DP FAQs
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Joy
Jul 11, 2008, 2:31:29 AM7/11/08
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1. What is a depository?
Ans. A depository can be compared to a bank. A depository holds
securities (like shares, debentures, bonds, Government Securities,
units etc.) of investors in electronic form. Besides holding
securities, a depository also provides services related to
transactions in securities.
2. How can I avail the service of a depository?
Ans. A depository interfaces with the investors through its agents
called Depository Participants (DPs). If an investor wants to avail
the services offered by the depository, the investor has to open an
account with a DP. This is similar to opening an account with any
branch of a bank in order to utilise the bank's services. Suggestions
on how to select a DP are given in Section IV.
II. Benefits
1. What are the benefits of participation in a depository?
Ans. The benefits of participation in a depository are:
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad
delivery , fake securities , etc.;
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
Nomination facility;
Change in address recorded with DP gets registered electronically with
all companies in which investor holds securities eliminating the need
to correspond with each of them separately;
Transmission of securities is done by DP eliminating correspondence
with companies;
Convenient method of consolidation of folios/accounts ;
Holding investments in equity, debt instruments and Government
securities in a single account;
Automatic credit into demat account, of shares, arising out of split/
consolidation/merger etc.
III. Services
1. What are the facilities offered by NSDL?
Ans. NSDL offers following facilities: -
Dematerialisation i.e., converting physical certificates to electronic
form;
Rematerialisation i.e., conversion of securities in demat form into
physical certificates;
Facilitating repurchase / redemption of units of mutual funds;
Electronic settlement of trades in stock exchanges connected to NSDL;
Pledging/hypothecation of dematerialised securities against loan;
Electronic credit of securities allotted in public issues, rights
issue;
Receipt of non-cash corporate benefits such as bonus, in electronic
form;
Freezing of demat accounts, so that the debits from the account are
not permitted;
Nomination facility for demat accounts;
Services related to change of address;
Effecting transmission of securities;
Instructions to your DP over Internet through SPEED-e facility.
(Please check with your DP for availing the facility);
Account monitoring facility over Internet for clearing members through
SPEED facility;
Other facilities viz. holding debt instruments in the same account,
availing stock lending/borrowing facility, etc.
IV. Account Opening
1. You mentioned that I would have to open an account with a DP if I
want to participate in the depository. Who is a DP?
Ans. NSDL provides its services to investors through its agents called
depository participants (DPs). These agents are appointed by NSDL with
the approval of SEBI. According to SEBI regulations, amongst others,
three categories of entities i.e. Banks, Financial Institutions and
Members of Stock Exchanges [brokers] registered with SEBI can become
DPs. You can get a list of DPs from NSDL's office or from our website
at www.nsdl.co.in.
2. How do I select a DP?
Ans. You can select your DP to open a demat account just like you
select a bank for opening a savings account. Some of the important
factors for selection of a DP can be:
Convenience - Proximity to your office/residence, business hours.
Comfort - Reputation of the DP, past association with the
organisation, whether the DP is in a position to give the specific
service you may need?
Cost - The service charges levied by DP and the service standards.
In order to obtain the complete list of DP locations and their
comparative charge structure, you may log on to www.nsdl.co.in or else
you may write to NSDL for the same.
3. Whether all the DPs are same?
Ans. All the DPs are appointed subject to fulfilment of uniform
requirements of SEBI ( Depositories and Participants) Regulations,
1996 and requirements of NSDL. However, the type of services offered
and the service standards may differ among various DPs. For example, a
DP branch having direct connectivity with the main office having
depository set-up may be in a position to execute instructions
faster.
4. What should I do when I want to open an account with a DP?
Ans. You can approach any DP of your choice and fill up an account
opening form. At the time of opening an account, you have to sign an
agreement with the DP in a NSDL prescribed standard agreement, which
details your and your DP’s rights and duties. You have to submit the
following with the prescribed account opening form. In case you want
to open account jointly with other person(s), following should be
submitted for all the account holders.
Proof of Identity (POI) (copy of any one proof):
Passport
Voter ID Card
Driving license
PAN card with photograph
Identity card/document with applicant’s Photo, issued by a) Central/
State Government and its Departments, b) Statutory/Regulatory
Authorities, c) Public Sector Undertakings, d) Scheduled Commercial
Banks, e) Public Financial Institutions, f) Colleges affiliated to
Universities (this can be treated as valid only till the time the
applicant is a student), g) Professional Bodies such as ICAI, ICWAI,
ICSI, Bar Council etc., to their Members; and h) Credit cards/Debit
cards issued by Banks.
Proof of Address (POA) (copy of any one proof):
Ration card
Passport
Voter ID Card
Driving license
Bank passbook
Verified copies of Electricity bills (not more than two months old)/
Residence Telephone bills (not more than two months old)/ Leave and
License agreement / Agreement for sale.
Self-declaration by High Court & Supreme Court judges, giving the new
address in respect of their own accounts.
Identity card/document with address, issued by a) Central/State
Government and its Departments, b) Statutory/Regulatory Authorities,
c) Public Sector Undertakings, d) Scheduled Commercial Banks, e)
Public Financial Institutions, f) Colleges affiliated to universities
(this can be treated as valid only till the time the applicant is a
student); and g) Professional Bodies such as ICAI, ICWAI, Bar Council
etc., to their Members.
Passport-size photograph.
IV. Copy of PAN Card.
You must remember to take original documents to the DP for
verification. Your DP will carry-out “in-person verification” of
account holder(s) at the time of opening your account. You should
remember to obtain a copy of the agreement and schedule of charges for
your future reference.
Note: Your DP may ask an additional proof of identity/address.
5. Can I open more than one account with the same DP?
Ans. Yes. You can open more than one account with the same DP. There
is no restriction on the number of accounts you can open with a DP.
6. Am I restricted to having account with only one DP?
Ans. No. There are no restrictions on the number of DPs you can open
accounts with. Just as you can have savings or current accounts with
more than one bank, you can open accounts with more than one DP.
7. Do I have to keep any minimum balance of securities in my account
with my DP?
Ans. No. The depository has not prescribed any minimum balance. You
can have zero balance in your account.
8. Can I open a single account for securities owned in different
ownership patterns such as securities owned individually and
securities owned along-with my wife ?
Ans. No. The demat account must be opened in the same ownership
pattern in which the securities are held in the physical form. e. g.
if one share certificate is in your individual name and another
certificate is jointly held in your and your wife's name , two
different accounts would have to be opened.
9. What do I do if I have physical certificates with the same
combination of names, but the sequence of names is different. i.e.
some certificates with husband as first holder and wife as second
holder and other set of certificates with wife as first holder and
husband as the second holder?
Ans. In this case you may open only one account with husband and wife
as the account holders and lodge the security certificates with
different order of names for dematerialisation in the same account.
You will fill-up an additional form called " Transposition cum Demat"
form. This would help you to effect change in the order of names as
well as dematerialise the securities.
10. Can someone else operate my account on my behalf on the basis of a
power of attorney ?
Ans. Yes. If you authorise any person to operate your account by
executing a power of attorney and submit it to your DP, that person
can operate the account on your behalf.
11. Why should I give my bank account details at the time of account
opening?
Ans. It is for protection of your interest. Your bank account number
will be mentioned on the interest or dividend warrant, you are
entitled to, so that such warrant cannot be encashed by any one else.
Further, a DP cannot open the account if bank account number is not
given.
12. Can I change details of my bank account?
Ans. Yes. Since in the depository system monetary benefits on your
security balances are paid as per the bank account details provided by
you at the time of account opening , you must ensure that any
subsequent change in bank account details is informed to your
depository participant.
13. What is 'Standing Instruction' given in the account opening form?
Ans. In a bank account, credit to the account is given only when a
'paying in' slip is submitted together with cash/cheque. Similarly, in
a depository account 'Receipt in' form has to be submitted to receive
securities in the account. However, for the convenience of investors,
facility of 'standing instruction' is given. If you say 'Yes' for
standing instruction, you need not submit 'Receipt in' slip everytime
you buy securities.
14. Can I operate a joint account on "either or survivor" basis just
like a bank account?
Ans. No. The demat account cannot be operated on "either or survivor"
basis like the bank account.
15. Can I add or delete names of accountholders (second or third
accountholder) after opening the account ?
Ans. No. Names of the accountholders for a depository account cannot
be changed. If you want to change name or add / delete an
accountholder, you need to open a new account in the desired holding
pattern (names) and transfer the securities to the newly opened
account. The old account may be closed.
16. What should I do if my address is changed? Do I need to write to
each company separately?
Ans. In case your address is changed, you only need to inform the new
address to your DP(s). When DP enters the new address in the
depository computer system, it will be automatically conveyed to all
companies in which you hold shares.
17. Can I close my demat account with one DP and transfer all
securities to my account with another DP ?
Ans. Yes. You can submit account closure request to your DP in
prescribed form. Your DP will transfer all your securities, as per
your instruction, and close your demat account.
18. What would be the charges for account closure and securities
transfer due to account closing?
Ans. The charges would be as per the schedule of charges of your DP,
agreed by you at the time of account opening or any subsequent changes
therein.
V. Nomination
1. Who can nominate?
Ans. Nomination can be made only by individuals holding beneficiary
accounts either singly or jointly. Non-individuals including society,
trust, body corporate, partnership firm, karta of Hindu Undivided
Family, holder of power of attorney cannot nominate.
2. Can joint holders nominate?
Ans. Yes. Nomination is permitted for accounts with joint holders.
But, in case of death of any of the joint holder(s), the securities
will be transmitted to the surviving holder(s). Only in the event of
death of all the joint holders, the securities will be transmitted to
the nominee.
3. Can a NRI nominate?
Ans. Yes, NRI can nominate directly. But, the power of attorney holder
cannot nominate on behalf of NRI.
4. Can a minor nominate?
Ans. No, a minor cannot nominate either directly or through its
guardian.
5. Who can be a nominee?
Ans. Only an individual can be a nominee. A nominee shall not be a
society, trust, body corporate, partnership firm, karta of Hindu
Undivided Family or a power of attorney holder.
6. Can there be more than one nominee?
Ans. Ans. No, only one nomination can be made for one depository
account.
7. Can a minor be a nominee?
Ans. Yes, a minor can be a nominee. In such a case, the guardian will
sign on behalf of the nominee and in addition to the name and
photograph of the nominee, the name, address and the photograph of the
guardian must be submitted to the DP.
8. Can separate nomination be made for each security held in a
depository account?
Ans. No. Nomination can be made account wise and not security wise.
9. Can a NRI be a nominee?
Ans. Yes, NRI can be a nominee subject to the exchange control
regulations in force from time to time.
10. What is the procedure for nomination?
Ans. The nomination form duly filled-in should be submitted to the DP
either at the time of account opening or later. The account holder,
nominee and two witnesses must sign this form and the name, address
and photograph of the nominee must be submitted. If nomination was not
made at the time of account opening , it can be made subsequently by
submitting the nomination form.
11. Can the nominee be changed?
Ans. Yes, the nomination can be changed anytime by the account holder/
s by simply filling up the nomination form once again and submitting
it to the DP.
VI. Transmission
1. What does transmission mean in relation to demat accounts?
Ans. Transmission is the process by which securities of a deceased
account holder are transferred to the account of the surviving joint
holder(s)/nominee/legal heirs of the deceased account holder. Process
of transmission in case of dematerialised holdings is more convenient
as the transmission formalities for all securities held in a demat
account can be completed by submitting documents to the DP whereas in
case of physical securities the surviving joint holder(s)/nominee/
legal heirs has to correspond independently with each company in which
shares are held.
2. What is the procedure for transmission of securities to the nominee
in case of the death of the sole account holder ?
Ans. In case of the death of the sole holder , for the purpose of
transmission of securities, the nominee has to submit a duly filled-in
transmission form, notarised copy of death certificate and an
affidavit in the prescribed format to the DP. After verifying these
documents and if found in order, the DP will transmit the securities
to the account of the nominee.
3. What would happen if no nomination is made for the account?
Ans. In case nomination is not made by the sole account holder, the
securities would be transmitted to the account of legal heir(s), as
may be determined by an order of the competent court. However in cases
where the value of securities to be transmitted is less than Rs.
1,00,000/- the DP may process the request based on submission of
necessary letter of indemnity , surety , affidavits and NOC
documents.
4. What is the procedure for transmission in case of Joint Accounts ?
Ans. In the event of death of one of the joint holders , the
securities will be transmitted to the surviving holder(s) on
submission of Transmission Form and notarised copy of the death
certificate of the deceased joint holder to the DP. For transmission
of securities, the account of the surviving holder(s) must be in the
same sequence in which the names appear in the joint account to be
closed.
VII. Dematerialisation
1. What do you mean by dematerialisation?
Ans. Dematerialisation is the process by which physical certificates
of an investor are converted to an equivalent number of securities in
electronic form and credited in the investor's account with its DP. In
order to dematerialise certificates; an investor will have to first
open an account with a DP and then request for the dematerialisation
of certificates by filling up a dematerialisation request form [DRF],
which is available with the DP and submitting the same along with the
physical certificates. The investor has to ensure that before the
certificates are handed over to the DP for demat, they are defaced by
marking "Surrendered for Dematerialisation" on the face of the
certificates.
2. Can I dematerialise any share certificate?
Ans. You can dematerialise only those certificates that are already
registered in your name and are in the list of securities admitted for
dematerialisation at NSDL. All the scrips included in S&P, CNX, NIFTY
and BSE SENSEX have already joined NSDL. This list has more than 4,300
companies and is steadily growing. You can get an updated list of
these companies from your DP or from NSDL's office or from NSDL
website at www.nsdl.co.in.
3. What precautions should I take before defacing a share
certificate?
Ans. Before defacing the share certificate, you must ensure that it is
available for dematerialisation. You must therefore check with your
Depository Participant (DP) whether the ISIN (code number for the
security in a depository system) has been activated and made available
for dematerialisation by the depository. If yes, then you may deface
the share certificate. The certificates are defaced by marking
"Surrendered for Dematerialisation" on the face of the certificate.
4. How long does the dematerialisation process take?
Ans. Dematerialisation will normally take about 30 days.
5. What if it takes more than 30 days for dematerialisation of the
shares?
Ans. If the process of dematerialisation takes more than 30 days,
please contact your DP. If he is unable to help you, then you may send
your grievance to:
The Officer in Charge
Investor Grievance Cell
National Securities Depository Limited
4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai - 400 013
Email: rela...@nsdl.co.in
VIII. Government Securities and Debt Instruments
1. Can I dematerialise my debt instruments , mutual fund units ,
government securities also in my demat account ?
Ans. Yes. You can dematerialise and hold all such investments in a
single demat account.
IX. Rematerialisation
1. Can my electronic holdings be converted back into certificates?
Ans. Yes. If you wish to get back your securities in physical form,
all you have to do is to request your DP for rematerialisation of the
same. 'Rematerialisation' is the term used for converting electronic
holdings back into certificates. Your DP will forward your request to
NSDL, after verifying that you have the necessary balance. NSDL in
turn will intimate the registrar who will print the certificates and
dispatch the same to you.
X. Trading / Settlement
1. What is the procedure for selling dematerialised securities?
Ans. The procedure for selling dematerialised securities is very
simple. After you have sold the securities, you would instruct your DP
to debit your account with the number of securities sold by you and
credit your broker's clearing account. This delivery instruction has
to be given to your DP using the delivery instruction slips given to
you by your DP at the time of opening the account. Procedure for
selling securities is given here below:
You sell securities in any of the stock exchanges linked to NSDL
through a broker;
You give instruction to your DP to debit your account and credit the
broker's [clearing member pool] account;
Before the pay-in day, your broker gives instruction to its DP for
delivery to clearing corporation;
Your broker receives payment from the stock exchange [clearing
corporation] ;
You receive payment from the broker for the sale of securities.
2. How can I purchase dematerialised securities?
Ans. For receiving demat securities you may give a one-time standing
instruction to your DP. This standing instruction can be given at the
time of account opening or later. Alternatively, you may choose to
give separate receipt instruction every time some securities are to be
received. The transactions relating to purchase of securities are
summarised below:
You purchase securities through a broker ;
You make payment to your broker who arranges payment to clearing
corporation on the pay-in day ;
Your broker receives credit of securities in its clearing account
(clearing member pool account) on the pay-out day;
Your broker gives instructions to its DP to debit clearing account and
credit your account;
You receive shares into your account. However, if standing
instructions are not given at the time of opening the account, you
will have to give 'Receipt Instructions' to your DP for receiving
credit,.
You should ensure that your broker transfers the securities from its
clearing account to your depository account, before the book closure.
If the securities remain in the clearing account of the broker, the
company will give corporate benefits (dividend or bonus) to the
broker. In that case, you will have to collect the benefits from your
broker.
3. What do you mean by 'Market Trades' and 'Off Market Trades'?
Ans. Any trade settled through a clearing corporation is termed as a
'Market Trade'. These trades are done through stock brokers on a stock
exchange. 'Off Market Trade' is one which is settled directly between
two parties without the involvement of clearing corporation. The same
delivery instruction slip can be used either for market trade or off-
market trade by ticking one of the two options.
4. If I sell securities through a sub-broker, which part of the
delivery instruction slip should be filled?
Ans. If you are delivering securities to your sub-broker you would
need to fill-in the off-market trade portion of the delivery
instruction slip.
5. What settlement details are required on the delivery instruction
slip?
Ans. On every stock exchange, various settlements are effected every
day such as daily settlement , auction settlement etc. Each of these
settlements is identified by combination of a market type and a
settlement number. You are required to mention the appropriate
settlement details on the delivery instruction slip while transferring
the shares to your broker's account. These settlement details are
available on the contract note issued by the broker.
6. What is T+3 rolling settlement cycle and when delivery is to be
given to a broker ?
Ans. In case of T+3 rolling settlements , the trades taking place on
each trading day are required to be settled on the third day following
the date of trade. For example trades of Monday will be settled on
Thursday morning. In this example, if you have sold securities, you
need to make sure that the securities reach the account of clearing
member of the stock exchange latest by Wednesday.
7. In case of T+3 rolling settlement cycle if I am trading (selling)
through a sub-broker when do I need to give delivery instruction to my
DP?
Ans. In this case also the settlement deadlines will remain the same
(i.e. Thursday morning for a Monday trade). However, there is an
additional transfer involved. You will transfer securities to the sub-
broker's account and the sub-broker will further transfer the
securities to the account of clearing member. Therefore, in this case
you should give delivery instructions to your DP immediately after
confirmation of sale transaction.
8. How do I come to know about the settlement deadlines?
Ans. The depository participant with whom you have your demat account
will prescribe the deadlines to be followed by you for submission of
delivery instruction slips. You should deliver instructions to your DP
as per these deadlines.
9. When I buy shares, in what time should I receive the securities
from my broker?
Ans. The broker is expected to transfer the securities to you within
two working days or four calendar days after securities are received
in his pool account, provided you have made the requisite payment to
the broker.
10. What precautions do I need to observe with respect to Delivery
Instruction Slips [DIS]?
Ans. The following precautions are to be taken :-
Ensure and insist with your DP to issue DIS book; do not accept loose
slips.
Ensure that DIS numbers are pre-printed and DP takes acknowledgment
from you for the DIS booklet issued to you.
Ensure that your account number [client id] is pre-stamped.
If your account is a joint account, all the joint holders have to sign
the instruction slips. Instruction cannot be executed if all joint
holders have not signed.
Avoid using loose slips
Do not leave signed blank DIS with anyone viz. broker/sub-broker.
Keep the DIS book under lock and key when not in use.
If only one entry is made in the DIS , strike out remaining space to
prevent misuse by any one.
Please fill in target account -Id and all details in the DIS,
yourself.
11. What is 'execution date' given in the delivery instruction form?
Ans. Execution date is the date on which securities will be actually
debited from your account. The execution date written on the delivery
instruction has to be entered by the DP, in the DPM system [computer].
DPM system will record the date and will debit your account only on
that date. You may issue the instruction well in advance of the date
on which you want the securities to be debited from your account but
your account will be debited only on the execution date. This facility
is called future execution date facility.
12. What benefit do I get by giving delivery instruction with a future
execution date?
Ans. By giving a future dated instruction the risk of non-execution of
instruction due to lack of time or last minute rush is covered.
13. What is the importance of record dates to me?
Ans. In case the securities bought by you are yet to be transferred
into your account by your broker before the book closure / record
date, you will not be entitled to receive corporate benefits such as
dividend or bonus since your name will not figure in the list of
beneficial owners. Hence, you must ensure that securities bought by
you are transferred into your account before the book closure / record
date announced by the company.
XI. Speed-e Facility (Internet Facility)
1. Is it possible to give delivery instructions to the DP over
Internet and if yes how?
Ans. Yes. NSDL has recently launched a facility for delivering
instructions to your DP over Internet , called SPEED-e. The facility
can be used by all registered users. Your DP will help you in
registering for the facility.
2. How does SPEED-e work?
Ans. You can submit delivery instructions electronically, on the SPEED-
e website https://www.speed-e.nsdl.com, after your DP has authorised
you to operate your account through the SPEED-e facility. You can
monitor the status of such delivery instructions to ensure that the
instructions have been executed.
3. How can I, as a Demat Account-holder / Clearing Member benefit from
SPEED-e?
Ans. The benefit offered by SPEED-e to a demat account holder /
Clearing Member is the convenience of conducting demat account
transactions using an Internet connection from anywhere at anytime
eliminating paperwork. Time and efforts for obtaining delivery
instruction forms from your DP and submitting them to the DP everytime
you sell securities is saved.
4. How can I register myself for SPEED-e?
Ans. For using the SPEED-e facility it is essential that your DP must
be registered with NSDL for this facility. There are two types of
users for this facility , one is password based user who logs in with
his password and can transfer securities only to three pre-specified
broker accounts of his choice. The second is the smart-card based user
who is issued a smart card for logging on to the site and can transfer
the securities to any account. A password user can visit the SPEED-e
website, fill-up the registration form available on the website. The
website would allot a registration number and the DP of the client
would authorise him for using the facility upon submission of a
request with the registration number.
A smart card user can download the form from the website, fill it and
submit the same to its DP. The DP will process the form and enable the
client for using the facility. The smart card user will also be issued
a smart card reader and a smart card.
5. What is the difference between Smart-card and Password based access
to SPEED-e?
Ans. Smart card based access to SPEED-e is more secure as your
identification is based both on "What you have i.e. smart card" and
"what you know i.e. PIN code" and provides a digital signature to
identify you. In the case of password based access , you should handle
your password carefully. In view of this security difference, the
password based users have been permitted to transfer securities
through SPEED-e facility to only three pre-specified broker accounts.
These three accounts can be changed by the user.
6. Is there any further benefit of the smart card option in SPEED-e
facility?
Ans. Following are the additional benefits of smart card option in
SPEED-e facility :
smart card user can transfer securities to any account unlike password
users where transfer of securities is permitted only to three pre-
notified broker accounts;
single smart card can be used to access all your demat accounts,
opened with the same DP;
facility of multiple authorisation;
you can freeze your demat account or any particular ISIN or specific
quantity within an ISIN yourself, through SPEED-e. The account freezed
using SPEED-e can be unfreezed only by you.
Thereby you can deliver instructions and transfer securities when you
wish, lock the account and unlock it only when you need, i.e. complete
control of your account in your hands.
7. How does one operate jointly held Demat Accounts through SPEED-e?
Ans. For password based operation, only one user can operate the
account. Joint holders will have to give a power of attorney to one
joint holder among themselves. For smart card based operation, in
addition to what is stated above, all the joint holders can operate
the account independently or jointly using multiple authorisation
facility.
XII. Corporate Benefits
1. How would I get my dividend / interest or other cash entitlements?
Ans. The concerned company obtains the details of beneficiary holders
and their holdings from NSDL. The payment to the investors will be
made by the company through the ECS ( Electronic Clearing Service)
facility or by issuing warrants on which your bank account details are
printed. The bank account details will be those which you would have
mentioned in your account opening form or changed thereafter.
2. How would I get my bonus shares or other non-cash entitlements?
Ans. The concerned company obtains the details of beneficiary holders
and their holdings from NSDL. Your entitlement will be credited by the
company directly in your NSDL depository account.
3. How will the investor confirm that bonus/rights entitlement is
credited into the account?
Ans. An allotment advice will be sent by the Issuer/ its R&T agent for
bonus/ rights entitlement. The Transaction Statement given by the DP,
will also show the bonus/ rights credit into the account. The quantity
shown in the advice and statement of transaction should match.
XIII. Pledging
1. What should I do if I want to pledge electronic securities?
Ans. The procedure is as follows:
Both you (pledgor) as well as the lender (pledgee) must have
depository accounts;
You have to initiate the pledge by submitting to your DP the details
of the securities to be pledged in a standard format ;
The pledgee has to confirm the request through its DP. It is suggested
that after creation of the pledge request, you may inform the pledgee
and request him to confirm the request;
Once this is done, your securities are pledged All financial
transactions between the pledgor and the pledgee are handled as per
usual practice outside the depository system.
2. How can I close the pledge after repayment of my loan?
Ans. After you have repaid your loan, you can request for a closure of
pledge by instructing your DP in a prescribed format. The pledgee on
receiving the repayment will instruct its DP accordingly for the
closure of the pledge.
3. Whether pledgee account can be in a different DP?
Ans. Yes. The pledgee can have an account with a different depository
participant of NSDL.
4. Can I change the securities offered in a pledge?
Ans. Yes; if the pledgee [lender] agrees, you may change the
securities offered in a pledge.
5. Who will receive dividend on the pledged securities?
Ans. Pledgor will continue to receive dividend on the pledged
securities. The pledgee will get the benefits only if pledge is
invoked and on record date the shares are in the pledgee's account.
6. How will the distribution of bonus shares for pledged shares
happen?
Ans. The software in NSDL has been modified to handle distribution of
bonus entitlements through Automatic Corporate Action (ACA) Module.
This works as follows:
The holdings as of the record date / book closure, (including those
holdings which are pledged) are considered for computing bonus
entitlements.
At the time of effecting the credit of bonus shares, the system checks
whether pledge is still open or closed.
Where pledge orders are not closed / invoked or partially closed /
invoked, the bonus entitlements in such cases are credited to the
pledgor's account with pledge marked in favour of the pledgee.
If the pledge is closed/invoked fully, the bonus entitlements will be
credited to the pledgor's account as free balances.
XIV. Securities Lending and BorrowingSEBI has introduced Securities
Lending and Borrowing scheme. As per this scheme, those persons having
securities can lend their securities for consideration and those
requiring securities (for meeting market obligations , as collateral
etc.) can borrow the same. Under the scheme, the securities are lent
through intermediaries who are approved by SEBI. The approved
intermediary would borrow the securities for further lending to
borrowers. Lenders of the securities and borrowers of the securities
enter into separate agreements with the approved intermediary for
lending and borrowing the securities . Lending and borrowing is
effected through the depository system.
1. Can I lend the securities lying in my account ?
Ans. Yes. You can lend your securities through Intermediaries approved
by SEBI.
2. How would I lend my demat securities?
Ans. You may enter into an agreement with the approved intermediary to
be a lender under this scheme. After that, you may lend securities any
time by submitting lending instruction to your DP.
3. How would I get back the securities lent by me?
Ans. Intermediary may return the securities at any time or at the end
of the agreed period of lending. Intermediary has to repay the
securities together with any benefits received during the period of
the loan.
4. How would I receive the corporate benefits which would accrue on
these securities during the period of lending ?
Ans. The benefits will be given to the Intermediary/borrower. However,
whenever the securities are being returned/recalled, Intermediary/
borrower will return the securities together with benefits received.
XV. Charges
1. What will be the charges for account opening and other depository
related transactions?
Ans. NSDL charges the DPs and not the investors. NSDL's charges to its
DPs are fixed and are based on the usage of NSDL system. Complete
details of NSDL charges as are payable by the DPs are available on
NSDL website (www.nsdl.co.in). The DP charges its client for the
services offered. The charges that the DP will be charging you for
various services are mentioned in the Schedule of Charges which forms
a part of the account opening agreement. You may keep a copy of this
for your future reference. You can get the details of the charges from
the DPs. You can also get a comparative list of DP charges from NSDL's
office or from the NSDL website.
Your DP may revise charges by giving you 30 days notice in advance.
XVI. Inter Depository Transfers
1. If my depository account is with NSDL, can I receive my securities
from an account holder having account with some other depository in
India?
Ans. Yes. Inter depository transfers are possible.
XVII. Safety Features
1. How will I know that my DP has updated my account after each
transaction?
Ans. Your DP will give you a Transaction Statement periodically, which
will detail your current balances and the various transactions you
have done through the depository account. If you so desire, your DP
may provide Transaction Statement at intervals shorter than the
stipulated ones, probably at a cost.
2. At what frequency will I receive my Transaction Statement from my
DP?
Ans. You will receive a Transaction Statement from your DP once in a
quarter. If you have done any transaction during the quarter, you will
receive the statement within fifteen days of the transaction.
3. What is to be done if there are any discrepancies in my transaction
statement?
Ans. In case of any discrepancy in the transaction statement, you can
contact your DP. If the discrepancy cannot be resolved at the DP
level, you should approach NSDL. NSDL also sends out a statement of
holdings to a few clients of DPs, picked at random. In case the
balance in your account as indicated by your DP does not tally with
the balance as indicated by NSDL, you can contact your DP/ NSDL for
clarification.
4. What happens if I lose my Transaction Statement?
Ans. You should inform your DP and obtain a duplicate Transaction
Statement.
5. What security do I have if the only proof of my holdings in the
depository is merely a piece of paper indicating my account balance?
Ans. No transaction can be effected in your account without your
written authorisation. Further, if you are away for a long time, you
have the facility of freezing your account wherein only credits into
your account will be allowed and no debit will be possible.
6. What will happen if my DP goes bankrupt or stops operation?
Ans. In a rare event of your DP going bankrupt or closing the
operations, the interests of the investors will be fully protected. In
such a situation, the investors will be given an option of either
transferring the securities to a new DP or they may rematerialise the
securities.
7. What precautions does NSDL take to protect the data in its
depository system?
Ans. The data carries a high importance in the NSDL depository system.
NSDL has taken necessary steps to protect the transmission and storage
of data. The data is protected from unauthorised access, manipulation
and destruction. The following back up practices are adopted to
protect the data:
Local Back up
Remote Back up
Disaster Recovery Site
In addition to this, every DP is required to take daily back up, at
the end of each day of operation.
8. Can I freeze my account?
Ans. NSDL system provides the facility to freeze the depository
accounts for any debits or for both, debits and credits. In an account
which is "freezed for debits", no debits will be permitted from the
account, till the time it is unfreezed.
9. What should I do if my DP is unable to resolve my problem?
Ans. In case of failure of a DP to resolve your grievance, you can
write to the investor grievance cell of NSDL at the following address:
The Officer in Charge
Investor Grievance Cell
National Securities Depository Limited
4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai - 400 013
Email : rela...@nsdl.co.in
Ans. A depository can be compared to a bank. A depository holds
securities (like shares, debentures, bonds, Government Securities,
units etc.) of investors in electronic form. Besides holding
securities, a depository also provides services related to
transactions in securities.
2. How can I avail the service of a depository?
Ans. A depository interfaces with the investors through its agents
called Depository Participants (DPs). If an investor wants to avail
the services offered by the depository, the investor has to open an
account with a DP. This is similar to opening an account with any
branch of a bank in order to utilise the bank's services. Suggestions
on how to select a DP are given in Section IV.
II. Benefits
1. What are the benefits of participation in a depository?
Ans. The benefits of participation in a depository are:
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad
delivery , fake securities , etc.;
Reduction in paperwork involved in transfer of securities;
Reduction in transaction cost;
Nomination facility;
Change in address recorded with DP gets registered electronically with
all companies in which investor holds securities eliminating the need
to correspond with each of them separately;
Transmission of securities is done by DP eliminating correspondence
with companies;
Convenient method of consolidation of folios/accounts ;
Holding investments in equity, debt instruments and Government
securities in a single account;
Automatic credit into demat account, of shares, arising out of split/
consolidation/merger etc.
III. Services
1. What are the facilities offered by NSDL?
Ans. NSDL offers following facilities: -
Dematerialisation i.e., converting physical certificates to electronic
form;
Rematerialisation i.e., conversion of securities in demat form into
physical certificates;
Facilitating repurchase / redemption of units of mutual funds;
Electronic settlement of trades in stock exchanges connected to NSDL;
Pledging/hypothecation of dematerialised securities against loan;
Electronic credit of securities allotted in public issues, rights
issue;
Receipt of non-cash corporate benefits such as bonus, in electronic
form;
Freezing of demat accounts, so that the debits from the account are
not permitted;
Nomination facility for demat accounts;
Services related to change of address;
Effecting transmission of securities;
Instructions to your DP over Internet through SPEED-e facility.
(Please check with your DP for availing the facility);
Account monitoring facility over Internet for clearing members through
SPEED facility;
Other facilities viz. holding debt instruments in the same account,
availing stock lending/borrowing facility, etc.
IV. Account Opening
1. You mentioned that I would have to open an account with a DP if I
want to participate in the depository. Who is a DP?
Ans. NSDL provides its services to investors through its agents called
depository participants (DPs). These agents are appointed by NSDL with
the approval of SEBI. According to SEBI regulations, amongst others,
three categories of entities i.e. Banks, Financial Institutions and
Members of Stock Exchanges [brokers] registered with SEBI can become
DPs. You can get a list of DPs from NSDL's office or from our website
at www.nsdl.co.in.
2. How do I select a DP?
Ans. You can select your DP to open a demat account just like you
select a bank for opening a savings account. Some of the important
factors for selection of a DP can be:
Convenience - Proximity to your office/residence, business hours.
Comfort - Reputation of the DP, past association with the
organisation, whether the DP is in a position to give the specific
service you may need?
Cost - The service charges levied by DP and the service standards.
In order to obtain the complete list of DP locations and their
comparative charge structure, you may log on to www.nsdl.co.in or else
you may write to NSDL for the same.
3. Whether all the DPs are same?
Ans. All the DPs are appointed subject to fulfilment of uniform
requirements of SEBI ( Depositories and Participants) Regulations,
1996 and requirements of NSDL. However, the type of services offered
and the service standards may differ among various DPs. For example, a
DP branch having direct connectivity with the main office having
depository set-up may be in a position to execute instructions
faster.
4. What should I do when I want to open an account with a DP?
Ans. You can approach any DP of your choice and fill up an account
opening form. At the time of opening an account, you have to sign an
agreement with the DP in a NSDL prescribed standard agreement, which
details your and your DP’s rights and duties. You have to submit the
following with the prescribed account opening form. In case you want
to open account jointly with other person(s), following should be
submitted for all the account holders.
Proof of Identity (POI) (copy of any one proof):
Passport
Voter ID Card
Driving license
PAN card with photograph
Identity card/document with applicant’s Photo, issued by a) Central/
State Government and its Departments, b) Statutory/Regulatory
Authorities, c) Public Sector Undertakings, d) Scheduled Commercial
Banks, e) Public Financial Institutions, f) Colleges affiliated to
Universities (this can be treated as valid only till the time the
applicant is a student), g) Professional Bodies such as ICAI, ICWAI,
ICSI, Bar Council etc., to their Members; and h) Credit cards/Debit
cards issued by Banks.
Proof of Address (POA) (copy of any one proof):
Ration card
Passport
Voter ID Card
Driving license
Bank passbook
Verified copies of Electricity bills (not more than two months old)/
Residence Telephone bills (not more than two months old)/ Leave and
License agreement / Agreement for sale.
Self-declaration by High Court & Supreme Court judges, giving the new
address in respect of their own accounts.
Identity card/document with address, issued by a) Central/State
Government and its Departments, b) Statutory/Regulatory Authorities,
c) Public Sector Undertakings, d) Scheduled Commercial Banks, e)
Public Financial Institutions, f) Colleges affiliated to universities
(this can be treated as valid only till the time the applicant is a
student); and g) Professional Bodies such as ICAI, ICWAI, Bar Council
etc., to their Members.
Passport-size photograph.
IV. Copy of PAN Card.
You must remember to take original documents to the DP for
verification. Your DP will carry-out “in-person verification” of
account holder(s) at the time of opening your account. You should
remember to obtain a copy of the agreement and schedule of charges for
your future reference.
Note: Your DP may ask an additional proof of identity/address.
5. Can I open more than one account with the same DP?
Ans. Yes. You can open more than one account with the same DP. There
is no restriction on the number of accounts you can open with a DP.
6. Am I restricted to having account with only one DP?
Ans. No. There are no restrictions on the number of DPs you can open
accounts with. Just as you can have savings or current accounts with
more than one bank, you can open accounts with more than one DP.
7. Do I have to keep any minimum balance of securities in my account
with my DP?
Ans. No. The depository has not prescribed any minimum balance. You
can have zero balance in your account.
8. Can I open a single account for securities owned in different
ownership patterns such as securities owned individually and
securities owned along-with my wife ?
Ans. No. The demat account must be opened in the same ownership
pattern in which the securities are held in the physical form. e. g.
if one share certificate is in your individual name and another
certificate is jointly held in your and your wife's name , two
different accounts would have to be opened.
9. What do I do if I have physical certificates with the same
combination of names, but the sequence of names is different. i.e.
some certificates with husband as first holder and wife as second
holder and other set of certificates with wife as first holder and
husband as the second holder?
Ans. In this case you may open only one account with husband and wife
as the account holders and lodge the security certificates with
different order of names for dematerialisation in the same account.
You will fill-up an additional form called " Transposition cum Demat"
form. This would help you to effect change in the order of names as
well as dematerialise the securities.
10. Can someone else operate my account on my behalf on the basis of a
power of attorney ?
Ans. Yes. If you authorise any person to operate your account by
executing a power of attorney and submit it to your DP, that person
can operate the account on your behalf.
11. Why should I give my bank account details at the time of account
opening?
Ans. It is for protection of your interest. Your bank account number
will be mentioned on the interest or dividend warrant, you are
entitled to, so that such warrant cannot be encashed by any one else.
Further, a DP cannot open the account if bank account number is not
given.
12. Can I change details of my bank account?
Ans. Yes. Since in the depository system monetary benefits on your
security balances are paid as per the bank account details provided by
you at the time of account opening , you must ensure that any
subsequent change in bank account details is informed to your
depository participant.
13. What is 'Standing Instruction' given in the account opening form?
Ans. In a bank account, credit to the account is given only when a
'paying in' slip is submitted together with cash/cheque. Similarly, in
a depository account 'Receipt in' form has to be submitted to receive
securities in the account. However, for the convenience of investors,
facility of 'standing instruction' is given. If you say 'Yes' for
standing instruction, you need not submit 'Receipt in' slip everytime
you buy securities.
14. Can I operate a joint account on "either or survivor" basis just
like a bank account?
Ans. No. The demat account cannot be operated on "either or survivor"
basis like the bank account.
15. Can I add or delete names of accountholders (second or third
accountholder) after opening the account ?
Ans. No. Names of the accountholders for a depository account cannot
be changed. If you want to change name or add / delete an
accountholder, you need to open a new account in the desired holding
pattern (names) and transfer the securities to the newly opened
account. The old account may be closed.
16. What should I do if my address is changed? Do I need to write to
each company separately?
Ans. In case your address is changed, you only need to inform the new
address to your DP(s). When DP enters the new address in the
depository computer system, it will be automatically conveyed to all
companies in which you hold shares.
17. Can I close my demat account with one DP and transfer all
securities to my account with another DP ?
Ans. Yes. You can submit account closure request to your DP in
prescribed form. Your DP will transfer all your securities, as per
your instruction, and close your demat account.
18. What would be the charges for account closure and securities
transfer due to account closing?
Ans. The charges would be as per the schedule of charges of your DP,
agreed by you at the time of account opening or any subsequent changes
therein.
V. Nomination
1. Who can nominate?
Ans. Nomination can be made only by individuals holding beneficiary
accounts either singly or jointly. Non-individuals including society,
trust, body corporate, partnership firm, karta of Hindu Undivided
Family, holder of power of attorney cannot nominate.
2. Can joint holders nominate?
Ans. Yes. Nomination is permitted for accounts with joint holders.
But, in case of death of any of the joint holder(s), the securities
will be transmitted to the surviving holder(s). Only in the event of
death of all the joint holders, the securities will be transmitted to
the nominee.
3. Can a NRI nominate?
Ans. Yes, NRI can nominate directly. But, the power of attorney holder
cannot nominate on behalf of NRI.
4. Can a minor nominate?
Ans. No, a minor cannot nominate either directly or through its
guardian.
5. Who can be a nominee?
Ans. Only an individual can be a nominee. A nominee shall not be a
society, trust, body corporate, partnership firm, karta of Hindu
Undivided Family or a power of attorney holder.
6. Can there be more than one nominee?
Ans. Ans. No, only one nomination can be made for one depository
account.
7. Can a minor be a nominee?
Ans. Yes, a minor can be a nominee. In such a case, the guardian will
sign on behalf of the nominee and in addition to the name and
photograph of the nominee, the name, address and the photograph of the
guardian must be submitted to the DP.
8. Can separate nomination be made for each security held in a
depository account?
Ans. No. Nomination can be made account wise and not security wise.
9. Can a NRI be a nominee?
Ans. Yes, NRI can be a nominee subject to the exchange control
regulations in force from time to time.
10. What is the procedure for nomination?
Ans. The nomination form duly filled-in should be submitted to the DP
either at the time of account opening or later. The account holder,
nominee and two witnesses must sign this form and the name, address
and photograph of the nominee must be submitted. If nomination was not
made at the time of account opening , it can be made subsequently by
submitting the nomination form.
11. Can the nominee be changed?
Ans. Yes, the nomination can be changed anytime by the account holder/
s by simply filling up the nomination form once again and submitting
it to the DP.
VI. Transmission
1. What does transmission mean in relation to demat accounts?
Ans. Transmission is the process by which securities of a deceased
account holder are transferred to the account of the surviving joint
holder(s)/nominee/legal heirs of the deceased account holder. Process
of transmission in case of dematerialised holdings is more convenient
as the transmission formalities for all securities held in a demat
account can be completed by submitting documents to the DP whereas in
case of physical securities the surviving joint holder(s)/nominee/
legal heirs has to correspond independently with each company in which
shares are held.
2. What is the procedure for transmission of securities to the nominee
in case of the death of the sole account holder ?
Ans. In case of the death of the sole holder , for the purpose of
transmission of securities, the nominee has to submit a duly filled-in
transmission form, notarised copy of death certificate and an
affidavit in the prescribed format to the DP. After verifying these
documents and if found in order, the DP will transmit the securities
to the account of the nominee.
3. What would happen if no nomination is made for the account?
Ans. In case nomination is not made by the sole account holder, the
securities would be transmitted to the account of legal heir(s), as
may be determined by an order of the competent court. However in cases
where the value of securities to be transmitted is less than Rs.
1,00,000/- the DP may process the request based on submission of
necessary letter of indemnity , surety , affidavits and NOC
documents.
4. What is the procedure for transmission in case of Joint Accounts ?
Ans. In the event of death of one of the joint holders , the
securities will be transmitted to the surviving holder(s) on
submission of Transmission Form and notarised copy of the death
certificate of the deceased joint holder to the DP. For transmission
of securities, the account of the surviving holder(s) must be in the
same sequence in which the names appear in the joint account to be
closed.
VII. Dematerialisation
1. What do you mean by dematerialisation?
Ans. Dematerialisation is the process by which physical certificates
of an investor are converted to an equivalent number of securities in
electronic form and credited in the investor's account with its DP. In
order to dematerialise certificates; an investor will have to first
open an account with a DP and then request for the dematerialisation
of certificates by filling up a dematerialisation request form [DRF],
which is available with the DP and submitting the same along with the
physical certificates. The investor has to ensure that before the
certificates are handed over to the DP for demat, they are defaced by
marking "Surrendered for Dematerialisation" on the face of the
certificates.
2. Can I dematerialise any share certificate?
Ans. You can dematerialise only those certificates that are already
registered in your name and are in the list of securities admitted for
dematerialisation at NSDL. All the scrips included in S&P, CNX, NIFTY
and BSE SENSEX have already joined NSDL. This list has more than 4,300
companies and is steadily growing. You can get an updated list of
these companies from your DP or from NSDL's office or from NSDL
website at www.nsdl.co.in.
3. What precautions should I take before defacing a share
certificate?
Ans. Before defacing the share certificate, you must ensure that it is
available for dematerialisation. You must therefore check with your
Depository Participant (DP) whether the ISIN (code number for the
security in a depository system) has been activated and made available
for dematerialisation by the depository. If yes, then you may deface
the share certificate. The certificates are defaced by marking
"Surrendered for Dematerialisation" on the face of the certificate.
4. How long does the dematerialisation process take?
Ans. Dematerialisation will normally take about 30 days.
5. What if it takes more than 30 days for dematerialisation of the
shares?
Ans. If the process of dematerialisation takes more than 30 days,
please contact your DP. If he is unable to help you, then you may send
your grievance to:
The Officer in Charge
Investor Grievance Cell
National Securities Depository Limited
4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai - 400 013
Email: rela...@nsdl.co.in
VIII. Government Securities and Debt Instruments
1. Can I dematerialise my debt instruments , mutual fund units ,
government securities also in my demat account ?
Ans. Yes. You can dematerialise and hold all such investments in a
single demat account.
IX. Rematerialisation
1. Can my electronic holdings be converted back into certificates?
Ans. Yes. If you wish to get back your securities in physical form,
all you have to do is to request your DP for rematerialisation of the
same. 'Rematerialisation' is the term used for converting electronic
holdings back into certificates. Your DP will forward your request to
NSDL, after verifying that you have the necessary balance. NSDL in
turn will intimate the registrar who will print the certificates and
dispatch the same to you.
X. Trading / Settlement
1. What is the procedure for selling dematerialised securities?
Ans. The procedure for selling dematerialised securities is very
simple. After you have sold the securities, you would instruct your DP
to debit your account with the number of securities sold by you and
credit your broker's clearing account. This delivery instruction has
to be given to your DP using the delivery instruction slips given to
you by your DP at the time of opening the account. Procedure for
selling securities is given here below:
You sell securities in any of the stock exchanges linked to NSDL
through a broker;
You give instruction to your DP to debit your account and credit the
broker's [clearing member pool] account;
Before the pay-in day, your broker gives instruction to its DP for
delivery to clearing corporation;
Your broker receives payment from the stock exchange [clearing
corporation] ;
You receive payment from the broker for the sale of securities.
2. How can I purchase dematerialised securities?
Ans. For receiving demat securities you may give a one-time standing
instruction to your DP. This standing instruction can be given at the
time of account opening or later. Alternatively, you may choose to
give separate receipt instruction every time some securities are to be
received. The transactions relating to purchase of securities are
summarised below:
You purchase securities through a broker ;
You make payment to your broker who arranges payment to clearing
corporation on the pay-in day ;
Your broker receives credit of securities in its clearing account
(clearing member pool account) on the pay-out day;
Your broker gives instructions to its DP to debit clearing account and
credit your account;
You receive shares into your account. However, if standing
instructions are not given at the time of opening the account, you
will have to give 'Receipt Instructions' to your DP for receiving
credit,.
You should ensure that your broker transfers the securities from its
clearing account to your depository account, before the book closure.
If the securities remain in the clearing account of the broker, the
company will give corporate benefits (dividend or bonus) to the
broker. In that case, you will have to collect the benefits from your
broker.
3. What do you mean by 'Market Trades' and 'Off Market Trades'?
Ans. Any trade settled through a clearing corporation is termed as a
'Market Trade'. These trades are done through stock brokers on a stock
exchange. 'Off Market Trade' is one which is settled directly between
two parties without the involvement of clearing corporation. The same
delivery instruction slip can be used either for market trade or off-
market trade by ticking one of the two options.
4. If I sell securities through a sub-broker, which part of the
delivery instruction slip should be filled?
Ans. If you are delivering securities to your sub-broker you would
need to fill-in the off-market trade portion of the delivery
instruction slip.
5. What settlement details are required on the delivery instruction
slip?
Ans. On every stock exchange, various settlements are effected every
day such as daily settlement , auction settlement etc. Each of these
settlements is identified by combination of a market type and a
settlement number. You are required to mention the appropriate
settlement details on the delivery instruction slip while transferring
the shares to your broker's account. These settlement details are
available on the contract note issued by the broker.
6. What is T+3 rolling settlement cycle and when delivery is to be
given to a broker ?
Ans. In case of T+3 rolling settlements , the trades taking place on
each trading day are required to be settled on the third day following
the date of trade. For example trades of Monday will be settled on
Thursday morning. In this example, if you have sold securities, you
need to make sure that the securities reach the account of clearing
member of the stock exchange latest by Wednesday.
7. In case of T+3 rolling settlement cycle if I am trading (selling)
through a sub-broker when do I need to give delivery instruction to my
DP?
Ans. In this case also the settlement deadlines will remain the same
(i.e. Thursday morning for a Monday trade). However, there is an
additional transfer involved. You will transfer securities to the sub-
broker's account and the sub-broker will further transfer the
securities to the account of clearing member. Therefore, in this case
you should give delivery instructions to your DP immediately after
confirmation of sale transaction.
8. How do I come to know about the settlement deadlines?
Ans. The depository participant with whom you have your demat account
will prescribe the deadlines to be followed by you for submission of
delivery instruction slips. You should deliver instructions to your DP
as per these deadlines.
9. When I buy shares, in what time should I receive the securities
from my broker?
Ans. The broker is expected to transfer the securities to you within
two working days or four calendar days after securities are received
in his pool account, provided you have made the requisite payment to
the broker.
10. What precautions do I need to observe with respect to Delivery
Instruction Slips [DIS]?
Ans. The following precautions are to be taken :-
Ensure and insist with your DP to issue DIS book; do not accept loose
slips.
Ensure that DIS numbers are pre-printed and DP takes acknowledgment
from you for the DIS booklet issued to you.
Ensure that your account number [client id] is pre-stamped.
If your account is a joint account, all the joint holders have to sign
the instruction slips. Instruction cannot be executed if all joint
holders have not signed.
Avoid using loose slips
Do not leave signed blank DIS with anyone viz. broker/sub-broker.
Keep the DIS book under lock and key when not in use.
If only one entry is made in the DIS , strike out remaining space to
prevent misuse by any one.
Please fill in target account -Id and all details in the DIS,
yourself.
11. What is 'execution date' given in the delivery instruction form?
Ans. Execution date is the date on which securities will be actually
debited from your account. The execution date written on the delivery
instruction has to be entered by the DP, in the DPM system [computer].
DPM system will record the date and will debit your account only on
that date. You may issue the instruction well in advance of the date
on which you want the securities to be debited from your account but
your account will be debited only on the execution date. This facility
is called future execution date facility.
12. What benefit do I get by giving delivery instruction with a future
execution date?
Ans. By giving a future dated instruction the risk of non-execution of
instruction due to lack of time or last minute rush is covered.
13. What is the importance of record dates to me?
Ans. In case the securities bought by you are yet to be transferred
into your account by your broker before the book closure / record
date, you will not be entitled to receive corporate benefits such as
dividend or bonus since your name will not figure in the list of
beneficial owners. Hence, you must ensure that securities bought by
you are transferred into your account before the book closure / record
date announced by the company.
XI. Speed-e Facility (Internet Facility)
1. Is it possible to give delivery instructions to the DP over
Internet and if yes how?
Ans. Yes. NSDL has recently launched a facility for delivering
instructions to your DP over Internet , called SPEED-e. The facility
can be used by all registered users. Your DP will help you in
registering for the facility.
2. How does SPEED-e work?
Ans. You can submit delivery instructions electronically, on the SPEED-
e website https://www.speed-e.nsdl.com, after your DP has authorised
you to operate your account through the SPEED-e facility. You can
monitor the status of such delivery instructions to ensure that the
instructions have been executed.
3. How can I, as a Demat Account-holder / Clearing Member benefit from
SPEED-e?
Ans. The benefit offered by SPEED-e to a demat account holder /
Clearing Member is the convenience of conducting demat account
transactions using an Internet connection from anywhere at anytime
eliminating paperwork. Time and efforts for obtaining delivery
instruction forms from your DP and submitting them to the DP everytime
you sell securities is saved.
4. How can I register myself for SPEED-e?
Ans. For using the SPEED-e facility it is essential that your DP must
be registered with NSDL for this facility. There are two types of
users for this facility , one is password based user who logs in with
his password and can transfer securities only to three pre-specified
broker accounts of his choice. The second is the smart-card based user
who is issued a smart card for logging on to the site and can transfer
the securities to any account. A password user can visit the SPEED-e
website, fill-up the registration form available on the website. The
website would allot a registration number and the DP of the client
would authorise him for using the facility upon submission of a
request with the registration number.
A smart card user can download the form from the website, fill it and
submit the same to its DP. The DP will process the form and enable the
client for using the facility. The smart card user will also be issued
a smart card reader and a smart card.
5. What is the difference between Smart-card and Password based access
to SPEED-e?
Ans. Smart card based access to SPEED-e is more secure as your
identification is based both on "What you have i.e. smart card" and
"what you know i.e. PIN code" and provides a digital signature to
identify you. In the case of password based access , you should handle
your password carefully. In view of this security difference, the
password based users have been permitted to transfer securities
through SPEED-e facility to only three pre-specified broker accounts.
These three accounts can be changed by the user.
6. Is there any further benefit of the smart card option in SPEED-e
facility?
Ans. Following are the additional benefits of smart card option in
SPEED-e facility :
smart card user can transfer securities to any account unlike password
users where transfer of securities is permitted only to three pre-
notified broker accounts;
single smart card can be used to access all your demat accounts,
opened with the same DP;
facility of multiple authorisation;
you can freeze your demat account or any particular ISIN or specific
quantity within an ISIN yourself, through SPEED-e. The account freezed
using SPEED-e can be unfreezed only by you.
Thereby you can deliver instructions and transfer securities when you
wish, lock the account and unlock it only when you need, i.e. complete
control of your account in your hands.
7. How does one operate jointly held Demat Accounts through SPEED-e?
Ans. For password based operation, only one user can operate the
account. Joint holders will have to give a power of attorney to one
joint holder among themselves. For smart card based operation, in
addition to what is stated above, all the joint holders can operate
the account independently or jointly using multiple authorisation
facility.
XII. Corporate Benefits
1. How would I get my dividend / interest or other cash entitlements?
Ans. The concerned company obtains the details of beneficiary holders
and their holdings from NSDL. The payment to the investors will be
made by the company through the ECS ( Electronic Clearing Service)
facility or by issuing warrants on which your bank account details are
printed. The bank account details will be those which you would have
mentioned in your account opening form or changed thereafter.
2. How would I get my bonus shares or other non-cash entitlements?
Ans. The concerned company obtains the details of beneficiary holders
and their holdings from NSDL. Your entitlement will be credited by the
company directly in your NSDL depository account.
3. How will the investor confirm that bonus/rights entitlement is
credited into the account?
Ans. An allotment advice will be sent by the Issuer/ its R&T agent for
bonus/ rights entitlement. The Transaction Statement given by the DP,
will also show the bonus/ rights credit into the account. The quantity
shown in the advice and statement of transaction should match.
XIII. Pledging
1. What should I do if I want to pledge electronic securities?
Ans. The procedure is as follows:
Both you (pledgor) as well as the lender (pledgee) must have
depository accounts;
You have to initiate the pledge by submitting to your DP the details
of the securities to be pledged in a standard format ;
The pledgee has to confirm the request through its DP. It is suggested
that after creation of the pledge request, you may inform the pledgee
and request him to confirm the request;
Once this is done, your securities are pledged All financial
transactions between the pledgor and the pledgee are handled as per
usual practice outside the depository system.
2. How can I close the pledge after repayment of my loan?
Ans. After you have repaid your loan, you can request for a closure of
pledge by instructing your DP in a prescribed format. The pledgee on
receiving the repayment will instruct its DP accordingly for the
closure of the pledge.
3. Whether pledgee account can be in a different DP?
Ans. Yes. The pledgee can have an account with a different depository
participant of NSDL.
4. Can I change the securities offered in a pledge?
Ans. Yes; if the pledgee [lender] agrees, you may change the
securities offered in a pledge.
5. Who will receive dividend on the pledged securities?
Ans. Pledgor will continue to receive dividend on the pledged
securities. The pledgee will get the benefits only if pledge is
invoked and on record date the shares are in the pledgee's account.
6. How will the distribution of bonus shares for pledged shares
happen?
Ans. The software in NSDL has been modified to handle distribution of
bonus entitlements through Automatic Corporate Action (ACA) Module.
This works as follows:
The holdings as of the record date / book closure, (including those
holdings which are pledged) are considered for computing bonus
entitlements.
At the time of effecting the credit of bonus shares, the system checks
whether pledge is still open or closed.
Where pledge orders are not closed / invoked or partially closed /
invoked, the bonus entitlements in such cases are credited to the
pledgor's account with pledge marked in favour of the pledgee.
If the pledge is closed/invoked fully, the bonus entitlements will be
credited to the pledgor's account as free balances.
XIV. Securities Lending and BorrowingSEBI has introduced Securities
Lending and Borrowing scheme. As per this scheme, those persons having
securities can lend their securities for consideration and those
requiring securities (for meeting market obligations , as collateral
etc.) can borrow the same. Under the scheme, the securities are lent
through intermediaries who are approved by SEBI. The approved
intermediary would borrow the securities for further lending to
borrowers. Lenders of the securities and borrowers of the securities
enter into separate agreements with the approved intermediary for
lending and borrowing the securities . Lending and borrowing is
effected through the depository system.
1. Can I lend the securities lying in my account ?
Ans. Yes. You can lend your securities through Intermediaries approved
by SEBI.
2. How would I lend my demat securities?
Ans. You may enter into an agreement with the approved intermediary to
be a lender under this scheme. After that, you may lend securities any
time by submitting lending instruction to your DP.
3. How would I get back the securities lent by me?
Ans. Intermediary may return the securities at any time or at the end
of the agreed period of lending. Intermediary has to repay the
securities together with any benefits received during the period of
the loan.
4. How would I receive the corporate benefits which would accrue on
these securities during the period of lending ?
Ans. The benefits will be given to the Intermediary/borrower. However,
whenever the securities are being returned/recalled, Intermediary/
borrower will return the securities together with benefits received.
XV. Charges
1. What will be the charges for account opening and other depository
related transactions?
Ans. NSDL charges the DPs and not the investors. NSDL's charges to its
DPs are fixed and are based on the usage of NSDL system. Complete
details of NSDL charges as are payable by the DPs are available on
NSDL website (www.nsdl.co.in). The DP charges its client for the
services offered. The charges that the DP will be charging you for
various services are mentioned in the Schedule of Charges which forms
a part of the account opening agreement. You may keep a copy of this
for your future reference. You can get the details of the charges from
the DPs. You can also get a comparative list of DP charges from NSDL's
office or from the NSDL website.
Your DP may revise charges by giving you 30 days notice in advance.
XVI. Inter Depository Transfers
1. If my depository account is with NSDL, can I receive my securities
from an account holder having account with some other depository in
India?
Ans. Yes. Inter depository transfers are possible.
XVII. Safety Features
1. How will I know that my DP has updated my account after each
transaction?
Ans. Your DP will give you a Transaction Statement periodically, which
will detail your current balances and the various transactions you
have done through the depository account. If you so desire, your DP
may provide Transaction Statement at intervals shorter than the
stipulated ones, probably at a cost.
2. At what frequency will I receive my Transaction Statement from my
DP?
Ans. You will receive a Transaction Statement from your DP once in a
quarter. If you have done any transaction during the quarter, you will
receive the statement within fifteen days of the transaction.
3. What is to be done if there are any discrepancies in my transaction
statement?
Ans. In case of any discrepancy in the transaction statement, you can
contact your DP. If the discrepancy cannot be resolved at the DP
level, you should approach NSDL. NSDL also sends out a statement of
holdings to a few clients of DPs, picked at random. In case the
balance in your account as indicated by your DP does not tally with
the balance as indicated by NSDL, you can contact your DP/ NSDL for
clarification.
4. What happens if I lose my Transaction Statement?
Ans. You should inform your DP and obtain a duplicate Transaction
Statement.
5. What security do I have if the only proof of my holdings in the
depository is merely a piece of paper indicating my account balance?
Ans. No transaction can be effected in your account without your
written authorisation. Further, if you are away for a long time, you
have the facility of freezing your account wherein only credits into
your account will be allowed and no debit will be possible.
6. What will happen if my DP goes bankrupt or stops operation?
Ans. In a rare event of your DP going bankrupt or closing the
operations, the interests of the investors will be fully protected. In
such a situation, the investors will be given an option of either
transferring the securities to a new DP or they may rematerialise the
securities.
7. What precautions does NSDL take to protect the data in its
depository system?
Ans. The data carries a high importance in the NSDL depository system.
NSDL has taken necessary steps to protect the transmission and storage
of data. The data is protected from unauthorised access, manipulation
and destruction. The following back up practices are adopted to
protect the data:
Local Back up
Remote Back up
Disaster Recovery Site
In addition to this, every DP is required to take daily back up, at
the end of each day of operation.
8. Can I freeze my account?
Ans. NSDL system provides the facility to freeze the depository
accounts for any debits or for both, debits and credits. In an account
which is "freezed for debits", no debits will be permitted from the
account, till the time it is unfreezed.
9. What should I do if my DP is unable to resolve my problem?
Ans. In case of failure of a DP to resolve your grievance, you can
write to the investor grievance cell of NSDL at the following address:
The Officer in Charge
Investor Grievance Cell
National Securities Depository Limited
4th Floor, Trade World
Kamala Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai - 400 013
Email : rela...@nsdl.co.in
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