Page 143 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes  Corporate actions and benefits collection, and
 Management information system considering the pivotal services rendered by the SHCIL.
NSE has considered using its services for the benefit of investors who are spread throughout
the length and breadth of the country. Without its services, the functions of NSE will not
be complete and perfect. SHCIL, thus, is complementary to its function as a depository.

Self Assessment

Fill in the blanks:

14. Custodians Clearing members are required to request for allotment of ..............................
code for the clients for which they wish to clear and settle.
15. The ……………………. is required to confirm whether he is going to settle that trade or
not. If the custodian confirms the trade.

7.6 Summary

 The introduction of Depositories has significantly contributed for the efficient functioning
of the stock marketing trading on line.
 Depositories are offering a variety of services to corporates, shareholders, banks and the
Government.
 It has simplified the entire process of equity trading and settlement with in the permitted
time.

 Depositories are offering other activities like company stock equity book building activity
and securitisation services which have significantly contributed to the growth of stock
market trading. But the depositories are adapting to false means of allocation and their
binary transactions.
 SEBI should take up more stringent norms and Punish severely to prevent such frauds to
retain the confidence and trust of the common investor, who is always being exploited by
the market mechanism.

7.7 Keywords

Depositories (NSDL/CDSL): The Depositories (NSDL/CDSL) will provide the list of demat
account holders and the number of shares held by them in electronic form on the Record date
to the company/registrar (known as Benpos.
Depository (NSDL and CDSL): A Depository (NSDL and CDSL) is an organisation like a Central
Bank, i.e. Reserve Bank where the securities of an investor are held in electronic form, through
Depository participants.
Depository System: Depository system functions very much like the banking system. A bank
holds funds in accounts whereas, a Depository holds securities in accounts for its clients. A
bank transfers funds between accounts whereas, a Depository transfers securities between
accounts.

7.8 Review Questions

1. Explain about the importance of depository system.
2. What are the guidelines of SEBI to regulate the depository System?

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