A bank or company which holds funds or securities depos
ited by others, and where exchanges of these
securities take place.
• India has adopted
system for securities
trading in which
book entry is done
electronically and no
paper is involved.
• Before the
introduction of the
the Depository Act,
1996, the process of
sale, purchase and
transfer of securities
was a huge problem,
and there was no
safety at all.
Key Features of the
Depository System in India
1. Multi-Depository System
2. Depository services through
5. Registered Owner/ Beneficial
6. Free Transferability of shares
Merits of Depository
• The shares, represented by
dematerialized share certificates are
fungible and, therefore, certificate
numbers and distinctive numbers are
cancelled and become non-operative.
• Transfer of dematerialized securities is
• The investor is also relieved of
problems like bad delivery, fake
certificates, shares under litigation,
signature difference of transferor and
• The threat of loss of certificates or
fraudulent interception of certificates
in transit that causes anxiety to the
investors, are eliminated.
Demerits of the
•Lack of control
•Need for greater
•Complexity of the
Dematerialization refers to the substitution of paper-
form securities by book entry securities.
• Fill up a dematerialization request form, which
is available with your DP;
• Submit your share certificates
• Receive credit for the dematerialized shares
into your account in 15 days.
• National Securities Depository Limited (NSDL) is the
first central securities depository in India based
• It was founded in November 1996.
• NSDL is promoted by IDBI, UTI and NSE.
• Central Depository
Services Limited (CDSL) is
Indian central securities
• It was founded in 1999.
• CDSL is promoted
by Bombay Stock
Exchange Limited (BSE)
jointly with State Bank of
India, Bank of India,
Bank of Baroda, HDFC
Chartered Bank and
Union Bank of India.