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Customersatisfactiontowardskarvystockexchangeprojectreportmbamarketing 120619223129-phpapp01 Customersatisfactiontowardskarvystockexchangeprojectreportmbamarketing 120619223129-phpapp01 Document Transcript

  • A Study of Customer Satisfaction towards Depository Participants EXECUTIVE SUMMARY Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals in shares. Apart from security broking Karvy is in to Demat services, Mutual fund and Insurance services. It offers a wide range of financial services in order to meet different individuals financial planning. The project emphasizes on “Customer satisfaction towards depository participants” Objectives of the Study: • To know the function of DP. • To know the percentage of have satisfied the service of DP. • To know how demat account is helping in the trading • To know the exception of the customer. • To know the loops and draw backs of DP. Research Methodology: Data source: Primary Data: Through Questionnaire Secondary Data: Karvy’s Record & Report, Magazine & Websites. Sample size: 100 customers of Karvy Stock Broking Ltd. 1
  • A Study of Customer Satisfaction towards Depository Participants Area Covered for research: Only Dharwad KARVY customers. Sampling Procedure: Random sampling method from available database. In the present scenario the service industry has given an utmost importance of doing a particular task at a fastest time in order to satisfy the customer and to attract new customer. In this project we can find out the customer of Karvy Consultant have satisfied with demat service and this DP is overcoming the disadvantages of the physical trading of the securities in the stock exchange. 2
  • A Study of Customer Satisfaction towards Depository Participants 3
  • A Study of Customer Satisfaction towards Depository Participants FINDINGS: 1) I have carried out this exercise on Dematerlisation. So in my studies I have tried to see whether the customer have satisfied the service given by depository participants. 2) I have also seen that awareness of KARVY service given by Karvy finical consultant is from friends. 3) It is also seen that more than 84% of the respondent have satisfied with the service of demat. 4) It is also seen that more than 55% to 60% of the respondent has satisfied with the service of Freezing/ Defreezing and loan against share. Also 40% respondents are not aware about these services. 5) Also found that nearly 2% of the respondents are dissatisfied with bill Acceptance. 6) 5% improper format of Holding/Transaction statement and 4% Frequently reminders are given to karvy consultant ltd., for update the information Are Dissatisfied. 7). 38% of respondent feel tariff structure of Karvy Stock Broking Ltd charged is high and very high. 4
  • A Study of Customer Satisfaction towards Depository Participants 8) Also found that 53% respondent have satisfied 80% of the service 9). 35% of respondent prefer Karvy Stock Broking Ltd DP to Other Dp because Of Quality service And, 40% for safety service. 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 5
  • A Study of Customer Satisfaction towards Depository Participants i.e. manual system of trading Due to increase in the trading volumes, the number of issuer increased substantially, and the birth of NSES 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 India. 6
  • A Study of Customer Satisfaction towards Depository Participants DESIGN OF THE STUDY Tile of the project: “Service Analysis & Customer satisfaction towards Depositary participants”. Statement of the Problem: KARVY STOCK BROKING Ltd is providing the Demat service. Hence in this report an attempt is made to know the present customer satisfaction towards depository participants. RESEARCH OBJECTIVES: • To know the function of DP. • To know the percentage of have satisfied the service of DP. • To know how demat account is helping in the trading • To know the exception of the customer. • To know the loops and draw backs of DP. . 7
  • A Study of Customer Satisfaction towards Depository Participants METHODS AND METHODOLOGY Sampling Design:  Sampling since segment wise investors in KARVY STOCK BROKING Ltd were available the overall customers were considered for the study. Hundred Percent coveraged. 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 KARVY STOCK BROKING Ltd.  Sampling Procedure: From large number of customer of KARVY STOCK BROKING Ltd. Were randomly selected from the available customer database.  Field Study: Directly approached respondents. DATA COLLECTION METHOD: 1. PRIMARY DATA: For a study of this nature primary data is collected through Questionnaire. 2. SECONDARY DATA: This is been is collected through Karvy’s Record & Report, Magazine & Websites. 8
  • A Study of Customer Satisfaction towards Depository Participants 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. LIMITATION OF STUDY • Since Sample size is only 100 all Hundred customers are approached . • Since segment wise investor is available in KARVY STOCK BROKING Ltd. Overall concept is taken for the study. • 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. BACKGROUND Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the 9
  • A Study of Customer Satisfaction towards Depository Participants customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments. The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company…Karvy Consultants Limited. We started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 10
  • A Study of Customer Satisfaction towards Depository Participants 1985. Since then, we have utilized our experience and superlative expertise to go from strength to strength…to better our services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one of India’s premier integrated financial service enterprise. Thus over the last 20 years Karvy has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. And we have made this journey by taking the route of quality service, path breaking innovations in service, versatility in service and finally…totality in service. Our highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for us the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Over the years we have ensured that the trust of our customers is our biggest returns. Factors such as our success in the Electronic custody business has helped build on our tradition of trust even more. Consequentially our retail client base expanded very fast. Our values and vision of attaining total competence in our servicing has served as the 11
  • A Study of Customer Satisfaction towards Depository Participants building block for creating a great financial enterprise, which stands solid on our fortresses of financial strength - our various companies. With the experience of years of holistic financial servicing behind us and years of complete expertise in the industry to look forward to, we have now emerged as a premier integrated financial services provider. And today, we can look with pride at the fruits of our mastery and experience – comprehensive financial services that are competently segregated to service and manage a diverse range of customer requirements. GROUP OF COMPANIES  KARVY SECURITY LTD • Deals in distribution of various investment products, viz, equities, Mutual fund, bounds debenture fixed deposits, insurance policies & other financial products • Member –Hyderabad stock Exchange (HSF) 12
  • A Study of Customer Satisfaction towards Depository Participants  KARVY STOCK BROKING LTD. • Deals in buying & selling equity shares & debenture &on the national stock exchange (NSE), the Hyderabad stock exchange & over the counter exchange of India (OTCEI) • Member-national stock exchange (NSE)  KARVY CONSULTANTS LTD • Transfer agency services for corporate & mutual funds • Registrar for IPObook building • Depositary participant services • Registered with both NSDL/CDSL • It enable services –MT/call center /data classification • Karvy .com comprehensive financial advisory site  KARVY INVESTER SERVICES LTD. • Deals in issue management, investor banking & merchant banking of fixed income & other financial products. • Trading through BSE  DEPOSITARY SEVICES • Registered as DP both with NSDL & CDSL 13
  • A Study of Customer Satisfaction towards Depository Participants • Serving over 2 lac investors • Online connectivity at Hyderabad, Lucknow &Bangalore • Ranked among the top 5 DPS in the country • High synergy with registry & broking activities for higher services levels to the customer information • Web based customer information • Provision of service in over 75 locations  IT SERVICES GROUP 1. Medical transcription • First strategic initiative into global processing • Among the top MT companies in India 2.E-BUSINESS GROUP • Strategic intent: to develop a comprehensive financial services portal which includes • Investor servicing: mutual funds, corporate shareholders & depository clients. • Distribution of financial products • Net trading • Insurance distribution 1. Call center 14
  • A Study of Customer Satisfaction towards Depository Participants 2. Started with a 30 agent e-call center 15
  • A Study of Customer Satisfaction towards Depository Participants MISSION Our mission is to be a leading, preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising and technology driven organization which will set the highest standards of service and business ethics. QUALITY POLICY To achieve and retain leadership, Karvy shall aim foe complete customers satisfaction, by combining its human and Technological resources, to provide superior quality financial Services. In the process, Karvy will strive to exceed Customer’s expectations. QUALITY OBJECTIVES As per the Quality Policy, Karvy will: 1. Build in- house process that will ensure transparent and harmonious relationship with its clients and investors to provide high quality of services. 2. Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. 3. Provide high quality of work life for all its employees and equip them with adequate knowledge &skills so as to respond to customer’s need. 4. Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics. 16
  • A Study of Customer Satisfaction towards Depository Participants 5. Use state –of – the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. 6. Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of it. Strive to keep all stake- holders (shareholders, clients, investors and regulatory authorities) proud and satisfied. Achievements  Among the top 5 stock brokers in India (4% of NSE volumes)  India's No. 1 Registrar & Securities Transfer Agents  Among the to top 3 Depository Participants  Largest Network of Branches & Business Associates  ISO 9002 certified operations by DNV  Among top 10 Investment bankers  Largest Distributor of Financial Products  Adjudged as one of the top 50 IT uses in India by MIS Asia  Full Fledged IT driven operations 17
  • A Study of Customer Satisfaction towards Depository Participants 18
  • A Study of Customer Satisfaction towards Depository Participants MILESTONE 19
  • A Study of Customer Satisfaction towards Depository Participants ORGANIZATION CHART Managing Director Chief Managing Director Vice-President Vice-President Vice-President Vice-President Karvy Karvy Karvy Karvy Securities Stock Broking Consultants Investors Services Ltd. Ltd. Ltd. Ltd. Deputy Deputy Deputy Deputy General General General General Manager Manager Manager Manager Senior Senior Senior Senior Manager Manager Manager Manager Branch Manager N number of Team Leaders N number of Executives 20
  • A Study of Customer Satisfaction towards Depository Participants 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. 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 21
  • A Study of Customer Satisfaction towards Depository Participants “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: • 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 22
  • A Study of Customer Satisfaction towards Depository Participants 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. 23
  • A Study of Customer Satisfaction towards Depository Participants • 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  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 24
  • A Study of Customer Satisfaction towards Depository Participants 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: • 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). 25
  • A Study of Customer Satisfaction towards Depository Participants • 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 26
  • A Study of Customer Satisfaction towards Depository Participants provisions in the Companies Act are 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 27
  • A Study of Customer Satisfaction towards Depository Participants 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 28
  • A Study of Customer Satisfaction towards Depository Participants 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 29
  • A Study of Customer Satisfaction towards Depository Participants 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, 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 30
  • A Study of Customer Satisfaction towards Depository Participants 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 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 31
  • A Study of Customer Satisfaction towards Depository Participants 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 32
  • A Study of Customer Satisfaction towards Depository Participants 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 • Ordinary • HUF 2. Financial institutions • Government –sponsored FI • State financial corporation • Other 3. FIIS • Mauritius –based • Others 4. NRI • Repatriable • Non-Repatriable • Depository receipt 33
  • A Study of Customer Satisfaction towards Depository Participants 5. Body corporate • Domestic company • Overseas corporate body Repatriable • Government company • 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 34
  • A Study of Customer Satisfaction towards Depository Participants 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; 2. Custodians who are permitted by the stock exchange to act as a clearing members. 35
  • A Study of Customer Satisfaction towards Depository Participants 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. 36
  • A Study of Customer Satisfaction towards Depository Participants One Clearing Member Pool Account is opened per card / Stock Exchange to settle trades in the Dematerialised form. 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 Account Receipt Account 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 37 Selling client Buying Client
  • A Study of Customer Satisfaction towards Depository Participants 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 38
  • A Study of Customer Satisfaction towards Depository Participants combination of market type and settlement number must be provided. A diagrammatic illustration of the internal structure of a clearing account is depicted in next page. 39
  • A Study of Customer Satisfaction towards Depository Participants 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. 40 Physical Rolling Action Rolling 2000014 Delivery Pool Receipt 2000015 Delivery Pool Receipt 2000248 Delivery Pool Receipt 9000152 Delivery Pool Receipt 9000153 Delivery Pool Receipt 9000152 Delivery Pool Receipt 2000016 Delivery Pool Receipt 2000249 Delivery Pool Receipt 2000248 Delivery Pool Receipt Clearing Account (IN503265)
  • A Study of Customer Satisfaction towards Depository Participants 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) 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 41 DP of Seller’s CM DP of Buyer’s CM DP of Seller NSDL CH/CC DP of buyer
  • A Study of Customer Satisfaction towards Depository Participants 42
  • A Study of Customer Satisfaction towards Depository Participants 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: 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 43 NSDL DP1 DP2 Seller A AAAlle r A Clearing MemberSeller C Seller B
  • A Study of Customer Satisfaction towards Depository Participants 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: 44
  • A Study of Customer Satisfaction towards Depository Participants Indicates flow of securities Indicates paper /electronic instruction given. 45
  • A Study of Customer Satisfaction towards Depository Participants 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 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 46
  • A Study of Customer Satisfaction towards Depository Participants 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. Karvy Consultants Ltd. has four DPMs as on date. They are: 1.Hyderabad-IN300394 2.Lucknow - IN301557 3.Bangalore- IN301926 4. Mumbai - IN302470 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. 47
  • A Study of Customer Satisfaction towards Depository Participants Function of Depository 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 dematerialisation 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, 48
  • A Study of Customer Satisfaction towards Depository Participants 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 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. 49
  • A Study of Customer Satisfaction towards Depository Participants Depository Participant: Depository Participant (DP) is an organisation 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 organisation, 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. 50
  • A Study of Customer Satisfaction towards Depository Participants Individual accounts can be opened by Ordinary Resident, HUF, NRI Repatriable and NRI Non-Repatriable. Body Corporate, Banks, Trusts, Financial 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 Dematerialisation Dematerialisation Process: 1 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 51 Investor R & T Agent DP NSDL
  • A Study of Customer Satisfaction towards Depository Participants 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. 4. R&T Agent, on receiving the physical documents and the electronic request, verifies and checks them. Once the R&T Agent is satisfied, Dematerialisation 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. 52
  • A Study of Customer Satisfaction towards Depository Participants 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 dematerialisation’. 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 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, 53
  • A Study of Customer Satisfaction towards Depository Participants 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 dematerialisation 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 dematerialisation. 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. i. The issuer or its R&T Agent verify the DRF & the accompanying certificate for validity, completeness and 54
  • A Study of Customer Satisfaction towards Depository Participants 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 55
  • A Study of Customer Satisfaction towards Depository Participants • 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. 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. 56
  • A Study of Customer Satisfaction towards Depository Participants 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 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. 57
  • A Study of Customer Satisfaction towards Depository Participants  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. 58
  • A Study of Customer Satisfaction towards Depository Participants 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. 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. 59
  • A Study of Customer Satisfaction towards Depository Participants 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 60
  • A Study of Customer Satisfaction towards Depository Participants TRADING & SETTLEMENT: 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.  Each DIS received should be inwarded correctly with the date and time stamp.  Late stamp must be affixed on the instructions received after the expiry of the deadline set by the DP.  Ensure the correctness of execution date on the DIS.  Ensure signature on DIS matches with the records of the DP.  Ensure that the signatures of all holders are obtain in case of joint accounts.  If the client has not issued “standing instructions”, he should be made aware that a receipt in instruction will be required to the credits into the account on purchase of shares.  Client should be made aware of the accounting freezing facility. 61
  • A Study of Customer Satisfaction towards Depository Participants 62
  • A Study of Customer Satisfaction towards Depository Participants 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. • Settlement of securities is effected through NSDL depository system. 63
  • A Study of Customer Satisfaction towards Depository Participants • 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. 64
  • A Study of Customer Satisfaction towards Depository Participants For this, a delivery instruction has to be given to your DP in a standardized format, which will be available with your DP. 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. 65
  • A Study of Customer Satisfaction towards Depository Participants 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. 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: 66
  • A Study of Customer Satisfaction towards Depository Participants • 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 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. 67
  • A Study of Customer Satisfaction towards Depository Participants 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 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. 68
  • A Study of Customer Satisfaction towards Depository Participants 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. 69
  • A Study of Customer Satisfaction towards Depository Participants 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. An amendment to the company law requiring all future public issues above Rs100mn to compulsorily offer securities in dematerialized 70
  • A Study of Customer Satisfaction towards Depository Participants 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. 71
  • A Study of Customer Satisfaction towards Depository Participants 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. 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. 72
  • A Study of Customer Satisfaction towards Depository Participants 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. 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 73
  • A Study of Customer Satisfaction towards Depository Participants 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. 74
  • A Study of Customer Satisfaction towards Depository Participants • 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 75
  • A Study of Customer Satisfaction towards Depository Participants DP. These investors can then either dematerialize their holdings or transfer them to a different account held with another DP. • 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. DEMAT SHARES: ARE THEY 100% SAFE When you buy physical shares from the stock market, you could never be certain of the validity of the title of shares. There were many 76
  • A Study of Customer Satisfaction towards Depository Participants reasons- the sellers' signature did not match, or the certificates were fake, forged or stolen, and so on. Demat shares are supposed to obviate these problems. Buying shares in the demat form always guarantees you a good title as soon as the settlement is over. The biggest attraction of trading in demat shares is that the shares you buy come with a clean title and immediately after the settlement on the relevant stock exchange. Rule 100 of market regulator SEBI determines whether the shares delivered in a settlement, are good or not. Under rule 100, the shares that have been transferred the company can still withdraw any number of times, if a transfer is found to be invalid for any reason. Suppose a sells physical shares to B and B gets them dematerialized. Later B sells the shares in the stock exchange and C buys them. Meanwhile A discovers that his share certificates were stolen and fraudulently sold by someone else. He gets a court order restraining the company from further transferring the shares and attaching them (currently in possession of C). This is known as 'stop transfer'. So C who has bought dematerialized shares is now struck with the shares. He cannot sell these shares since they would be frozen in his account 77
  • A Study of Customer Satisfaction towards Depository Participants In demat shares, pre-demat problems about the validity of a share do not effect the interest of the buyers after dematerialization. Shares go through a verification process at the registrars' before they are dematerialized. Therefore the responsibility lies with the registrar. The registrar must find a remedy if the original transfer of shares, before their dematerialization comers under doubt. But there is a catch. The company and its registrars are not responsible if the reasons for original transfer being invalid were not available at the time of dematerialization. Matters have to be dealt with on a case-to-case basis. Which means that even demat buyer may find that his shares have been frozen in his demat account. This kind of case has to be contested in court by the parties involved. This issue is not directly addressed in The Depositories Act, 1996. Sebi’s regulations on depositories and depository participants also do not mention the issue. Matters get more complex if an investor has traded further in shares of the same company in his demat account. Demat shares are fungible and don’t have distinctive numbers. It is not easy to track the sale or trade of shares after they are dematerialized. 78
  • A Study of Customer Satisfaction towards Depository Participants 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 79
  • A Study of Customer Satisfaction towards Depository Participants ANALYSIS OF CUSTOMER SATISFACTION Sample size selected: 100 Total Number of customer available for survey: 100 0 50 100 1 sample for survey Series1 The sample size selected for the survey was 100.(Hundred) customers of KARVY CONSLUTANT STOCK BROKING were available for survey. So opinion was taken to know the customer satisfactions towards demat account. 80
  • A Study of Customer Satisfaction towards Depository Participants 1.Respondent came to know the about “KARVY FINANCIAL CONSULTANT “ Total no. Of sample taken: 100 1 2 3 4 5 Friends News Papers/ Business Magazines Online Agent/Fina ncial Others 47 18 10 14 11 47% 18% 10% 14% 11% Friends News Papers/BusinessMagazin es Online Agent/Financial Others Source: Survey Data The above table and chart shows the respondents know KARVY FINANCIAL CONSULTANT :- • 47.00% of respondent know KARVY FINANCIAL CONSULTANT through their Friends. • 18% of of respondent know KARVY FINANCIAL CONSULTANT through News Papers & Magazine. 81
  • A Study of Customer Satisfaction towards Depository Participants • 14% of respondent know KARVY FINANCIAL CONSULTANT through Agents & Financial Institutions. • 11% of respondent know KARVY FINANCIAL CONSULTANT through Others. 2.They are interested to visit “KARVY FINANCIAL CONSULTANT “ Yes 94% No 6% Yes No Source: Survey Data Yes No 94 6 82
  • A Study of Customer Satisfaction towards Depository Participants The above table and chart shows that 94% of respondents are interested to visit KARVY FINANCIAL CONSULTANT & only 6% of Respondent are not interested to visit the same . 83
  • A Study of Customer Satisfaction towards Depository Participants 3. They Respondents are interested to visit “KARVY FINANCIAL CONSULTANT “ because of visual pleasure, hospitality & Excellent Guideline etc 47 45 8 0 00 10 20 30 40 50 Agree Just agree No Opinion Just Disagree Disagree Series1 Source: Survey Data The above table and chart shows that 47% of Respondents are interested to visit “KARVY FINANCIAL CONSULTANT “ , 45% of Respondent just agree & 8% of Respondent are not interest to give there opinion . Agree Just agree No Opinion Just Disagree Disagree 47 45 8 0 0 84
  • A Study of Customer Satisfaction towards Depository Participants 4. They Respondents are definitely use service “KARVY FINANCIAL CONSULTANT “Because attitude of employee. Agree Just agree No Opinion Just Disagree Disagree 69 24 7 0 0 Source: Survey Data The above table and chart shows that 69% of Respondents are interested to visit “KARVY FINANCIAL CONSULTANT “Because of there attitude, and, 24% of Respondent just agree only 7% of Respondent are constant. 85 69 24 7 0 00 10 20 30 40 50 60 70 80 Agree Just agree No Opinion Just Disagree Disagree Agree Just agree No Opinion Just Disagree Disagree
  • A Study of Customer Satisfaction towards Depository Participants 86
  • A Study of Customer Satisfaction towards Depository Participants 5. They Respondents are definitely using service of “KARVY FINACIAL CONSULTANT because what they benefit gets from them. 50 41 8 1 00 10 20 30 40 50 60 Agree Just agree No Opinion Just Disagree Disagree Agree Just agree No Opinion Just Disagree Disagree Source: Survey Data The above table and chart shows that 50% of Respondents are interested to visit “KARVY FINANCIAL CONSULTANT because they get that much of benefits from them , and, 41% of Respondent just agree only 8% of Respondent constant..1% of Respondent just disagrees. Agree Just agree No Opinion Just Disagree Disagree 50 41 8 1 0 87
  • A Study of Customer Satisfaction towards Depository Participants 88
  • A Study of Customer Satisfaction towards Depository Participants 6 They Respondents are interested “KARVY FINANCIAL CONSULTANT “ because they introduce new scheme and we get benefit . Yes 86% No 14% Yes No Yes No 86 14 89
  • A Study of Customer Satisfaction towards Depository Participants Source: Survey Data The above table and chart shows that 86% of respondents are interested to use service of “KARVY FINANCIAL CONSULTANT” because they introduce new scheme and we get benefit & only 14% of Respondent are not interested to visit the same. 7 They Respondents use “KARVY FINANCIAL CONSULTANT “because Karvy People know customer value and money value. Agree Just agree No Opinion Just Disagree Disagree 54 39 6 1 0 90
  • A Study of Customer Satisfaction towards Depository Participants 54 39 6 1 00 10 20 30 40 50 60 Agree Just agree No Opinion Just Disagree Disagree Agree Just agree No Opinion Just Disagree Disagree Source: Survey Data The above table and chart shows that 54% of respondents are satisfied with the service of “KARVY FINANCIAL CONSULTANT” because the Karvy People know customer value and money value. 39% Respondents just agree .6% of parole say no opinion and only 1% of Respondent say just disagree. 8. They Respondents specify “KARVY FINANCIAL CONSULTANT “better then other Dp. Agree Just agree No Opinion Just Disagree Disagree 41 37 20 1 1 91
  • A Study of Customer Satisfaction towards Depository Participants 41 37 20 1 1 0 5 10 15 20 25 30 35 40 45 Agree Just agree No Opinion Just Disagree Disagree Agree Just agree No Opinion Just Disagree Disagree Source: Survey Data The above chart shows that 41% of respondents are interested in “KARVY FINANCIAL CONSULTANT” because of their best service which is better then other DP services. 41% of Respondents agree.31% of Respondents just agreed. 20 % of Respondent has not given their opinion. Only 1% of Respondent disagrees. 92
  • A Study of Customer Satisfaction towards Depository Participants 9. Demat Extremely satisfied Satisfied Neither satisfied/ nor unsatisfied Unsatisfied Extremely unsatisfied 38 46 16 0 0 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied S1 38 46 16 0 0 Source: Survey Data The above table and chart shows demat services offered by KARVY FINANCIAL CONSULTANTS are satisfied. 38% of the Respondents are extremely satisfied, 46% just Satisfied, 16%of of Respondents neither satisfied / Unsatisfied.. 93
  • A Study of Customer Satisfaction towards Depository Participants b. Settlement (Selling/ Buying) Extremely Satisfied Satisfie d Neither satisfied/nor Unsatisfied Unsatisfie d Extremely unsatisfied 25 49 26 0 0 25 49 26 0 00 10 20 30 40 50 60 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows that 25% of the respondents are extremely satisfied by the service of Karvy, 49% of respondents are satisfied and 26% of the respondents are having neutral opinion about the service provided by the Institution. 94
  • A Study of Customer Satisfaction towards Depository Participants c. Freezing/Defreezing Extremely Satisfied Satisfied Neither satisfied/nor Unsatisfied Unsatisfie d Extremely unsatisfied 6 49 45 0 0 6 49 45 0 0 0 20 40 60 1 Extremely unsatisfied unsatisfied Neither satisfied/nor unsatisfied Satisfied Extremely satisfied Source: Survey Data The above table and chart shows the services of freezing/ defreezing 49% of the respondent are aware and satisfied with these services. And 45% of respondent are having neutral opinion about freezing/ defreezing, 6% of respondent are dissatisfied with this service because they are don’t have understood the core concept. 95
  • A Study of Customer Satisfaction towards Depository Participants d. Loan against Shares Extremely satisfied Satisfied Neither satisfied/nor unsatisfied Unsatisfied Extremely unsatisfied 22 33 45 0 0 22% 33% 45% 0%0% Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows most of the respondent are having neutral opinion i.e., 45% and 33% have satisfied this service. 22% of respondent are extremely satisfied. 96
  • A Study of Customer Satisfaction towards Depository Participants e. Share Trading Extremely Satisfied Satisfie d Neither satisfied/nor Unsatisfied Unsatisfie d Extremely unsatisfied 49 47 4 0 0 49 47 4 0 00 10 20 30 40 50 60 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows the service of share trading, 49% of the respondent have Extremely Satisfied with this service, and 47% of respondent are satisfied; In all we can say that 96% respondent have satisfied with the services of Share trading. 97
  • A Study of Customer Satisfaction towards Depository Participants F. Periodic statements Extremel y Satisfied Satisfied Neither satisfied/ unsatisfied Unsatisfied Extremely unsatisfie d 48 44 8 0 0 48 44 8 0 00 10 20 30 40 50 60 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows the services given by Karvy about Periodic statements 48% of the respondent are extremely satisfied & 44% of the respondent is satisfied .In all 92%(appr) of respondent have satisfied with this service. 98
  • A Study of Customer Satisfaction towards Depository Participants g. Telephone Quires Extremely satisfied Satisfied Neither satisfied/nor unsatisfied Unsatisfie d Extremely unsatisfied 40 48 12 0 0 40 48 12 0 00 10 20 30 40 50 60 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows the 48% of the respondent are satisfied with the Telephonic service; 40% of the respondent are mostly satisfied & in all 88% of the Respondent satisfied; 12% having neutral opinion. 99
  • A Study of Customer Satisfaction towards Depository Participants h. Co-operation by Staff Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied 60 35 5 0 0 60 35 5 0 0 0 10 20 30 40 50 60 70 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows overall 60% of the respondent are extremely satisfied with the co-operation by staff; 35% of the 100
  • A Study of Customer Satisfaction towards Depository Participants respondents are satisfied & 5% of the respondents are having neutral opinion. 101
  • A Study of Customer Satisfaction towards Depository Participants I. Bills acceptance. Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied 50 32 16 1 1 50 32 16 1 10 10 20 30 40 50 60 Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Extremely satisfied Satisfied Neither satisfied/nor unsatisfied unsatisfied Extremely unsatisfied Source: Survey Data The above table and chart shows overall 50% of the respondent are extremely satisfied; 32% of the respondents are satisfied &16% of the respondents are having neutral opinion. 102
  • A Study of Customer Satisfaction towards Depository Participants 10. Dissatisfied with services/ scheme A Frequently reminders are given to karvy consultant ltd., for update the information 4 4% B Irregular receipt of Holding/Transaction statement 1 1% C Improper attention given to the enquires 5 5% D Improper format of Holding/Transaction statement 1 1% E Billing problems 1 1% F Inadequate information 2 2% a B c d e f 4 1 5 1 1 2 4 1 5 1 1 2 0 1 2 3 4 5 6 1 a b c d e f Source: Survey Data The above table and chart shows that 5% of the respondents are unsatisfied with Improper attention given to the enquires . & 4% of the respondent are unsatisfied with frequently reminders are given to karvy 103
  • A Study of Customer Satisfaction towards Depository Participants consultant ltd., for update the information given by DP .So proper communication with the Respondent & update information is required. 11. Tariff Structure 13 25 62 0 00 10 20 30 40 50 60 70 Veryhigh High resonable low verylow Veryhigh High resonable low verylow Source: Survey Data The above table and chart shows that 62% of the respondents think the tariff structure of the KARVY CONSULTANT is very Very high High Reasonable Low Very low 13 25 62 0 0 104
  • A Study of Customer Satisfaction towards Depository Participants reasonable.25% of the respondent thinks the tariff structure is high. 13% of the respondent feels the tariff structure is very high. 12. Rate of Satisfaction for DP services 0% 20% 40% 60% 80% 100% 0 0 11 31 53 5 13 25 62 0 00 10 20 30 40 50 60 70 Veryhigh High resonable low verylow Veryhigh High resonable low verylow Source: Survey Data The above table and chart shows that 53% of the respondent have satisfied 80% of service given by DP; 31% of the respondent have satisfied 60% of service and 11% of the respondent have 105
  • A Study of Customer Satisfaction towards Depository Participants satisfied 40% of the service. Only 5% of respondent have satisfied 100 of the service. 106
  • A Study of Customer Satisfaction towards Depository Participants 13. Preference of own DP over other DP Quality service Rate Charged Nothing in particular Safety Reach 35 14 10 40 1 35 14 40 1 10 0 5 10 15 20 25 30 35 40 45 Qulity service Rate Charged Nothing in paricular Safety Reach Qulity service Rate Charged Nothing in paricular Safety Reach Source: Survey Data The above table and chart shows that 40% of the respondents preferred this DP because of Safety & 35% of the respondents preferred this DP because of the quality service. In all 75% prefer KARVY CONSULTANT because of safety& quality. 107
  • A Study of Customer Satisfaction towards Depository Participants Recommendation  Customer service should be improved and more co-operation also provide.  Time taken for transfer of script from trading account into demat account should be reduced.  Statement copy should made more clear and figure should be mention in respective column.  More space provide in trading place.  The commission charged should be reduced.  The office should be situated near bus stand or subhas road. 108
  • A Study of Customer Satisfaction towards Depository Participants CONCLUSION Since it is service based industry, the customer plays vital role, so in order to satisfy the customer appoint more no of well qualified agents who can communicate respondents to improve the services, hence give more advertisement in News paper, local TV channel, to over come the over crowding and non availability of telephone links proper measure should be taken. 109
  • A Study of Customer Satisfaction towards Depository Participants QUESTIONNAIRE Dear Sir/ Madam NAME : ____________________________ ADDRESS : ____________________________ __________________________ OCCUPATION: __________________________ Phone No: __________ 1. I came to know about KARVY FINANCIAL CONSULTANTS from 1 2 3 4 5 Friend s News Papers /Business Magazine Online Agent/Financial Agency Others 2. I am interested in visiting KARVY FINANCIAL CONSULTANTS because they provide quick and timely service. 1) Yes 2) No 3. I have been using service of KARVY FINANCIAL CONSULTANTS because of the low cost, visual pleasure, Hospitality, Communication, and new concept of financial consultancy 1 2 3 4 5 Agree Just Agree No opinion Just disagree Disagree 110
  • A Study of Customer Satisfaction towards Depository Participants 4. In future I will be definitely using the service of KARVY FINANCIAL CONSULTANTS because of the attitude of the employees towards customers. 1 2 3 4 5 Agree Just Agree No opinion Just disagree Disagree 5. I will definitely use service of KARVY FINANCIAL CONSULTANTS because of the benefit I get from KARVY FINANCIAL CONSULTANTS 1 2 3 4 5 Agree Just Agree No opinion Just disagree Disagree 6. I am interested in KARVY FINANCIAL CONSULTANTS because of the new scheme introduced frequently and benefit from such scheme 1) Yes 2) No 7. I use KARVY FINANCIAL CONSULTANTS because they know customer value as well as money value of customers 1 2 3 4 5 111
  • A Study of Customer Satisfaction towards Depository Participants Agree Just Agree No opinion Just disagree Disagree 8. KARVY FINANCIAL CONSULTANTS service of dp are better then other dp services. 1 2 3 4 5 Agree Just Agree No opinion Just disagree Disagree 112
  • A Study of Customer Satisfaction towards Depository Participants 9. Express your satisfaction level about the following scheme/service please tick. Schemes/services Extremely Satisfied Satisfie d Neither satisfied/nor unsatisfied unsatisfie d Extremely Unsatisfied a. Demat b. Settlement (Selling/purchasing ) c. Freezing/ defreezing Of an account d. Loan against shares e. Share trading f Periodic statements g. Telephone queries h. Co-operation by staff i. Bills Acceptance 10. 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 KARVY FININCIAL CONSULTANTS., 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 Other specify___________________ 113
  • A Study of Customer Satisfaction towards Depository Participants 11. Please tick the following: Tariff Structure 1 2 3 4 5 Very High High Reasonabl e Low Very Low 12. How do you rate the services of your DP 0% 20% 40% 60% 80% 100% 13. How do you justify your preference for your KARVY FINANCIAL CONSULTANTS DP over other DP’s? 1 2 3 4 5 Quality Service Rates Charged Nothing in particular Safety Reach 14. A) Your age (Yrs) <25 26-35 36-45 46-60 > 60 B) Income (Pa) <60000 60000-1.2 L 1. 2 L– 2.4 L 2.4 L– 3.6L 3.6 L – 6.0.L 6.0 L –12.0 L C) Education Up to Xth Graduate Post Graduate. PhD. Others. D) Yearly of investment. 114
  • A Study of Customer Satisfaction towards Depository Participants 1L-5 L 5L-10L >10L 15. Suggestion ______________________________________________ ______________________________________________ Thank you for your co-operation 115
  • A Study of Customer Satisfaction towards Depository Participants CODE SHEET OF CUSTOMER RESPONSE Q. 9. Extremely Satisfied: 1; Satisfied: 2;Neither Satisfied/Nor Dissatisfied: 3; Unssatisfied:4; Extremely Dissatisfied: 5 Q11. Very High: 1;High: 2;Reasonable: 3;Low: 4;Very Low: Q12. 0%: 1; 20%: 2; 40%: 3; 60%: 4;80%: 5;100%: Q813. Quality Service: 1;Rates charged: 2;Nothing in particular: 3; Safety: 4;Reach: 5 DATA CODE - SHEET Sl No 123456789a9b9c9d9e9f9g9h9i10a10b10c10d10e10f111213a13b13c13d13e 1 1 1 1 1 1 1 1 2 2 2 3 3 1 2 1 1 2 2 3 5 3 2 1 1 1 1 1 2 2 2 1 2 2 2 2 2 2 1 2 3 4 1 3 1 1 1 1 1 1 2 1 2 2 2 2 2 2 3 2 3 3 2 4 4 4 1 1 2 2 2 2 2 2 2 2 3 3 2 2 2 2 2 2 3 3 5 1 1 1 1 1 1 1 1 1 2 2 3 1 1 1 2 2 3 5 1 6 1 1 2 1 1 1 2 1 1 1 2 1 1 2 1 1 2 2 5 4 7 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 1 3 5 1 8 4 1 1 1 1 1 1 1 2 1 3 3 1 1 1 1 1 3 6 4 9 1 1 1 2 2 1 2 3 2 2 3 3 2 1 1 1 1 3 5 1 10 1 1 2 3 1 2 3 2 2 3 2 3 2 3 2 2 2 3 4 2 4 3 11 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 2 12 2 1 2 1 2 1 3 2 2 2 2 2 2 2 2 2 2 3 5 1 13 2 1 2 2 2 1 2 2 2 1 1 3 1 1 1 3 1 1 3 4 3 14 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 1 5 1 15 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 1 2 3 5 4 16 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 2 3 4 1 17 2 1 1 1 1 1 1 3 1 2 3 3 2 2 1 1 1 3 5 1 18 1 1 2 1 2 1 1 2 2 1 2 1 1 1 1 1 1 3 5 4 19 1 1 1 1 1 1 2 2 1 1 2 2 1 1 1 2 1 3 5 1 20 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1 21 1 1 2 2 3 1 2 1 1 2 2 2 1 1 2 1 1 2 5 4 22 4 1 2 1 1 1 2 3 1 2 3 3 1 2 1 1 3 2 5 4 23 1 1 1 1 1 1 2 1 1 1 2 3 1 1 1 1 1 3 5 4 24 1 1 1 1 1 1 2 3 1 1 3 3 2 1 1 2 1 3 5 4 116
  • A Study of Customer Satisfaction towards Depository Participants 25 1 1 1 1 1 1 1 1 3 2 2 3 1 1 2 1 2 3 5 1 26 4 2 3 2 3 2 2 2 3 2 3 3 2 2 2 2 2 2 4 3 27 1 1 1 1 1 1 2 1 1 1 2 3 2 1 2 1 1 3 4 1 28 1 1 2 2 3 1 1 1 2 2 2 3 2 2 1 1 1 3 5 1 29 1 1 2 1 3 2 1 2 1 2 3 3 1 1 1 1 1 1 5 4 30 2 1 1 1 1 1 1 1 2 1 3 3 1 2 1 1 1 3 5 1 31 2 1 1 1 1 1 1 1 2 2 2 3 2 2 2 2 2 3 5 4 32 1 1 2 1 1 1 1 1 2 2 2 3 2 2 2 2 2 1 3 3 1 33 1 1 1 1 1 1 2 2 2 2 2 3 2 2 1 1 2 3 4 1 34 2 1 2 2 1 2 2 2 2 2 2 3 2 2 2 2 2 3 5 1 35 1 1 1 1 1 1 1 1 2 2 2 3 1 1 2 2 2 1 3 5 4 36 5 1 2 1 2 2 2 5 2 2 2 3 2 3 2 2 5 1 3 6 2 4 3 37 1 1 1 2 2 1 2 2 2 3 3 2 2 1 2 1 1 3 3 1 38 1 1 1 1 1 1 1 2 2 1 2 1 1 1 1 1 1 5 2 5 4 39 1 2 3 3 4 2 4 4 2 2 3 3 2 2 3 2 4 3 6 3 3 3 40 1 1 1 1 1 2 2 2 2 2 3 3 2 2 2 2 2 2 4 4 41 1 1 2 1 2 2 1 3 2 2 3 3 2 2 1 1 2 3 5 1 42 2 1 1 1 2 1 1 1 1 2 2 3 1 1 2 1 1 2 5 4 43 4 1 2 1 1 1 1 2 1 2 3 3 1 1 1 1 1 3 5 1 44 1 1 3 2 1 2 2 3 2 2 3 3 2 2 1 1 2 3 1 3 2 45 1 1 1 1 2 1 1 2 2 1 2 3 1 1 2 1 2 3 4 2 46 2 1 3 3 2 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1 47 1 2 2 1 2 1 1 1 3 2 1 2 1 2 3 1 1 3 4 1 48 2 1 2 2 1 1 3 2 2 3 3 1 2 2 3 2 3 2 4 2 49 1 1 1 1 2 1 1 1 3 2 2 3 1 2 3 1 1 3 3 3 50 5 1 2 1 1 1 1 2 1 3 1 2 2 3 2 1 1 2 5 1 51 1 1 2 2 2 1 1 1 3 1 3 3 1 3 2 2 1 3 4 2 52 2 1 1 1 1 1 3 2 2 3 2 1 3 2 3 1 1 3 5 3 53 1 1 2 1 2 1 1 1 1 2 1 2 1 3 2 1 1 2 4 2 54 1 2 2 2 1 1 3 3 3 1 3 2 2 1 3 1 1 3 3 1 55 3 1 1 1 2 1 1 1 2 3 2 3 1 2 2 1 1 2 5 3 56 1 1 2 2 1 1 1 2 3 2 2 2 2 1 2 1 1 3 4 2 57 2 1 1 1 2 2 1 1 1 1 3 1 1 2 3 2 1 3 3 2 58 4 1 2 1 1 1 3 2 2 3 1 3 2 1 2 1 1 1 4 1 59 1 2 2 2 2 1 1 1 3 2 3 2 1 2 3 1 1 3 5 2 60 3 1 1 1 1 1 2 2 2 3 2 1 2 1 2 2 1 3 3 4 61 1 1 2 1 2 1 1 1 3 1 3 2 1 2 3 1 1 3 4 2 62 3 1 2 1 1 1 2 3 1 3 2 3 2 1 2 2 1 1 5 1 63 1 1 1 1 2 1 1 1 3 2 2 2 1 2 3 1 1 3 4 4 117
  • A Study of Customer Satisfaction towards Depository Participants 64 4 1 1 1 1 2 1 2 2 3 1 1 2 1 2 2 1 3 3 2 65 1 1 2 1 2 1 1 1 1 1 3 2 3 1 3 1 1 3 4 1 66 1 1 2 2 3 1 2 3 3 3 2 1 2 2 2 2 1 3 3 2 67 1 2 1 1 2 1 1 1 2 2 3 2 3 1 1 1 1 3 4 4 68 3 1 2 1 3 1 2 2 3 3 2 3 2 1 2 1 1 3 5 1 69 3 1 1 1 2 1 1 2 3 3 3 1 1 2 1 2 1 2 5 1 70 4 1 2 1 2 1 2 3 2 2 3 1 2 1 1 2 1 2 5 4 71 5 1 2 4 1 1 1 2 1 3 3 3 1 2 1 2 1 2 4 1 72 5 1 1 1 2 1 2 3 3 1 2 1 2 1 1 1 1 1 5 4 73 5 1 2 2 3 1 1 1 1 3 3 3 1 2 1 2 1 2 4 4 74 5 1 2 2 1 1 2 3 2 2 3 1 2 1 1 2 1 2 5 1 75 5 1 3 1 2 1 1 2 3 3 3 2 1 3 2 1 1 1 4 4 76 4 1 2 2 1 1 2 1 1 1 3 1 2 1 2 2 1 2 5 1 77 2 1 2 1 2 1 1 3 1 3 2 3 3 2 1 1 1 1 4 4 78 5 1 1 3 1 1 2 2 3 2 3 2 1 2 2 3 2 2 5 2 79 3 1 2 1 2 1 1 1 2 3 2 1 2 1 2 1 2 1 4 1 80 1 1 1 1 3 1 2 2 1 2 3 3 1 2 2 2 2 1 5 4 81 4 1 1 1 2 1 1 3 1 3 2 2 2 1 2 1 2 3 4 2 82 5 1 2 2 1 1 2 1 1 2 3 1 1 2 1 2 2 1 5 4 83 3 1 3 1 2 1 1 2 1 2 2 2 2 1 2 1 2 3 4 4 84 2 1 2 1 2 1 2 3 2 3 3 2 1 3 2 2 2 3 5 1 85 4 1 1 3 1 1 1 1 2 1 2 1 2 1 1 1 2 1 4 4 86 3 1 3 1 2 1 2 2 1 3 2 3 1 2 2 2 2 3 5 4 87 1 1 2 2 2 2 1 3 1 2 3 2 2 1 2 1 2 3 4 4 88 5 1 1 1 2 1 2 3 2 2 3 1 1 3 2 3 3 1 5 5 89 2 1 3 1 1 1 1 1 2 3 2 2 2 1 1 1 3 3 4 4 90 4 1 2 1 2 1 2 2 1 2 3 2 1 2 2 2 3 3 6 1 91 3 1 1 1 2 1 1 3 2 1 3 3 2 1 1 1 3 2 5 4 92 2 1 2 1 1 1 2 2 2 3 2 2 1 2 2 3 3 3 6 4 93 5 1 1 1 2 1 1 1 2 2 3 1 2 1 1 2 3 3 5 4 94 4 1 2 1 2 1 2 3 1 2 3 2 1 2 2 3 3 3 5 4 95 2 1 1 2 2 1 1 2 2 3 2 2 2 1 1 2 3 2 5 4 96 4 1 2 1 1 1 2 1 1 2 3 1 1 2 2 1 3 3 6 4 97 3 1 1 2 2 1 1 3 2 3 2 3 2 1 2 1 3 3 5 4 98 2 1 2 2 1 1 2 2 1 2 3 1 1 2 2 1 3 2 5 4 99 4 1 1 2 2 1 1 2 2 3 3 3 2 1 2 1 3 3 5 4 10 0 2 1 2 3 1 1 2 1 1 1 3 1 1 2 2 1 3 3 5 4 118
  • A Study of Customer Satisfaction towards Depository Participants 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 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 dematerialised (demat) form and undertake scrip less trading must have a 119
  • A Study of Customer Satisfaction towards Depository Participants 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. Karvy 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 dematerialisation 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”. 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 120
  • A Study of Customer Satisfaction towards Depository Participants 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. 121
  • A Study of Customer Satisfaction towards Depository Participants 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. 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 pledgor 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 122
  • A Study of Customer Satisfaction towards Depository Participants 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. 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 ". 123
  • A Study of Customer Satisfaction towards Depository Participants NSDL: The National Securities Depository Limited is an organisation 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 can pledge securities in electronic form against loan / credit facilities extended by a pledgee, who too has a beneficiary account with a Depository Participant. 124
  • A Study of Customer Satisfaction towards Depository Participants 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. 125
  • A Study of Customer Satisfaction towards Depository Participants 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. 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 126
  • A Study of Customer Satisfaction towards Depository Participants 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. 127
  • A Study of Customer Satisfaction towards Depository Participants BIBLIOGRAPHY Web sites • www.karvy.com • www.indiainfoline.com • www.sharekhan.com • info@nsdl.co.in Books • Company books & Brochures • NSDL Books 128
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