Page 122 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Rupesh Roshan Singh, Lovely Professional University
Unit 7: Depositories and Custodians

Unit 7: Depositories and Custodians Notes

CONTENTS
Objectives
Introduction

7.1 Depository Services to Investors
7.2 SEBI: Guidelines with Respect to Depositories
7.3 Stock Exchange

7.4 Nomination Facility
7.5 Custodians
7.5.1 The Stock Holding Corporation of India Ltd.
7.6 Summary
7.7 Keywords

7.8 Review Questions
7.9 Further Readings

Objectives

After studying this unit, you should be able to:
 Learn the concept of depositories and custodians;
 Explain the concept of NSDL and CDSL;
 Know importance and use of D-MAT;

 Understand role stock holding corporation of India Ltd.;
 Explain Nomination facility.

Introduction

The Phenomenal growth of both the primary and secondary equities and debentures markets
and the entry of bulk traders (both domestic and foreign financial institutions in it have revealed
many shortcomings and inadequacies of the market infrastructure to support the new levels
volumes of securities trading in India.
The existing traditional manual methods trading, clearing settlement, transfer, registration,
record keeping have been found to be cumbersome and time consuming. Moreover this resulted
in slow down of system efficiency and increased the systematic risks.
Expansion of the stock trading industry has led to a tremendous increase in risk factors relating
to counter party risk, credit risk, bad deliveries, long delayed deliveries, counterfeit scripts,
forged certificates, wrong signatures and slow and stealing of shares.
All this ultimately led to introduce a new modern infrastructure consisting of Depositories,
paperless trading and computer recording of transactions. A beginning of this was made by
setting up Stock Holding Corporation of India Limited (SHCIL), jointly invested by ICICI, IDBI,
IFCI, RBI, UTI, LIC.

LOVELY PROFESSIONAL UNIVERSITY 117