Monday, October 8, 2018

KEY FEATURES OF THE DEPOSITORY SYSTEM IN INDIA



KEY FEATURES OF THE DEPOSITORY SYSTEM IN INDIA
-:Multiple deposit system:- 
The deposit model adopted by India provides a competitive multiple custody bank System. There may be several places that provide custody services. A depository must be a founded company. in accordance with the Companies Act of 2013 and should have received a certificate of registration under the securities and the Law of the Exchange Board of India, 1992. Currently, SEBI has two demat services in india, namely:

- National Securities Depository Limited (NSDL) and

- Central Depository Service Limited (CDSL)
  •  Depositary Deposit services:- 
Depositaries can provide their services.Investors through their agents called deposit participants. These agents are appointed under the conditions.Compulsory according to the rules of the Securities and Exchange Board of India (Depositary and Participant), 1996 and other applicable conditions.
  • Dematerialization:- 
the model adopted in India provides for the dematerialization of values. This is a significant Step towards a completely paperless stock market. Dematerialization is a process of which physical certificates of an investor are converted into electronic format and transferred to the account of Depositary.
  • fungibility:- 
securities held in dematerialized form do not have significant characteristics such as Folio number or certificate number. Once the actions are dematerialized, they lose their identity in relation to the action. Certificate, unique numbers and folios. Thus, all values of the same class are identical and interchangeable For example, all equity investments in the fully paid share class are interchangeable.
  • Registered owner/beneficiary owner:- 
in the custody system, ownership of dematerialized securities It is divided between the registered owner and the beneficial owner. According to the Deposit Law of 1996 "Registered Holder "means a depository whose name is entered in the issuer's registry. means a person whose name is registered as such in the deposit. Although the values are registered in the name of the depository that actually owns the rights, benefits and obligations related to the securities

held by the depositary, remain with the final beneficiary. For dematerialized NSDL / CDSL values, it is the Owner registered in the books of the issuer; However, property rights and responsibilities remain with the final beneficiary. everybody

The rights, obligations and responsibilities underlying security lie with the effective beneficiary of the guarantee.

  • Free transfer of shares: the transfer of shares in dematerialized form is free

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