through his DP.
Once this is done, your securities are pledged
All commercial documentation between the pledgor and the pledgee are
handled outside the depository system.
After you have repaid your loan, you can request for a closure of pledge by
instructing your DP through a standard format. The pledgee on receiving the
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repayment as well as the request for closure of pledge will instruct his DP
accordingly.
Even the locked-in securities can be pledged, however they cannot be invoked before
the lock-in release date.
Even after the securities are pledged, the pledgor continues to remain the beneficiary
holder of those securities and will receive benefits of a corporate action, if any.
Initial Public Offerings: Credits for public offers can be directly received into
demat account. In the public issue application form of depository eligible companies,
there will be a provision to indicate the manner in which securities should be allotted
to the applicant. All you have to do is to mention your client account number and the
name and identification number of your DP.
Any allotment due to you will be credited into your account.
If the applicant is allotted securities in dematerialized form, but the details
regarding the beneficiary account are incomplete/ wrong, the person will get physical
delivery of allotted securities.
If securities were allotted in the dematerialized form, these would be credited
to applicant’s account any day between allotment date and listing date, at the
discretion of the company.
The issuer company/ their R&T agent will forward the applicant the allotment
advice giving the number of shares allotted in dematerialized form. Through this you
can come to know that you have been allotted shares.
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An amendment to the company law requiring all future public issues above
Rs100mn to compulsorily offer securities in dematerialized form is awaiting
legislative approval. After this all the issues above Rs100mn will require investors to
trade only in demat way.
Partly paid up and fully paid up shares in the depository, will be given
separate ISINs (International Securities Identification Number). These are also traded
separately at the stock exchanges.
The company issues call notices to the beneficial holders of securities in the
electronic form. The details of such beneficial holders will be provided to the issuer/
their R&T agent by NSDL. After the call money realization, issuer/ their R&T agent
will electronically convert the partly paid up shares to fully paid up shares.
Receipt Of Cash/ Non-Cash Benefits: When any corporate event such as rights or
bonus or dividend is announced for a particular security, depository will give the
details of all the clients having electronic holdings in that security as of the record
date to the registrar. The registrar will then calculate the corporate benefits due to all
the shareholders. The disbursement of cash benefits such as dividend/ interest will be
done directly by the registrar. In case of non-cash benefits, depository will directly
credit the securities entitlements in the depository accounts of all those clients who
have opted for electronic allotment based on the information provided by the registrar.
The bonus/ rights issue against holding in dematerialized form can be either in
the physical/ dematerialized form as per the choice of the investor. If no choice is
given, by default, the securities will be issued in the physical form.
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Even if an investor has holdings in physical form, he can receive the bonus/
rights issue against this in the dematerialized form.
In case of fractional part, as in the physical segment, it would be paid in cash
and the remaining whole part would be credited to the investors account.
The statement of holding and transaction statement is sent by the investors DP,
it will show the bonus/ rights credit into investor’s account. This report is sent to the
investor every fifteen days. In addition, an allotment advise will be send by the issuer/
their R&T agent for bonus/ rights entitlement.
Stock Lending and borrowing: Through the depository account securities in the
demat form can be easily lent/ borrowed. Securities can be lent or borrowed in
electronic form through an approved intermediary, who has opened a special
'intermediary' account with a DP.
To Lend Securities: You have to instruct your DP through a standard format (which
is available with your DP) to deposit your securities with the intermediary.
If the intermediary accepts your deposit of securities, the securities will be moved
from your account into the intermediary's account. If you wish to recall the securities
lent by you, you can make a request vide a standard format available with your DP.
To Borrow Securities: You have to instruct your DP through a standard format
(which is available with your DP) to borrow securities from the intermediary.
If the intermediary accepts your request, the securities will be moved from the
intermediary's account to your account. If you wish to return the securities borrowed
by you, you can make a request vide a standard format available with your DP.
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Transmission Of Securities: Transmission of securities due to death, lunacy,
bankruptcy, and insolvency or by any other lawful means other than transfer is also
possible in the depository system. In the case of transmission, the claimant will have
to fill in a transmission request form, (which is available with the DP) supported by
valid documents. The DP, after ensuring that the application is genuine, will transfer
securities to the account of the claimant. For this, the claimant must have a depository
account. The major advantage in transmission of dematerialized holdings is that the
transmission formalities for all securities held with a DP can be completed in one go,
unlike in the case of share certificates, where the claimant will have to interact with
each issuing company or its R&T Agent.
In case where the deceased was one of the joint holders in the Client account,
the surviving client(s) shall be the person(s) recognized by depository as having title
to the securities held in that joint Client account. In case where the deceased was a
sole holder of the Client account, his legal heir(s) or the legal representative(s) will be
the person(s)
recognized by depository as having title to the securities held in that sole Client
account.
Security: National Security and Depository Limited claims to have undertaken
sufficient security measures. These measures are:
A DP can be operational only after registration by Sebi, which is based on the
recommendation from NSDL and Sebi’s own independent evaluation. Sebi has
prescribed criteria for becoming a DP in the regulations.
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DPs are allowed to effect any debit and credit to an account only on the basis
of valid instruction from the client.
Every day, there is a system driven mandatory reconciliation between the DP
and NSDL.
There are periodic inspections into the activities of both DP and R&T agent by
NSDL. This also includes records based on which the debit/ credit are
effected.
The data interchange between NSDL and its business partners is protected by
standard protection measures such as encryption. This is a SEBI requirement.
There are no direct communication links between two business partners and
all communications between two business partners are routed through NSDL
All investors have a right to receive their statement of accounts periodically
from the DP.
Every month NSDL forwards statement of accounts to a random sample of
investors as a counter check.
In the depository, the depository holds the investor holdings on trust.
Therefore, if the DP goes bankrupt the creditors of the DP will have no access
to the holdings in the name of the clients of the DP. These investors can then
either dematerialize their holdings or transfer them to a different account held
with another DP.
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Investor grievance: All grievances of the investors are to be resolved by the
concerned DP. If they fail to do so the investor has the right to approach
NSDL.
Insurance Cover: NSDL has taken a comprehensive insurance policy to protect
the interest of the investors in cases of failure of the DP to resolve a genuine
loss. The details of the policy is as under:
Upper limit per claim: Rs200mn.
Number of claims allowed: unlimited
Minimum value of the claim: Rs150, 000
To cover claims valued less than Rs150, 000 NSDL has an investor protection
fund in place.
Besides all these safety measures efforts have been done to make this electronic
system foolproof.
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Analysis of customer satisfaction
1.Scheme of holding shares
Small investors Longterm investors Traders51 32 1751% 32% 17%
Interpretation:
The above table and graph shows that most of the investors are small investors (that is
about 51%. And about 32% are long term investors , and 17% are traders.
2 Awareness about new services will come to be known by
Friends Newspaper Broker Agents Other21 17 17 39 621% 17% 17% 39% 6%
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Interpretation:
The above table and chart shows that the respondents aware of the following services
is mainly from agents that is about 39%,and from friends is 21%,and from
newspaper is 17%, and broker is 17% and from others is 6%.
3a.Schemes/Services awareness and the availed services
Schemes/Services I have availed the service I am aware of the serviceShare trading 80 20% of respondents 80% 20%
Interpretation:
From the above graph and chart it shows that 80% of the customers have availed the
service of share trading and 20% of them are aware of the service.
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3b. Settlement(selling/Purchasing)
Service/Scheme I have availed the service I am aware of the serviceSettlement 65 35
65% 35%
Interpretation:
From the above graph and chart it shows that 65% of the respondents have availed the
service(Settlement) and 35% are aware of the service.
3c. Freezing/Defreezing
Service/Schemes I have availed the service I am aware of the serviceFreezing/Defreezing 5 95
5% 95%
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Interpretation:
From the above graph and chart 95% of the respondents are aware of the
service(Freezing/Defreezing) and 5% of them have availed the service.
3d.Loan against shares
Service/Scheme I have availed the service I am aware of the serviceLoan and shares 20 80
20% 80%
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Interpretation:
From the above table and chart is shows that 20% of the respondents have availed the
service (Loan against shares) and 80% are aware of the service
3e. Sell ‘n’ cash
Service/Scheme I have availed the service I am aware of the serviceSell ‘n’ cash 67 33
67% 33%
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Interpretation:
From the above graph and chart it shows that 67% of the respondents have availed the
service(Sell ‘n’ Cash) and 33% of them are aware of the service
4a. Express your level of satisfaction towards the following schemes/services.
Scheme/Service
Extremely satisfied
Satisfied
Neither satisfied/Unsatisfied
Unsatisfied
Extremely Unsatisfied
Demat 33 36 13 18 033% 36% 13% 18% 0%
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Interpretation:
From the above graph and chart it shows that 33% are extremely satisfied with
Demat services and 36% are satisfied and 13% are neither satisfied/Nor satisfied
and 18% of them are unsatisfied.
4b.Settlement(Selling/Purchasing)
Scheme/Service Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Settlement 16 37 28 15 416% 37% 28% 15% 4%
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Interpretation:
From the above table and chart it shows that 16% of the respondents are extremely
satisfied with the service of settlement and 37% are satisfied and 28% are neither
satisfied/Nor unsatisfied,15% are unsatisfied and 4% are extremely unsatisfied.
4c. Freezing/Defreezing of the account
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Scheme/Service Extremely satisfied
Satisfied
Neither satisfied/Nor unsatisfied
Unsatisfied
Extremely unsatisfied
Freezing/Defreezing
9 20 51 15 5
9% 20% 51% 15% 5%
Interpretation:
The above table and graph it shows that 20% of the respondents are satisfied with the
service of freezing/Defreezing,9% are extremely satisfied,51% are neither satisfied
/Nor unsatisfied 15% unsatisfied and 5% are extremely unsatisfied.
4d.Loan against shares
Scheme/Service Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Loan against shares
11 25 45 15 4
11% 25% 45% 15% 4%
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Interpretation:
The above table and figure shows that 11% of the respondents are extremely satisfied
,25% are satisfied,45% neither satisfied or unsatisfied,15% unsatisfied,4% are
extremely unsatisfied
4e.Sell ‘n’ cash
Scheme /service
Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Sell’n’cash 20 35 33 7 520% 35% 33% 7% 5%
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Interpretation:
The above chart and table shows that 20% of the respondents are extremely satisfied
with the service of sell ‘n’ cash and35% are satisfied,33% are neither satisfied nor
unsatisfied, 7% are unsatisfied and 3% are extremely unsatisfied
4f.Share Trading
Scheme/service Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Share trading 15 34 26 15 1015% 34% 26% 15% 10%
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Interpretation:
From the above table and chart it shows that 15% are extremely satisfied , 34% are
satisfied ,26% are neither satisfied nor unsatisfied,15% are unsatisfied,10% are
extremely unsatisfied.
4h.Associated shares
Service/scheme Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Associated shares
17 38 38 7 0
17% 38% 38% 7% 0%
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Interpretation:
From the above chart and table it shows that 17% are extremely satisfied,38% are
satisfied,38% are neither satisfied nor unsatisfied, 7% are unsatisfied.
4i . Periodic statements
Scheme/service Extremely satisfied
Satisfied Neither satisfied/nor unsatisfied
Unsatisfied Extremely unsatisfied
Periodic statements
18 50 32 0 0
18% 50% 32% 0% 0%
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Interpretation:
From the above chart and table it shows that 18% of the respondents are extremely
satisfied with the service of (periodic statements) 50% are satisfied, 32% are neither
satisfied nor unsatisfied.
4j. Telephone queries:
Scheme/service Extremely satisfied
Satisfied Neither satisfied/nor unsatisfied
Unsatisfied Extremely unsatisfied
Telephone queries
9 46 25 11 9
9% 46% 25% 11% 9%
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Interpretation:
From the above chart and table it shows 46% are satisfied by telephone queries,9%
are extremely satisfied,25% are neither satisfied ,11% are unsatisfied,9% are
extremely unsatisfied.
4k. Co-operation by staff:
Service Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Co-operation by staff
21 42 33 4 0
21% 42% 33% 4% 0%
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Interpretation:
From the table chart and table it shows that 21% are extremely satisfied regarding the
co-operation by staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4%
are unsatisfied.
4l. Bills acceptance
Service Extremely satisfied
Satisfied Neither satisfied/Nor unsatisfied
Unsatisfied Extremely unsatisfied
Bills acceptance
12 36 28 18 6
12% 36% 28% 18% 6%
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Interpretation:
From the above table and chart it shows that 12% of the respondents are extremely
satisfied,36% are satisfied,28% are neither satisfied/Nor unsatisfied,18% are
unsatisfied,6% are extremely unsatisfied
5.Problems faced while dealing with DP.
Frequent reminders are given
17 17%
Irregular receipt of holding/transaction statement
28 28%
Improper attention given to enquiries
10 10%
Improper format of holding/Transaction statement
0 0%
Billing problems 15 15%Inadequate information 30 30%others 0
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Interpretation:
From the above table and chart it shows that 17% are of the opinion that when they
face any problem while dealing with DP then frequent reminders are given,28% of
them face problem in irregular receipt of holding/transaction statement,10% are of the
opinion that improper attention is given to the enquiries,15% face billing
problems,30% because of inadequate information.
6.Tariff structure
Very high high Reasonable Low Very low35 30 27 8 035% 30% 27% 8% 0%
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Interpretation:
From the above chart and table it shows that 35% of the respondents say that the tariff
structure is very high,30% say that it is high, 27% say that it is reasonable,8% say that
it is low.
7.Rate of satisfaction for DP services
1 2 3 4 5 60% 20% 40% 60% 80% 100%11% 24% 25% 32% 8% 0%
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Interpretation:
24% of the respondents are 20% satisfied with the services of DP,25% of the
respondents are 40% satisfied with the services of DP, and 32% are 60% satisfied
with the services of DP.
8.Preference of own DP over other DP
1 2 3 4 5Quality service
Rates charged Nothing in particular
Safety Reach
30.4 9.8 34.8 25.0 030.4% 9.8% 34.8% 25% 0%
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Interpretation:
30.4% of the respondents prefer DP over other DP’s because of quality service,9.8%
because of rates charged,34.8% for nothing in particular, and 25% for safety.
FINDINGS:
Most of the investors are small investors (that is about 51%. And about 32%
are long term investors , and 17% are traders.
The respondents aware of the new services provided by HDFC BANK are
mainly from agents that is about 39%,and from friends is 21%,and from
newspaper is 17%, and broker is 17% and from others is 6%.
From the analysis it is clear that 33% of the respondents are extremely
satisfied with Demat services and 36% are satisfied and 13% are neither
satisfied/Nor satisfied and 18% of them are unsatisfied.
From the analysis it clearly states that 16% of the respondents are extremely
satisfied with the service of settlement(Selling/Buying) and 37% are satisfied
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and 28% are neither satisfied/Nor unsatisfied,15% are unsatisfied and 4% are
extremely unsatisfied.
20% of the respondents are extremely satisfied with the service of sell ‘n’
cash and35% are satisfied,33% are neither satisfied nor unsatisfied, 7% are
unsatisfied and 3% are extremely unsatisfied
46% of the respondents are satisfied by telephone queries,9% are extremely
satisfied,25% are neither satisfied ,11% are unsatisfied,9% are extremely
unsatisfied.
21% of the respondents are extremely satisfied regarding the co-operation by
staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4% are
unsatisfied.
24% of the respondents are 20% satisfied with the services of DP,25% of the
respondents are 40% satisfied with the services of DP, and 32% are 60%
satisfied with the services of DP.
30.4% of the respondents prefer DP over other DP’s because of quality
service,9.8% because of rates charged,34.8% for nothing in particular, and
25% for safety.
SUGGESTIONS:
For the service awareness they must appoint well-qualified agents who can
communicate to the respondents.
Service awareness must also be given through advertisements in
newspapers and local TV channels
Customers are facing over crowding ,non-availability of telephone lines so
proper measures should be taken to overcome these problems.
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The role of sell ‘n’ cash in the present scenario is helpful to the customers
therefore it should be explained to the customers.
CONCLUSION:
Customer satisfaction. is the one which is playing a important role in today’s
world.
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Questionnaire
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Dear Sir/Madam
. Name : ___________________________________
Address : ____________________________________
1. In which scheme are you holding your scheme?
Small Investors Long Term Investors Traders
2. If you are aware of new services then how do you come to know about these services?
Friends News paper Brokers Agents Others
3. Please tick ( ) from the following
Schemes/ Services I have availed of the following services
I aware of the following services
a. Share Tradingb. Settlement (Selling / Purchasing)c. Freezing / Defreezingd. Loan against sharese. Sell ‘n’ cash
4. Express your level if satisfaction about the following Schemes / Services. Please Tick form the following.
Schemes / Services
Satisfied Mostly Dissatisfied
Neither Satisfied/ Nor Dissatisfied
Mostly Dissatisfied
Dissatisfied
a. Dematb. Settlement (Selling / Purchasing)c. Freezing / defreezing of an account
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d. Loan against sharese. Sell ‘n’ cashf. Share Tradingg. Associated shares h. Periodic Statementsi. Telephone Queriesj. Co- operation by staffk. Bills Acceptance
5. If you have faced any when dealing through your DP or you are unsatisfied with the above mentioned Services / Schemes
Frequently reminders are given to HDFC for update the information.
Irregular receipt of Holding/Transaction statement
Improper attention given to the enquires
Improper format of Holding/Transaction statement
Billing problems
Inadequate information
6. Please tick the following:
TariffStructure
1 2 3 4 5
Very High High Reasonable Low Very Low
7.How do you rate the services of your DP0% 20% 40% 60% 80% 100%
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8. How do you justify your preference for your DP over other DP’s?Quality Service
Rates Charged Nothing in Particulars
Safety Reach
9. Any suggestion : ------------------------------------------------------------------------------ ---------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------
THANK YOU
MASTER CODE SHEET
1 4 1 1 2 1 1 1 1 2 1 2 2 2 1 3 1 1 2 1 3 33 2 1 1 2 2 2 1 4 3 2 4 4 3 3 2 2 2 1 2 2 31 1 1 2 2 2 2 3 1 3 3 2 2 2 1 3 1 2 6 3 3 11 4 1 1 2 1 1 2 4 1 4 4 2 3 2 2 2 2 2 1 2 23 3 1 2 2 2 2 2 1 2 2 3 2 2 3 2 3 1 1 3 3 12 4 1 1 2 1 1 4 4 1 3 2 4 3 3 3 1 3 6 3 2 13 2 1 1 2 2 2 2 1 3 4 3 2 2 2 3 3 4 2 3 5 31 3 2 2 2 2 2 4 1 2 4 2 4 3 1 3 3 2 6 1 4 12 4 1 2 2 2 1 3 1 3 4 3 2 3 3 2 1 5 1 2 5 41 3 1 2 2 2 2 2 1 4 1 2 4 1 2 2 2 4 5 3 2 23 3 2 1 2 2 1 4 5 3 2 2 4 2 1 3 2 2 6 1 3 12 4 1 1 2 2 1 2 1 4 4 1 2 3 2 2 1 5 6 3 4 41 2 1 2 2 2 1 2 2 3 3 4 3 3 3 2 2 2 5 2 5 32 3 2 2 2 2 2 3 3 2 2 2 2 1 2 3 2 5 6 1 3 13 3 2 1 2 2 1 2 5 5 4 5 4 2 2 3 3 2 6 3 5 42 4 1 2 2 2 1 2 1 3 4 3 4 3 1 3 2 5 1 2 5 31 4 1 1 2 2 1 3 4 2 3 1 3 3 2 2 2 2 2 1 4 31 4 1 1 2 2 1 1 3 5 3 2 2 3 3 2 2 5 5 3 2 12 1 2 1 2 2 1 2 1 3 2 3 4 4 2 3 3 2 6 2 5 2
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Glossary
Account Freezing: The Depository Participant may freeze the account of a client
maintained with him on written instructions received by the Participant in that regard
from the client concerned in the form specified under the Business Rules.
Account Opening: Any person willing to avail the services offered by a Depository
shall open an account with a Depository Participant.
Beneficiary: A person who benefits from a trust set up on his / her behalf & anyone
who benefits from the proceeds of a will
A person who benefits from a contractual or fiduciary relationship
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Beneficiary ID No: Each beneficiary is allotted an ID No. generated by DP by
which a beneficiary is identified. This is similar to your Bank A/c No. Or the Folio
No.
BSE: Bombay Stock exchange is one of the oldest stock exchanges in Asia with over
6,000 stocks listed.
Beneficiary Account: An investor or a broker who wants to hold shares in
dematerialized (demat) form and undertake scrip less trading must have a depository
account called beneficiary account with Depository Participant of his choice.
CDSL: Central Depository Securities Ltd is an organization promoted by the stock
exchange Mumbai, (BSE) in association with Bank of India, Bank of Baroda, State
Bank of India and HDFC Bank to provide electronic depository facilities for securities
traded in the equity and the debt market. CDSL is the second depository in India.
HDFC is one of the Depository Participants of CDSL.
Client Id: Whenever any client opens an account with a Depository Participant he
/she is provided with an account number which is known as the beneficiary account
number or the Client Id. The combination of the Client Id and the Depository
Participant Id is unique.
Deface: The client (registered owner) shall submit a request to the DP in the DRF for
dematerialization along with the certificates of securities to be dematerialised. Before
submission, the client has to deface or cancel the certificates by writing
"SURRENDERED FOR DEMATERIALISATION”.
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Defreezing of an account: The client can request his depository participant to release
the suspension order and defreeze the account for regular operations. The Depository
participant shall defreeze the account only after receipt of the application for
defreezing signed by all the account holders
Delivery Instructions by client: In order to transfer securities from his account to
another a beneficial account owner must give an instruction to his / her Depository
Participant. A beneficial account owner must give instruction to his / her DP to
transfer
DRN: When the securities are found in order with the details of the request as
mentioned in the form, the depository participant enters the details in the DPM
(Depository participant Module, provided by NSDL to the DP) a Dematerialization
Request Number (DRN) is generated by the system. The DRN so generated is entered
in the space provided for the purpose in the Dematerialization Request Form. The
request is then released to DM (Depository Module – Depository’s software system).
The DM forwards the requests to the Issuer / R & T agent electronically. Once the
DRN is confirmed or accepted by the Issuer / R & T agent the DM electronically
authorize the creation of appropriate credit balances in the client’s account. The DPM
shall credit the client’s account automatically.
Electronic Public Offering (EPO): An initial public offering, or new issue of
shares, in which the process of applying for shares is handled electronically (via
websites).
Freezing of an account: Any client can give instructions, in the prescribed form, to
his Depository Participant to freeze his account either for debit or for all operations.
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Only after receipt of the application for freezing the account signed by all the account
holders the Depository Participant shall freeze the account till further notice received
from the client in this regard.
Fungible: Dematerialized shares do not have any distinctive numbers or certificate
numbers. These shares are fungible – which means that 100 shares of a security are
the same as any other 100 shares of that security.
Hypothecation: The pledging of securities as collateral. A client having a beneficiary
account with a DP can hypothecate securities in electronic form against loan / credit
facilities extended by a pledge, who has a beneficiary account with a DP. The creation
of pledge / hypothecation will be initiated by the pledger through its DP and the
pledgee will instruct its DP to confirm the creation of the pledge. The pledge /
hypothecation so created can either be closed on repayment of loan or invoked on
default. After the pledgor repays the loan to the pledgee the pledgor will initiate the
closure of pledge / hypothecation. In case of default by the pledgor in repaying the
loan to the pledgee, the pledgee may initiate invocation of pledge / hypothecation,
after taking such steps as may be necessary as per the terms of the underlying
agreement with the pledgor and the Bye Laws and Business Rules of NSDL and SEBI
Regulations. In case of hypothecation, the pledgor will instruct its DP to confirm the
invocation of the hypothecation.
Initial Public Offering (IPO) : The first offering of a company’s shares to the public.
The shares offered may be existing ones held privately, or the company may issue
new shares to the public.
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Inter Depository Instructions: Inter-Depository Transfer means transfer of securities
which are admitted for dematerialisation on both the depositories from an account
held in one depository to an account held in the other depository
ISIN: International Securities Identification Number (ISIN) is a code that uniquely
identifies a specific securities issue.
Market Trade: Trades which are settled through the Clearing Corporation / Clearing
House of an exchange are classified as " Market Trades ".
NSDL: The National Securities Depository Limited is an organization promoted by
the Industrial Development Bank of India, the Unit Trust of India and the National
Stock Exchange of India Limited to provide electronic depository facilities for
securities traded in the equity and the debt market. NSDL commenced its operations
in the year 1996 and is the first depository in India.
NSE: National Stock Exchange is one of the leading stock exchanges in India. The
NSE has been set up by leading institutions to provide a modern, fully automated
screen – based trading system with national reach.
Off Market Trade: Trades which are not settled through the Clearing Corporation /
Clearing House of an exchange are classified as " Off Market Trades ". Negotiated
trades which are not cleared and settled through the Clearing Corporation / Clearing
House are off-market trades.
Pledge: To deposit personal property as security for a personal loan of money. If the
loan is not repaid when due, the personal property pledged shall be forfeit to the
lender. A client (pledgor) having a beneficiary account with a Depository Participant
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can pledge securities in electronic form against loan / credit facilities extended by a
pledgee, who too has a beneficiary account with a Depository Participant.
Rematerialisation: It is the process by which a client can get his electronic holdings
converted into physical certificates. The client has to submit the rematerialisation
request to the DP with whom he has an account. The DP enters the request in its
system, which blocks the client’s holdings to that extent automatically. The Issuer /
R& T agent then prints the certificates, dispatches the same to the client and
simultaneously electronically confirms the acceptance of the request to NSDL.
Thereafter, the client’s blocked balances are debited.
Registrar and Transfer Agent (RTA) : A transfer agent and registrar for a publicly
held company keeps record of every outstanding share certificate and the name of the
person to whom it is registered. When the share changes hands, the transfer agent
transfers the ownership of the stock from the seller’s name to the buyer’s name. The
registrar reconciles all transfer records and makes sure that the number of shares
debited is equal to the number of shares credited.
Settlement: It is the process by which investors pay for shares they have bought and
receive payment for shares they have sold. It is also the process by which the investor
delivers the shares he has sold to the clearing house and receives the shares which he
has purchased from the clearing house of a recognized stock exchange.
Settlement Day: The day on which purchased securities are due for delivery to the
buyer and payment is due to be made to the seller.
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Statement of Holding: A statement of holding details out the current balance in a
depository account. At least once every fortnight the Depository participant sends a
statement of Holdings to its clients.
Statement of transaction: A statement of transaction details out the various
transactions done through that depository account. At least once in every fortnight the
Depository Participant sends a statement of transaction to its clients. Karvy’s Online
Demat services enable its clients to view their statement of transactions on the net.
Transferability of Shares: Shares in a company are freely transferable, subject to
certain conditions, such that no shareholder is permanently or necessarily wedded to a
company. When a member transfers his shares to another person, the transferee steps
into the shoes of the transferor and acquires all rights of the transferor in respect of
those shares. For dematerialised shares the depository participant debits and credits
the account of the client with an authorisation from such client.
Transmission: Transmission of shares denotes a process by which ownership of
share is transferred on legal heir or to some other person by operation of law. In case
of transmission no transfer deed and no stamp duty is required. Transmission of
shares generally takes place in case of death, insolvency or mental illness or purchase
in case of shares by court or in case of amalgamation, where the amalgamating
company holds shares in various companies.
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BibliographyWeb sites
www.Hdfcbank.com
www.sharekhan.com
Books
Company books & Brochures
NSDL Books
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