ROLE OF DEPOSITORIES -
September 2nd, 2010
OBJECTIVE OF DEPOSITORIES:
- Forgery of certificates.
- Tearing and mutilation of scripts due to reckless handling.
- Loss of certificates by postal authorities /registrars / investors
- Less Liquidity prevalent in the markets with poor consumer confidence.
- To liberate the Indian securities market from the paperwork grid.
- To reduce the paper handling cost in the capital market.
- To standardise the Indian settlement practice.
- To increase the growth potential of Indian capital market.
- To implement an achievable clearing, settlement, and depository solution which is not expensive to develop and maintain.
- Depository performs the following functions through depository participants (DPs):
- Enables the surrender and withdrawal of securities to and from the depository
- Maintains investor holdings in the electronic form.
(dematerialisation and re-materialisation).
- Effects settlement of securities traded on the exchanges. Carries out settlement of trades not done on the stock exchange (off-market trades)
- Receiving on behalf of demat account holders non-cash corporate benefits, such as, allotment of bonus and rights shares in electronic form or securities ensuing upon consolidation, stock split or merger/amalgamation of companies.
- Pledging of dematerialised securities.
- Facilitating Securities Lending and Borrowing, if the DP is registered as an "Approved Intermediary" for the purpose.
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