BIRTH OF DEMATERIALIZATION A NEW ERA OF INDIAN CAPITAL MARKET

Birth of Dematerialization				of a Bank a/c;
A new era of Indian Capital Market
				BANK
				� DEPOSITORY
				ACCOUNT
Before the introduction of the
Depositories Act 1996, everyone hold shares in				Hold Funds
the physical form. There were many risks
associated with holding physical certificates. They				Hold Securities
could get torn, mutilated, duplicated or even				Safe Keeping of money
stolen. More over, transfer of shares from one				Safe Keeping of Securities
person to another was not only a very long
process but would also attract a lot of charges.				Cheque Book
The introduction of the Depositories Act 1996
revolutionized the entire capital market.				Delivery Instruction Booklet
				Pass Book

				Account holding Statement
Depository				Facilitates transfer of funds
				Between bank accounts
1) A depository is an organization where				Facilitates transfer of securities between demat
the securities of an investor are held in electronic				accounts.
form, at the request of the investor through the				Transfer of funds without
medium of a Depository Participant.				Physical handling of cash
				Transfer of stocks without
2) If an investor wants to utilize the				Physical handling of shares
services offered by a depository, he has to open
an account with the depository through its
Depository Participant.


Depository Participant
				SERVICES OFFERED BY DP
a)A Depository Participant(DP)
is an agent of the depository and is authorized to				1)Account opening and maintenance
offer depository services to investors.
				2)Dematerialization of securities
b)According to SEBI guidelines,
financial institutions, banks, custodians, stock				3)Transfer of securities
brokers etc can become DP with a Depository.
				4)Pledging of securities

				5)Rematerialization of securities{Conversion from
				Electronic form into physical Form}




Depositories in Indian Context				How can shares be dematerialized?

1)Central Depository Services(India) Limited				To dematerialize the shares, the
(CDSL)				customer has to fill a form called the DRF(Demat
				Requisition Form)
2)National Securities Depository Limited(NSDL)

				The dematerialization process is as
Types of Demat Accounts;				follows;

There are two types of				1) Client submits DRF and physical
account in the depository;				certificates to DP
a) Beneficiary account				2) DP intimates depository and sends
				certificates with DRF to R&T agent.
Accounts opened for the use				3) R&T agent confirms
of individuals, corporates, HUF’s etc are				dematerialization to depository.
ownership accounts and are called Beneficiary				4) Depository credits securities to
accounts.				beneficial owner

b) Pool account				Procedure for Opening Demat account;

The pool account is a
commercial account that is opened by the broker				1) Registration form
to transfer the shares to and from the exchange.				2) Photograph’s with signatures
				across it
				3) PAN card
				4) Proof of residence-passport,
Dematerialization				Voter’s ID Card, Driving License, Ration Card
				etc
				5) Proof of identity-passport, Voter’s
It is the process of converting				ID Card, Driving License, PAN Card.
securities from physical form to electronic form.				6) Bank account Proof-bank statement,
				Cancelled cheque


				Only Individuals, NRI’s, Minor’s, HUF’s,
				Registered Trusts & corporates can open a
				demat account.

The following Table shows the features of				Partnership firms & proprietorship firms
Depository a/c by comparing with the Features				cannot open demat accounts .

Florida Tsa

BIRTH OF DEMATERIALIZATION A NEW ERA OF INDIAN CAPITAL MARKET

Articles