A project report on customer satisfaction towards depository participants at karvy


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A project report on customer satisfaction towards depository participants at karvy

  1. 1. A Study of Customer Satisfaction towards Depository ParticipantsEXECUTIVE SUMMARY Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals in shares. Apartfrom 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 financialplanning. 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. 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 aparticular 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 Babasabpatilfreepptmba.com Page. No1
  2. 2. A Study of Customer Satisfaction towards Depository Participantsservice and this DP is overcoming the disadvantages of the physical trading of thesecurities in the stock exchange.Findings:Findings:1) I have carried out this exercise on Dematerlisation. So in my studies I have tried to seewhether 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 isfrom mainly through Agents is less than friends .3) It is also find that more than 84% of the respondent have satisfied with the service ofdemat.4) It is also find that more than 55% to 60% of the respondent has satisfied with the serviceof Freezing/ Defreezing and loan against share. More than not aware abut 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 aregiven 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 andvery high.8) Also find that 53% respondent have satisfied 80% of the service9). 35% of respondent prefer Karvy Stock Broking Ltd as DP to other DP because ofQuality service. And 40% for safety service. Babasabpatilfreepptmba.com Page. No2
  3. 3. A Study of Customer Satisfaction towards Depository ParticipantsIntroductionIndia has two hundred years old tradition in Securities. Infact that first India stockexchange established in Bombay is the oldest in Asia. The earliest security dealings wereTransactions in loan securities of East India Company, the dominant institution of thosedays. Corporate Shares came into the picture by 1830’s and assumed significance with theCompanies Act of 1956. In 1887 the broker community gave birth to the “Native share andstock 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 registeredan impressive growth in 1980s. the process of liberalization and the transparency inoperation has raised the interest of foreign investors in India. Till 1978 there were only 8recognized exchanges in India. Initially the exchange operated on an outcry system i.e.manual system of trading Due to increase in the trading volumes, the number of issuerincreased substantially, and the birth of NSES highly transparent automated system comeinto existence Even then there was an increase in paper work causing a gridlock at everystage in the stock market This delays the clearance and settlement of traders, registration ofsecurities in the shareholder name and due this it increased the back office paper workintermediaries These outdated systems have increased settlement risks and have renderedthe implementation of a delivery of a versus payment system impossible. National StockExchange of India Limited to provide electronic depository facilities for securities tradedin the equity and the debt market. NSDL commenced its operations in the year 1996 and isthe first depository in India. Babasabpatilfreepptmba.com Page. No3
  4. 4. A Study of Customer Satisfaction towards Depository ParticipantsDesign of the studyTile of the project: “Service Analysis & Customer satisfaction towards Depositary participants”.Statement of the Problem: KARVY STOCK BROKING Ltd is providing the Dematservice. Hence in this report an attempt is made to know the present customer satisfactiontowards 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. .Methods and MethodologySampling 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. Babasabpatilfreepptmba.com Page. No4
  5. 5. A Study of Customer Satisfaction towards Depository Participants  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. SECOUNDARY DATA: This is been is collected through Karvy’s Record & Report, Magazine & Websites.MEASUREMENT TECHNIQUE: For this purpose measurement technique used for survey is questionnaire to collect information from the respondentANALYTICAL 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. Babasabpatilfreepptmba.com Page. No5
  6. 6. A Study of Customer Satisfaction towards Depository Participants • 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, flowsfreely towards attaining diverse goals of the customer through varied services. Creating aplethora of opportunities for the customer by opening up investment vistas backed byresearch-based advisory services. Here, growth knows no limits and success recognizes noboundaries. Helping the customer create waves in his portfolio and empowering theinvestor completely is the ultimate goal. KARVY, is a premier integrated financial services provider, and ranked among thetop five in the country in all its business segments, services over 16 million individualinvestors in various capacities, and provides investor services to over 300 corporate,comprising the who is who of Corporate India. KARVY covers the entire spectrum offinancial services such as Stock broking, Depository Participants, Distribution of financialproducts - mutual funds, bonds, fixed deposit, equities, Insurance Broking, CommoditiesBroking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance,placement of equity, IPOs, among others. Karvy has a professional management team andranks among the best in technology, operations and research of various industrialsegments. Babasabpatilfreepptmba.com Page. No6
  7. 7. A Study of Customer Satisfaction towards Depository Participants The birth of Karvy was on a modest scale in 1981. It began with the vision andenterprise of a small group of practicing Chartered Accountants who founded the flagshipcompany…Karvy Consultants Limited. We started with consulting and financialaccounting automation, and carved inroads into the field of registry and share accountingby 1985. Since then, we have utilized our experience and superlative expertise to go fromstrength to strength…to better our services, to provide new ones, to innovate, diversify andin the process, evolved Karvy as one of India’s premier integrated financial serviceenterprise. Thus over the last 20 years Karvy has traveled the success route, towards building areputation as an integrated financial services provider, offering a wide spectrum ofservices. And we have made this journey by taking the route of quality service, pathbreaking innovations in service, versatility in service and finally…totality in service.Our highly qualified manpower, cutting-edge technology, comprehensive infrastructureand total customer-focus has secured for us the position of an emerging financial servicesgiant enjoying the confidence and support of an enviable clientele across diverse fields inthe financial world. Over the years we have ensured that the trust of our customers is our biggestreturns. Factors such as our success in the Electronic custody business has helped build onour 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 thebuilding block for creating a great financial enterprise, which stands solid on our fortressesof financial strength - our various companies. Babasabpatilfreepptmba.com Page. No7
  8. 8. A Study of Customer Satisfaction towards Depository Participants With the experience of years of holistic financial servicing behind us and years ofcomplete expertise in the industry to look forward to, we have now emerged as a premierintegrated 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 adiverse 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)  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 Babasabpatilfreepptmba.com Page. No8
  9. 9. A Study of Customer Satisfaction towards Depository Participants • 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 • 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 Babasabpatilfreepptmba.com Page. No9
  10. 10. A Study of Customer Satisfaction towards Depository Participants 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 2. Started with a 30 agent e-call centerMISSIONOur mission is to be a leading, preferred service provider to our customers, and we aim toachieve this leadership position by building an innovative, enterprising and technologydriven organization which will set the highest standards of service and business ethics. QUALITY POLICY To achieve and retain leadership, Karvy shall aim foe completecustomers satisfaction, by combining its human and Technological resources, to providesuperior quality financial Services. In the process, Karvy will strive to exceed Customer’sexpectations.QUALITY OBJECTIVES As per the Quality Policy, Karvy will: Babasabpatilfreepptmba.com Page. No10
  11. 11. A Study of Customer Satisfaction towards Depository Participants 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. 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)  Indias No. 1 Registrar & Securities Transfer Agents  Among the to top 3 Depository Participants  Largest Network of Branches & Business Associates Babasabpatilfreepptmba.com Page. No11
  12. 12. A Study of Customer Satisfaction towards Depository Participants  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 operationsMilestone Babasabpatilfreepptmba.com Page. No12
  13. 13. A Study of Customer Satisfaction towards Depository ParticipantsORGANISATION CHART Managing Director Babasabpatilfreepptmba.com Page. No13
  14. 14. A Study of Customer Satisfaction towards Depository Participants Chief Managing DirectorVice-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 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. Babasabpatilfreepptmba.com Page. No14
  15. 15. A Study of Customer Satisfaction towards Depository ParticipantsSecurities registered in your name are surrendered to depository participant (DP) and theseare sent to the respective companies who will cancel them after "Dematerialization" andcredit your depository account with the DP. The securities on Dematerialization appear asbalances 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 papercertificates, the Depose Depository functions like a securities bank, where thedematerialized 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 accountwith a DP & then request for the dematerialization of certificate by filling up adematerialization request form (DRF), which is available with DP & submitting the samealong with the physical certificates. The investor has to ensure that before the certificateare handled over to the DP For demat, they are defaced by marking “Surrendered fordematerialisation” on the face of the certificates. Depository is much like a bank andperform 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, aninvestor opens a depository account with a depository participant in order to avail ofdepository facilities. Following table compares the two.Bank Depository Babasabpatilfreepptmba.com Page. No15
  16. 16. A Study of Customer Satisfaction towards Depository ParticipantsHolds funds in accounts Holds securities in accountTransfers funds between accounts Transfers securities between accountsTransfers without handling money Transfers without handling securitiesSafekeeping of money Safekeeping of securities Transacting the depository way has several advantages over the traditional system oftransacting 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 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. Babasabpatilfreepptmba.com Page. No16
  17. 17. A Study of Customer Satisfaction towards Depository Participants • RBI has increased the limit of loans against dematerialized securities as collateral to Rs2mn per borrower as against Rs1mn per borrower in case of loans against physical securities. • RBI has also reduced the minimum margin to 25% for loans against dematerialized securities as against 50% for loans against physical securities. In short the advantages of opening a demat account are  Shorter settlements thereby enhancing liquidity  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 investorcan hold shares either in physical or in dematerialized form. But according to Sebi’sdirective certain shares have to be traded compulsorily in dematerialized form where the Babasabpatilfreepptmba.com Page. No17
  18. 18. A Study of Customer Satisfaction towards Depository Participantsseller cannot sell in physical form. However, after he has bought the shares the investorcan ask for rematerialization of the shares. The Depository Account must be opened with a Depository Participant. NSDLinterfaces with investor trough Depository Participants (DPS). A list of names andaddresses of all Authorized DP’s is available with the NSDL and CDSL and one can meetany of these DP’s place and make a choice at your based on your comfort andconvenience. Opening a depository account is as simple as opening a bank account. Onecan open a depository account with any DP. To open a Depository Account, you have to submit the duly filled in AccountOpening 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). • 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 accountin the same order of names before you submit your share certificates for demat. A sole Babasabpatilfreepptmba.com Page. No18
  19. 19. A Study of Customer Satisfaction towards Depository Participantsholder of the share certificates cannot add more names as joint holders at the time ofdematerializing his share certificates. However, if the investor wants to transfer the ownership from his individual nameto a joint name, he should first open an account as the sole holder (account A) anddematerialize 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 andmake an off market transfer of the shares from the account A to account B. The investorwill incur a charge on this transaction. Alternatively, the certificates can be transferred tothe 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 canbe availed of only when the relevant provisions in the Companies Act are amended. NSDLcaptures the details of the nominee when the account is opened so as to offer the facility assoon as the relevant amendments are effected in the Law. A client can choose to open more than one account with same DP. In addition tothis, he has a choice of opening accounts with more than one DP. However a broker canopen just one Clearing Member account per card/ stock exchange for clearing purpose, buthe can still open multiple beneficiary accounts Beneficiary is the personal account whereinbrokers can keep their personal holdings.Account opening Babasabpatilfreepptmba.com Page. No19
  20. 20. A Study of Customer Satisfaction towards Depository Participants Any investor who wishes to avail depository services must first open an accountwith a depository participant of NSDL The process of opening a Demat account is verysimilar to a bank account The investor can open an account with any depository participantof NSDL An investor may open an account with several DPs or he may open severalaccount 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 DPbased on criteria like convenience , comfort has to enter into an agreement with the DPThe form and contents of this agreement are specified by the business rules of NSLD Types of depositary account depends on the operation to be performed There are threetypes of Demat accounts which can be opened with a depositary participant viz(a) Beneficiary Account (b) Clearing member Accounts and (c) intermediary account 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 Babasabpatilfreepptmba.com Page. No20
  21. 21. A Study of Customer Satisfaction towards Depository Participants • 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 borrowingBeneficiary 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 Babasabpatilfreepptmba.com Page. No21
  22. 22. A Study of Customer Satisfaction towards Depository Participants beneficiary account with a depository Thus all legal entities with the exception of partnership firms can open an account in the depository systemDocuments 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 aproof of identity of the applicant The applicants signature and photograph must beauthenticated by an existing account holder or by the applicant bank or after dueverification made with the original of the applicants valid passport , voter id , drivinglicense or PAN card with photograph and further Proof of address- The account opening form should be supported with proof of addresssuch as verified copies of ration card/ passport/ voter ID/ PAN card/driving license / bankpassbook an authorized official of the participant, under his signature, shall verify theoriginal documents In case any account holder fails o produce the original documents for verificationwithin the foreside period of 30 days, it must be immediately brought to the notice ofNSDL Failure to produce the original within the prescribed time would invite appropriateaction against such account holder, which could even include freezing of their accountsCommon 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) Babasabpatilfreepptmba.com Page. No22
  23. 23. A Study of Customer Satisfaction towards Depository Participants 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 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 Babasabpatilfreepptmba.com Page. No23
  24. 24. A Study of Customer Satisfaction towards Depository Participants 2. Financial institutions • Government –sponsored FI • State financial corporation • Other 3. FIIS • Mauritius –based • Others 4. NRI • Repatriable • Non-Repatriable • Depository receipt 5. Body corporate • Domestic company • Overseas corporate body Repatriable • Government company • Central government • State government • Co-operative body • NBFC • Non –NBFC • Broker Babasabpatilfreepptmba.com Page. No24
  25. 25. A Study of Customer Satisfaction towards Depository Participants • 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. IntermediaryClearing Member Account The entities that are authorized to pay out from a clearing corporation/ clearinghouse against traders done by them or their clients are known as clearing members. CMsare identified in the system through their CM-BP ID. All pay-in and pay-out transactionsare 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.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 Babasabpatilfreepptmba.com Page. No25
  26. 26. A Study of Customer Satisfaction towards Depository Participantsdepository and obtain a business partner identification number (CM-BP-ID). The clearingmember is identified by the combination of CC-CM-ID given by the DP. Immediately after opening a clearing account, the DP should inform the depositorythe details of clearing members name, CM-BP-ID, client-ID, and date of the opening theaccount in DPM system. The clearing account should only be for clearing and settlement purpose and nit forany other purpose, e.g., holding of securities received in a settlement received in asettlement account should be transferred to the transferred to respective beneficial accountsas soon as possible, but in no case later than the time prescribed by the depository/ stockexchange/ 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 andpay-out with the Broker. This single account allows you to know to which accountsecurities must be delivered and received from. One Clearing Member Pool Account isopened 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. Theinternal structure of the Clearing Account consists of three parts to facilitate easy bookkeeping. • Arrangement of clearing account Babasabpatilfreepptmba.com Page. No26
  27. 27. A Study of Customer Satisfaction towards Depository Participants  Pool Account  Delivery Account  Receipt Account Clearing Corporation (CC)/Clearing House (CH) Clearing Account Receipt Account Delivery Account Pool Account Selling Buying client Client a) Pool Account: It has two roles in clearing of Securities, viz., before pay-in, the selling client of the clearing member transfers securities from his client Account to the Clearing Account. After receiving pay-out, the clearing member transfers securities from his Clearing Account to the account of the buying client. b) Delivery Account: The securities before pay-in, the securities move from the Pool Account To the Delivery Account. The movement will be automatic if clearing member has given such an undertaking to its Clearing If the Clearing Corporation. It will be effected on the basis of instruction received from the Clearing house/ Clearing Corporation. If the clearing house/ Clearing Corporation has not taken such undertaking, the clearing member to its DP must submit a delivery instruction form. At the time of pay-in, NSDL flushes out the securities in the Delivery Account & transfers the same to the Clearing house/ Clearing Corporation. Babasabpatilfreepptmba.com Page. No27
  28. 28. A Study of Customer Satisfaction towards Depository Participants c) Receipt Account: On pay-out day, the Clearing house/ Clearing Corporation transfers securities to the Pool Account (to The extent of net receipt) through the Receipt Account. This account can be used to trace details of settlement-wise receipt of the clearing member. • Market Type & Settlements Number: A clearing account can be broken into compartment and sub-compartments. Each compartment can be called as market type and be as settlement number. Hence, if securities are moved from any clearing account, apart from the CM-BP-ID, the combination of market type and settlement number must be provided. A diagrammatic illustration of the internal structure of a clearing account is depicted below Clearing Account (IN503265) Physical Rolling Action Rolling 2000014 9000152 2000248 Delivery Pool Receipt Delivery Pool Receipt Delivery Pool Receipt 2000015 9000153 2000248 Delivery Pool Receipt Delivery Pool Receipt Delivery Pool Receipt 2000016 9000152 2000249 Delivery Pool Receipt Delivery Pool Receipt Delivery Pool ReceiptSettlement calendar: Settlement calendar is decided by the stock exchange. It containsdetails for each market type & settlement number. The detail for each settlement consists Babasabpatilfreepptmba.com Page. No28
  29. 29. A Study of Customer Satisfaction towards Depository Participantsof the date of trading, pay-in time, pay-out date, settlement number etc. Clearing membercan obtain the settlement calendar from its own stock exchange. This is also available inthe depository software of the DP.  MARKET TRANSFERS: Any trade, which is cleared & settled by the clearing house/ Clearing Corporation of the stock exchange, is considered as a market trade in the depository. Consequently, the transfers routed through the clearing account. Typically, a market trade has the following legs of transactions. a. Receiving securities for pay-in from clients (client to clearing members) b. Delivering securities to the clearing house/clearing corporation for pay-in. (clearing house/clearing corporation) 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 isdepicted below: DP of buyer DP of Buyer’s CM D C NSDL CH/CC A B DP of Seller DP of Seller’s CM Babasabpatilfreepptmba.com Page. No29
  30. 30. 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: NSDL DP2 DP1 Seller Seller Seller Clearing A B C Member Indicates flow of securities AAAlle rA Indicates paper /electronic instruction given.  OFF MARKET TRANSFERS: Any trade, which is not cleared and settled by the clearing house/clearing corporation of the stock exchange, is considered as an off- market trade in the depository. Consequently, the transfer is not routed through the clearing account. Such transfers take place directly between two beneficiary accounts. Both buyer and seller may open account either with the same DP or with different DPs. The buyer and seller will trade amongst themselves and later on will exchange money, i.e., settle funds amongst themselves. The selling client would Babasabpatilfreepptmba.com Page. No30
  31. 31. A Study of Customer Satisfaction towards Depository Participants 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: Indicates flow of securities Indicates paper /electronic instruction given.Depository: A Depository is a Company where the shares of an individual are held in theelectronic form, at the request of the shareholder. This eliminates the physical form of Babasabpatilfreepptmba.com Page. No31
  32. 32. A Study of Customer Satisfaction towards Depository Participantsholding. 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 bedeposited in a bank. The bank holds your funds in the electronic form and subsequentlydebits or credits the account. Depending on your issuance of cheques or deposit ofcheques. The advantages of safety and convenience of dealing with a Bank overweigh thereasons for holding liquid cash in your home. Your financial assets such as Equity Sharesmay be compared to the above example. You may hold physical share certificates in yourhome 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, whichholds your shares in the electronic form. You can dematerialize shares of only thosecompanies 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 streetname (market deliveries) cannot be dematerialized. However, when you send shares to theregistrar to be transferred to your name you can request that you want those shares indematerialized form. Karvy Consultants Ltd. has four DPMs as on date. They are:1.Hyderabad-IN3003942.Lucknow - IN3015573.Bangalore- IN3019264. Mumbai - IN302470 Babasabpatilfreepptmba.com Page. No32
  33. 33. A Study of Customer Satisfaction towards Depository Participants In India depositories are required to be registered with SEBI and are governed bythe provision of the Depositories Act, 1996 and regulation and bylaws framed fordepositories by the SEBI. The depositories work in a completely computerized environment with electroniclinkages with the point of origination for the transactions that may cause the change inownership of securities. A depository will be electrically linked with the Register of themembers maintained by the company/registrar, clearing and settlement system in the stockexchanges, stock lending organization (if in existence), custodians of securities, depositoryparticipants and brokers.Function of DepositoryDematerlisation: one of the primary functions of depository is to eliminate or minimizethe movement of the physical securities in the market. This is achieved throughdematerialisation of securities. Dematerlisation is the process of converting securities heldin physical form into holdings in book entry form.Account Transfer: The depository gives effect to all transfers resulting from the settlementof trade and other transactions between various beneficial owners by recording entries inthe accounts of such beneficial owners.Transfer and Registration: A transfer is the legal change of ownership of a security in therecords of the issuer. For effecting a transfer, certain legal steps have to be taken likeendorsement, execution of a transfer of security occurs merely by passing book entries inthe records of the depositories, on the instructions of the beneficial owners.Corporate Actions: A depository may handle corporate actions in two ways. In the firstcase, it merely provides information to the issuer about the persons entitled to receive Babasabpatilfreepptmba.com Page. No33
  34. 34. A Study of Customer Satisfaction towards Depository Participantscorporate benefits. In the other case, depository itself takes the responsibility ofdistribution of corporate benefits.Pledge and hypothecation: Depositories allow the securities placed with them to be usedas collateral securities in physical form to the lender or its custodian. These securities areverified for authenticity and often need to be transferred in the name of lender. This has atime and money cost by way of transfer fees or stamp duty. If the borrower wants tosubstitute the Pledging/Hypothecating the securities makes the process very simple andcollateral accounting through book entries in the records of the depository.Linkage with clearing system: whether it is a separating clearing corporation attached to astock exchange or a clearing house (department) of a stock exchange, the clearing systemperforms the function of ascertaining the pay-in (sell) or pay-out (buy) of brokers whohave traded on the stock exchange. Actual delivery of securities to the clearing systemfrom the selling and delivery of securities from the clearing system to the buying broker isdone by the depository. To achieve this, depositories and the clearing system should beelectronically linked.Depository Participant: Babasabpatilfreepptmba.com Page. No34
  35. 35. A Study of Customer Satisfaction towards Depository Participants Depository Participant (DP) is an organisation that acts as an Agent of theDepository and interacts with the investor. A DP is responsible for maintaining yoursecurities account and operating it only under your written instructions. The DepositoriesActs mandates that investors can use Depository facilities only through DP’s. Thedistribution channel and geographical spread of the DP’s offices allows you to access theDepository at a low cost. DP can only access their own clients information. They cannotaccess the client information of any other DP. The information of your holdings in theaccount 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 openinga 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. Individual accounts can be opened by Ordinary Resident, HUF, NRI ~ Repatriableand NRI Non-Repatriable. Body Corporate, Banks, Trusts, Financial Institutions, ForeignInstitutional 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 andmentioning the account category as HUF. However, Kartha of HUF will sign theapplication, agreement and all transactions under the account An account cannot be opened in the name of the firm. It has to be opened in thename of any of the Partner as an Individual account only. Babasabpatilfreepptmba.com Page. No35
  36. 36. A Study of Customer Satisfaction towards Depository ParticipantsProcedure for DematerialisationDematerialisation Process 1 Investor DP 2A 2 5 R & T Agent 3 NSDL 4Steps:1. Client/ investor submits the DRF (Demat Request Form) and Physical certificates to DP.DP checks whether the securities are available for demat. Client defaces the certificates bystamping ‘Surrender for Dematerlisation’. DP punches two holes on the name of thecompany 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 thephysical 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 requestto the R&T Agent.4.R&T Agent, on receiving the physical documents and the electronic request, verifies andchecks them. Once the R&T Agent is satisfied, Dematerialisation of the concernedsecurities is electronically confirmed to NSDL.5.NSDL credits the dematerialized securities to the beneficiary account of the investor andintimates the DP electronically. The DP issues a statement of transaction to the client.A. DPs provide Dematerlisation request forms (DRF) to their clients. Babasabpatilfreepptmba.com Page. No36
  37. 37. A Study of Customer Satisfaction towards Depository ParticipantsB. The client completes the DRF in all respect 7 submits to the DP along with the securitycertificates to be dematerialized.C. The DP checks the DRF for validity, completeness and correctness. The followingpoints 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, number of Babasabpatilfreepptmba.com Page. No37
  38. 38. A Study of Customer Satisfaction towards Depository Participants 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 shouldaccept the DRF and certificates.E. If DRF and the accompanying security certificates are not found in order, the DP shouldreturn the DRF and certificates.F. The DP should enter the dematerialisation request in the DPM. DPM generates a requestnumber (DRN), which should be mentioned on DRF.G. An autorised person, other than one who entered the DRF details in the DPM, shouldverify the details of DRN and release a request to NSDL.H. Once the DP has received the certificates defaced by investor, the DP punches twoholes on the name of the issuer or its R&T Agent for dematerialisation. DRF andenclosures 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 andshould refer to the allotted DRN and should Be sent within seven days of accepting it fromthe client.I. The issuer or its R&T Agent verify the DRF & the accompanying certificate for validity,completeness and correctness. They also match the details with the intimation receivedfrom NSDL against the same DRN.J. In case DRF is not found in order, the issuer or its R&T Agent send an objection memoto the DP, with or without DRF & security certificates depending upon the reason forrejection.K. DRFs & Certificate are sent back on the following grounds: Babasabpatilfreepptmba.com Page. No38
  39. 39. A Study of Customer Satisfaction towards Depository Participants • DRN does not match with message from DM • Quantity of actual securities is less than DRF • Quantity of actual securities is more than DRFL. DRF & certificate are not sent back: • If the certificate is fake • If the certificate has been reported to be stolen • If the duplicates of the original certificates sent for demat have already been issued • If the endorsements are forged • If the securities are not in the name of the account holder as per DRF • If the details of the certificates do not pertain to the R&T Agent • If the signatures differ • If there is any court order on the securities • If the certificate are received after 15 days of the electronic request.M. The DP informs the client accordingly & requests removal of reasons for objection.The DP removes these or provides additional information to the issuer or its R & T Agentwithin 15days of receiving the objection memo.N. The DP, if the client so requires, may generate a new dematerialisation request & sendthe 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 Babasabpatilfreepptmba.com Page. No39
  40. 40. A Study of Customer Satisfaction towards Depository Participants  Separate DRF for: • Partly & fully paid-up shares • Locked & free holding • Holdings locked in for different reasons • Locked in holdings having different release date • Different ISINs of the company  ISIN to be entered by DP.  All joint holders to sign DRF.  Check DRF form with details on certificate. Demat process The demat process requires defacing of securities which will make the securitycertificate undeliverable unless the demat formalities are completed. Therefore, the clientshould be assisted in ascertaining whether the securities in question are available fordemineralisation. Clients should be helped in filling up the demat request properly. Dematrejection causes great inconvenience to the client. DP should attend to this area with careand 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. Babasabpatilfreepptmba.com Page. No40
  41. 41. 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.Closure of account:Closure on Client’s Request- A DP can close a depository account on receipt of anapplication in the prescribed format. The application should be made by the account. Incase joint-holders. An account can be closed sought to be closed, the following steps arenecessary.a. Re-materialization of all securities standing to the credit of the same account making theapplication for closure; orb. Transferring the balance to the credit of another account opened by the same accountholder(s) either with the same participant or with a different participant.Before closing the account the DP should ensure that all pending transactions have beensettled. The request for closure should be processed only after ensuring that there is nobalance lying in the account.Consolidations of accounts- Some clients have opened multiple accounts to dematerializetheir shares held in multiple combination and sequence of names. However, they may notneed so many accounts after they have dematerialized their shares and may want to bringall their share holdings into one or fewer accounts. This can be achieved by using normaloff Market transfer instruction.Closure by DP – the DP may also initiate closure of a client’s account if the client hasdefaulted in performing should give sufficient notice to the client before initiating closure Babasabpatilfreepptmba.com Page. No41
  42. 42. A Study of Customer Satisfaction towards Depository Participantsof his account. The notice should clearly state the reasons for closure of his account. Thenotice should clearly state the reasons for closure of account. The process of closingaccount in such a case is the same that of client-initiated closure.Closure/ Shifting of Clearing Account –A clearing member may transfer its clearingaccount from one DP to another DP. For this, simultaneously applications have to be madefor closure of account to the earlier DP and for opening of new clearing member account tothe new DP. On receipt of the application, the new DP forwards the application to thedepository for approval and allotment of a new CM-BP-ID is allotted, the new DP opens anew Clearing account and intimates the depository about the new client- ID. On receipt ofintimation from the intimates the clearing member. All pay-out of securities, subsequent tothe closure of old clearing account, take place in the new account. Pg-17-3Trading & Settlement:This is the an area where the DP must the DP must take immense care while accepting andprocessing 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. Babasabpatilfreepptmba.com Page. No42
  43. 43. A Study of Customer Satisfaction towards Depository Participants  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.Settlement The settlement of trades in the stock exchanges is undertaken by the clearingcorporation (CC)/ clearing house (CH) of the corresponding stock exchanges. While thesettlement of dematerialized securities is effected through depository, the funds settlementis effected through the clearing banks. The clearing members directly with the CC/ CHsettle 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 settlementcycle, 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. Babasabpatilfreepptmba.com Page. No43
  44. 44. A Study of Customer Satisfaction towards Depository Participants • Settlement of securities is effected through NSDL depository system. • Clearing and settlement of the regular market trades is effected through the clearing members of the clearing houses of respective stock exchanges. All trading members of stock exchanges are clearing members of clearing houses. In addition, for settlement of institutional trades, custodians are also allowed to act as clearing members. • Clearing members of clearing house, dealing in dematerialized securities are expected to open a clearing account with any DP for the purpose of settling trades in dematerialized securities. As, in the mixed (unified) segment, there is a possibility for all clearing members to receive dematerialized securities, they are expected to open clearing accounts. If there is any short delivery at the time of pay-in of securities, these short positions are auctioned in the Demat segment as done in the Unified (erstwhile-physical) segment. Selling And Buying Of Shares: Selling dematerialized shares in stock exchanges issimilar to the procedure for selling physical shares. Instead of delivering physical shares tothe broker, you instruct your DP to debit your account with the number of shares sold byyou and credit your brokers clearing account. Babasabpatilfreepptmba.com Page. No44
  45. 45. A Study of Customer Satisfaction towards Depository ParticipantsFor this, a delivery instruction has to be given to your DP in a standardized format, whichwill 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 brokers clearing member pool account. (this is a depository account used exclusively for settling transactions by a broker) • On the pay-in day, your broker gives instruction to his DP for delivery of the shares to clearing corporation of the relevant stock exchange. • The broker receives payment from the clearing corporation • You receive payment from your broker for the sale in the same manner you would receive payment for a sale in the physical mode.Buying Demat Shares: The procedure for buying dematerialized shares in stock exchanges is similar to the procedure for buying physical shares. When you want to purchase shares in electronic form, you have to instruct your broker to purchase the dematerialized shares from the stock exchanges linked to a depository. Once the order is executed, you have to instruct your DP (vide a simple formatwhich is available with the DP) to receive securities from your brokers clearing account. Babasabpatilfreepptmba.com Page. No45
  46. 46. A Study of Customer Satisfaction towards Depository Participants Alternatively, you may give a standing instruction to receive credits into youraccount and do away with giving a separate receipt instruction each time you expect acredit. You have to ensure that your broker too gives a matching instruction to his DP totransfer the shares purchased on your behalf into your depository account. You should also ensure that your broker transfers the shares purchased from hisclearing account to your depository account, before the book closure. This is reallyimportant because shares that remain in the clearing account of the broker on the bookclosure/ record date will not be eligible for corporate benefits.In brief, the transactions relating to purchase of shares are: • You can purchase shares in any of the stock exchanges connected to a depository through a broker of your choice and make a payment to your broker; • Your broker receives credit in his clearing account with his DP on the pay-out day; • Broker gives instructions to his DP to debit his clearing account and credit your account; • You instruct your DP for receiving credit into your depository account either through a specific receipt instruction or using the "standing instruction" facility. • In case you are not using the "standing instruction" facility then, your depository account is credited only if the instructions given by you and your broker match.Other ServicesBesides demat and trading Depositories also offer other services, these are: Babasabpatilfreepptmba.com Page. No46
  47. 47. A Study of Customer Satisfaction towards Depository Participants o Pledging/ hypothecation of dematerialized securities. o Electronic credit in public offerings of companies. o Receipt of non-cash corporate benefits such as bonus, rights in electronic form. o Stock lending and borrowing. o Transmission of securities.Pledging: Dematerialized shares could be pledged; in fact, this is more advantageous ascompared 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 instructingyour DP through a standard format. The pledgee on receiving the repayment as well as therequest for closure of pledge will instruct his DP accordingly. Babasabpatilfreepptmba.com Page. No47
  48. 48. A Study of Customer Satisfaction towards Depository ParticipantsEven the locked-in securities can be pledged, however they cannot be invoked before thelock-in release date.Even after the securities are pledged, the pledgor continues to remain the beneficiaryholder of those securities and will receive benefits of a corporate action, if any.Initial Public Offerings: Credits for public offers can be directly received into demataccount. In the public issue application form of depository eligible companies, there willbe 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 andidentification 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 detailsregarding the beneficiary account are incomplete/ wrong, the person will get physicaldelivery of allotted securities. If securities were allotted in the dematerialized form, these would be credited toapplicant’s account any day between allotment date and listing date, at the discretion of thecompany. The issuer company/ their R&T agent will forward the applicant the allotmentadvice giving the number of shares allotted in dematerialized form. Through this you cancome to know that you have been allotted shares. Babasabpatilfreepptmba.com Page. No48
  49. 49. A Study of Customer Satisfaction towards Depository Participants An amendment to the company law requiring all future public issues aboveRs100mn to compulsorily offer securities in dematerialized form is awaiting legislativeapproval. After this all the issues above Rs100mn will require investors to trade only indemat way. Partly paid up and fully paid up shares in the depository, will be given separateISINs (International Securities Identification Number). These are also traded separately atthe stock exchanges. The company issues call notices to the beneficial holders of securities in theelectronic form. The details of such beneficial holders will be provided to the issuer/ theirR&T agent by NSDL. After the call money realization, issuer/ their R&T agent willelectronically 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 bonusor dividend is announced for a particular security, depository will give the details of all theclients having electronic holdings in that security as of the record date to the registrar. Theregistrar will then calculate the corporate benefits due to all the shareholders. Thedisbursement of cash benefits such as dividend/ interest will be done directly by theregistrar. In case of non-cash benefits, depository will directly credit the securitiesentitlements in the depository accounts of all those clients who have opted for electronicallotment based on the information provided by the registrar. Babasabpatilfreepptmba.com Page. No49
  50. 50. A Study of Customer Satisfaction towards Depository Participants The bonus/ rights issue against holding in dematerialized form can be either in thephysical/ dematerialized form as per the choice of the investor. If no choice is given, bydefault, the securities will be issued in the physical form. Even if an investor has holdings in physical form, he can receive the bonus/ rightsissue against this in the dematerialized form. In case of fractional part, as in the physical segment, it would be paid in cash andthe remaining whole part would be credited to the investors account. The statement of holding and transaction statement is sent by the investors DP, itwill show the bonus/ rights credit into investor’s account. This report is sent to the investorevery fifteen days. In addition, an allotment advise will be send by the issuer/ their R&Tagent for bonus/ rights entitlement.Stock Lending and borrowing: Through the depository account securities in the dematform can be easily lent/ borrowed. Securities can be lent or borrowed in electronic formthrough an approved intermediary, who has opened a special intermediary account with aDP.To Lend Securities: You have to instruct your DP through a standard format (which isavailable with your DP) to deposit your securities with the intermediary.If the intermediary accepts your deposit of securities, the securities will be moved fromyour account into the intermediarys account. If you wish to recall the securities lent byyou, you can make a request vide a standard format available with your DP. Babasabpatilfreepptmba.com Page. No50
  51. 51. A Study of Customer Satisfaction towards Depository ParticipantsTo Borrow Securities: You have to instruct your DP through a standard format (which isavailable with your DP) to borrow securities from the intermediary. If the intermediary accepts your request, the securities will be moved from theintermediarys account to your account. If you wish to return the securities borrowed byyou, 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 thedepository system. In the case of transmission, the claimant will have to fill in atransmission 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 accountof the claimant. For this, the claimant must have a depository account. The majoradvantage in transmission of dematerialized holdings is that the transmission formalitiesfor all securities held with a DP can be completed in one go, unlike in the case of sharecertificates, where the claimant will have to interact with each issuing company or its R&TAgent. In case where the deceased was one of the joint holders in the Client account, thesurviving client(s) shall be the person(s) recognized by depository as having title to thesecurities held in that joint Client account. In case where the deceased was a sole holder ofthe 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. Babasabpatilfreepptmba.com Page. No51
  52. 52. A Study of Customer Satisfaction towards Depository ParticipantsSecurity: National Security and Depository Limited claims to have undertaken sufficientsecurity 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 hasprescribed criteria for becoming a DP in the regulations. • 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. Babasabpatilfreepptmba.com Page. No52
  53. 53. A Study of Customer Satisfaction towards Depository Participants • In the depository, the depository holds the investor holdings on trust. Therefore, if the DP goes bankrupt the creditors of the DP will have no access to the holdings in the name of the clients of the DP. These investors can then either dematerialize their holdings or transfer them to a different account held with another DP. • 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 systemfoolproof.Demat Shares: Are They 100% Safe When you buy physical shares from the stock market, you could never be certain ofthe validity of the title of shares. There were many reasons- the sellers signature did notmatch, or the certificates were fake, forged or stolen, and so on. Babasabpatilfreepptmba.com Page. No53
  54. 54. A Study of Customer Satisfaction towards Depository Participants Demat shares are supposed to obviate these problems. Buying shares in the dematform always guarantees you a good title as soon as the settlement is over. The biggestattraction of trading in demat shares is that the shares you buy come with a clean title andimmediately after the settlement on the relevant stock exchange. Rule 100 of market regulator SEBI determines whether the shares delivered in asettlement, are good or not. Under rule 100, the shares that have been transferred thecompany can still withdraw any number of times, if a transfer is found to be invalid for anyreason. Suppose a sells physical shares to B and B gets them dematerialized. Later B sellsthe shares in the stock exchange and C buys them. Meanwhile A discovers that his sharecertificates were stolen and fraudulently sold by someone else. He gets a court orderrestraining the company from further transferring the shares and attaching them (currentlyin possession of C). This is known as stop transfer. So C who has bought dematerializedshares is now struck with the shares. He cannot sell these shares since they would befrozen in his account In demat shares, pre-demat problems about the validity of a share do not effect theinterest of the buyers after dematerialization. Shares go through a verification process atthe registrars before they are dematerialized. Therefore the responsibility lies with the registrar. The registrar must find a remedyif the original transfer of shares, before their dematerialization comers under doubt. Butthere is a catch. The company and its registrars are not responsible if the reasons for Babasabpatilfreepptmba.com Page. No54
  55. 55. A Study of Customer Satisfaction towards Depository Participantsoriginal transfer being invalid were not available at the time of dematerialization. Mattershave to be dealt with on a case-to-case basis. Which means that even demat buyer may findthat his shares have been frozen in his demat account. This kind of case has to be contestedin court by the parties involved. This issue is not directly addressed in The Depositories Act, 1996. Sebi’sregulations 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 samecompany in his demat account. Demat shares are fungible and don’t have distinctivenumbers. It is not easy to track the sale or trade of shares after they are dematerialized. In a rare event of your DP going bankrupt or closing the operations, the interests ofthe investors will be fully protected. In such a situation, the investors will be given anoption of either transferring the securities to a new DP or they may rematerialise thesecurities Analysis of customer satisfaction A. Sample size selected: 100 Total Number of customer available for survey: 100 Babasabpatilfreepptmba.com Page. No55
  56. 56. A Study of Customer Satisfaction towards Depository Participants sample Available for survy 100 Series1 50 0 1 The sample size selected for the survey was 100.(Hundred) customers of KARVYCONSLUTANT STOCK BROKING were available for survey. So opinion was taken toknow the customer satisfactions towards demat account.1.Customer came to know the about “KARVY FINANCIAL CONSULTANT “Total no. Of sample taken: 100 Babasabpatilfreepptmba.com Page. No56
  57. 57. A Study of Customer Satisfaction towards Depository Participants 1 2 3 4 5 News Papers/ Friends Business Magazines Online Agent/Financial Others 47 18 10 14 11 Friends 11% News 14% Papers/BusinessM 47% agazines Online 10% Agent/Financial 18% OthersSource: Survey Data The above table and chart shows the respondents know KARVY FINANCIALCONSULTANT is from the friends is more. Nearly 47.00% of respondent will know .18% of Customer through News paper ,10% of Customer through online ,14% ofCustomer through Agent and financial consultant and 11% of Customer know through.Others. Babasabpatilfreepptmba.com Page. No57
  58. 58. A Study of Customer Satisfaction towards Depository Participants2.They are interested to visit “KARVY FINACIAL CUNCALTANT “Total no. Of sample taken: 100 1 2 Yes No 94 6 No 6% Yes No Yes 94%Source: Survey Data The above table and chart shows the respondents interested to visit KARVY FINANCIAL CONSULTANT 94 % and only 6% of Customer are not interested to visit . Babasabpatilfreepptmba.com Page. No58
  59. 59. A Study of Customer Satisfaction towards Depository Participants3. They have been use service of “KARVY FINACIAL CUNCALTANT “ Because of visual pleasure ,hospitality, communication etc Total no. Of sample taken: 100 Q-3 1 2 3 4 5 Agree Just agree No Opinion Just DisagreeDisagree 47 45 8 0 0 50 47 45 40 30 Series1 20 10 8 0 0 0 Agree Just agree No Opinion Just Disagree DisagreeSource: Survey Data The above table and chart shows they have been use service of “KARVY FINACIAL CUNCALTANT “ 47% of Customer agree ,and , 45% of Customer just agree only 8% of Customer are not interest to give there opinion . Babasabpatilfreepptmba.com Page. No59
  60. 60. A Study of Customer Satisfaction towards Depository Participants4.They will definitely use service “KARVY FINACIAL CUNCALTANT “ because attitude of employee.Total no. Of sample taken: 100Q-41 2 3 4 5Agree Just agree No Opinion Just Disagree Disagree69 24 7 0 0 Just Disagree No Opinion 0% 7% Disagree Agree Just agree 0% Just agree 24% No Opinion Agree Just Disagree 69% DisagreeSource: Survey Data The above table and chart shows they have been use service of “KARVY FINACIAL CUNCALTANT “Because of there attitude 69% of Customer agree ,and , 24% of Customer just agree only 7% of Customer are not interest to give there opinion. Babasabpatilfreepptmba.com Page. No60
  61. 61. A Study of Customer Satisfaction towards Depository Participants5.they will definitely use of “KARVY FINACIAL CUNCALTANT “because what theybenefit get from them.Total no. Of sample taken: 100 Q-5 1 2 3 4 5 Agree Just agree No Opinion Just Disagree Disagree 50 41 8 1 0 8%1% 0% Agree Just agree 50% No Opinion 41% Just Disagree DisagreeSource: Survey DataThe above table and chart shows they have been use service of “KARVY FINACIALCUNCALTANT “Because what benefit get from them 50% of Customer agree ,and ,41% of Customer just agree only 8% of Customer are not interest to give there opinion.1%of Customer just disagree . Babasabpatilfreepptmba.com Page. No61
  62. 62. A Study of Customer Satisfaction towards Depository Participants6. They will interested “KARVY FINACIAL CUNCALTANT “because they introduce new scheme and we get benefit .Total no. Of sample taken: 100 Q-6 1 2 Yes No 86 14 No 14% Yes No Yes 86%Source: Survey DataThe above table and chart shows they have been interested to use service of “KARVYFINACIAL CUNCALTANT “because they introduce new scheme and we get benefit .86%of Customer say Yes .only 14% of Customer are not satisfied .. Babasabpatilfreepptmba.com Page. No62
  63. 63. A Study of Customer Satisfaction towards Depository Participants7.They use “KARVY FINACIAL CUNCALTANT “ they know customer value and money value Total no. Of sample taken: 100Q-71 2 3 4 5Agree Just agree No Opinion Just Disagree Disagree54 39 6 1 0 60 54 50 39 Agree 40 Just agree 30 No Opinion 20 Just Disagree 10 6 Disagree 1 0 0 1Source: Survey DataThe above table and chart shows they have been interested to use service of “KARVYFINACIAL CUNCALTANT “because they know customer value and moneyvalue.54% of say agree .39% Customer say just agree .6%of parole say no opinionand only 1% of Customer say just disagree. Babasabpatilfreepptmba.com Page. No63
  64. 64. A Study of Customer Satisfaction towards Depository Participants8.they want to specify use “KARVY FINACIAL CUNCALTANT “better then other .Total no. Of sample taken: 100Q-81 2 3 4 5Agree Just agree No Opinion Just Disagree Disagree41 37 20 1 1 Just Disagree 1% Disagree No Opinion 1% 20% Agree 41% Just agree 37%Source: Survey DataThe above table and chart shows they have been specifically said “KARVY FINACIALCUNCALTANT “ better then other Dp services. 41% of customer agree.31% ofcustomer are just agree. 20 % of Customers are not given any opinion. Only 1% ofcustomer just disagree 1% of customer disagree. Babasabpatilfreepptmba.com Page. No64