This document provides an overview of SEBI regulations for Depository Participants (DPs) in India. It discusses that the depository system is regulated by acts like the Depositories Act of 1996 and SEBI regulations of 1996 and 2018. Depository Participants act as an intermediary between investors and depositories, offering depository services to beneficial owners. The document outlines the key constituents of the depository system, including depositories, issuer companies, beneficial owners, and DPs. It also describes eligibility criteria for entities to become a DP, such as public financial institutions, scheduled banks, and stock brokers. Important provisions governing DPs require them to obtain registration certificates from SEBI and recognize depository bye-laws.

1. An overview of
SEBI regulations
on the DPs.
(Depository
Participants)

2. Introduction to the
Depository system in India
Subtle Recap

3. Constituents
of
Depository
system
The
Depositories
Issuer Company
Beneficial owners
Depository
participants

4. HOW DOES IT WORKS

5. Legal Framework and
SEBI Regulations of
depository system in
India
The transactions in the security market
through the depositories and participants
operations are regulated under following
Statutes;
1. The Depositories Act, 1996.
2. The SEBI (Depositories &
Participants) Regulation 1996 and
2018.
3. The Depositories By-Laws.
4. Other laws such as The Company
Laws, The Security Contract
(Regulation) Act, 1956, The SEBI
ACT 1992.
5. Bye-Laws by the depositories.

6. Who are/can become a Depository Participants?
• The Depository Participant is the link between the owner of the securities and
the depositors. He is deemed to be an agent of the depository. Accordingly, he
is authorized to offer depository services to investors. As per SEBI regulations
and Depository Act, a depository cannot interact directly with beneficial
owners. He has to deal with its agents called Depository Participant. Neither
can the investors directly approach the depository for any services. They have
to interact through the DP. Although there is no formal definition of DPs in any
of the previously mentioned statutes.

7. In continuation..
• Further under Section 35 of the 2018 SEBI (Depository & Participants) Regulation
(Amended) the following institutions can become a DP.
1. Public Financial Institutions.
2. Scheduled Banks including Foreign Banks approved by the Reserve Bank of India (RBI).
3. State Financial Corporation established under the State Financial Corporations Act, 1951.
4. Institutions engaged in granting financial services, promoted by the entities mentioned
above, jointly or severally.
5. Custodian of Securities who is granted Certificate of Registration under the SEBI Act,
1992.
6. Clearing House or Clearing Corporation of a Stock Exchange.
7. Stock Broker who is granted Certificate of Registration under the SEBI Act, 1992.
8. Non-Banking Financial Company having a net worth of not less than Rs.50 lakh.
9. Registrar of Issue andTransfer Agents who have a minimum net worth of Rs.10 crore.
• Apart from the above eligibility criteria, the NSDL and CDSL have also added
certain eligibility criteria to be registered as DP under them. The NSDL and CDSL
are empowered to set their own eligibility criteria in their Bye-Laws.

8. Important provisions
Section 12 of SEBI Act 1992 (1) Mandates for
DPs to obtained the registration certificates
from the board before commencement of
the business. This section also empowers the
board to suspend or cancel a COR of found
under contravention to the regulations, in
prescribed manner.
Section 32 of SEBI Regulation,1996 deals
with the procedure of application for
obtaining the registration certificate by the
wherein the applicant got to choose the
depository and submit the application form
to the board through the respective
depository.
This Section also confers a legal recognition to
the Bye- laws of the depositories.

10. Important Provisions