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The Indian Financial System has undergone a considerable change in the recent
past. The Financial Sector reforms, along with technological advancement have
integrated international markets, which have facilitated the scope for uninterrupted
mobility of funds in various financial markets. It has also led to efficient and low-cost
transactions related to securities. This can be seen in the Indian financial sector reforms
also, which started in the early 1990s.
Acknowledgement
Executive Summary
Certificates
BIBLIOGRAPHY……………………………………………………………….………………………………..77
OBJECTIVE
1. Firstly, the core objective of our summer training was to understand the practical
working of an organization, which so far we had only read about in the books.
This training was our first experience of working in any organization which gave
us an opportunity to look at the various aspects such as the hierarchy of
employees in the organization, functioning of various departments, HR practices,
flow of information etc.
2. The next objective was to apply the theoretical knowledge gained during our
course of MBA Programme. This involves a wide area of topics like organization
behavior, structure and design of organization, research methodologies and
application of statistical for quantitative analysis.
5. Under the guidance of our project mentor, we realized that the conversion of
physical securities into electronic form changed the way in which the security
holders were looking at the things. It changed security level, convenience level,
cost of holding and transacting in the securities and so on. So we decided to study
these aspects along with the other objectives. The comparative study of various
DPs followed by this enabled Anagram to take a re-look at its position regarding
various aspects vis-à-vis other DPs.
SOURCES OF INFORMATION
In our project we were given a complete view of the mechanism of the Demat
system as a base. We also gained some important knowledge about the fundamentals of
the system by referring to certain material provided by NSDL as well as got a lot of
information from the GLS library. A large amount of information on the related topics
was retrieved from the Internet without which our knowledge would have remained
shallow and incomplete.
APPROACH
We had done the project in a group of three students. As we were required to visit
the different DPs and gather the relevant information, the approach we thought to be the
most appropriate was as follows:
Two of us approached the DPs as students, who were interested in studying their
services. This was done by getting a questionnaire filled up by the DP in-charge.
One of us approached the DPs as a prospective client, who was interested in
opening an account in their DP.
Another aspect of our project was to get a feedback from the clients of Anagram
Securities Ltd. with regards to the services and scope of improvement. Our approach with
regards to this was a prior appointment with the clients, which consisted mostly of the
sub-brokers, and some individual clients. Some of the clients were available at the office
of Anagram itself.
After collecting the required information from all the above-mentioned sources,
what we got was raw data. Such raw data would not be of much help to anyone. As
taught in our Business Research Methodology course, we tried to organize this data into a
systematic report, which would enable the reader to understand it better.
Followed by this we tried to read between the lines and listed some important
conclusions that we could draw from the information. This analysis was very helpful in
understanding in depth the various factors that affect the working of a DP as a whole and
the inter-relationships that exist among them.
Another aspect of our analysis included a study of the type of services provided to
the clients of Anagram Securities Ltd. and the scope of improvement if any in the same.
This information would be very helpful to Anagram Securities Ltd. in improving their
services and customer satisfaction.
Anagram Securities Ltd. is part of the Rs.2500 crore Lalbhai Group, and one of
India’s top broking houses, with memberships of the NSE, BSE and ASE and a decade of
hard-won experience. Anagram has grown steadily after its origin in 1994 and has
always focused on the needs of the retail client. Apart from this it also caters to the
needs of institutional clients. It has more than 60 branches all over India with a total
clientele of more than 15000.
Over the years it has had a stronghold in Gujarat and has now expanded to 38 offices
covering all the major business centers spread across the country. Their client base,
“Moneypore is not a place. You don’t need a passport to get there. Moneypore is that
state of consciousness which enables retail investors to make intelligent decisions. You
need not be rich to become a resident of Moneypore. All you need is an open mind and a
desire to take charge of your financial affairs.”
Apart from conventional broking service, which is its main focus, it also offers
online trading, and depository participant facilities with the NSDL. It has also ventured
into mutual funds, commodity broking, futures and options, primary market. It has
maintained prompt payouts to the clients, winning a reputation for reliability and
transparency that is not too common a currency in this business. And it has done this
despite the alarming and sudden slumps that the stock market and the economy have gone
through over the last decade.
1. STOCKBROKING
It was one of the first to offer online trading. The site, www.moneypore.com, a
high bandwidth leased lines, secure servers and accustom-built user interface gives the
customers an international trading experience. Moneypore also gives regular updates
during trading hours, and access to information, analysis and research, and a range of
monitoring tools.
To help the clients manage their portfolio, Anagram offers a complete range of
other investment products, including Mutual Funds, Bonds, and Small Saving products.
On their site, a person would find huge amounts of information, updates and analysis, as
well as a range of calculators and interactive tools to help him/her make their choices.
RESEARCH-BASED ADVICE
The effort is directed to prevent permanent loss of capital and to make absolute
returns over time with a minimal amount of business risk. Anagram is confident that
through this process, over a three-year period, the investment results will be superior to
any market index. The portfolio, however, may fluctuate in the short run, as the
investment decisions will be guided by business prospects and not by short-term market
movements. They feel that this process will be well suited to the needs of investors.
It sees its role as that of an unbiased information provider and advisor attempting
to empower individuals to take investment decisions and styles that suit them. Their
selection of companies reflects this. Many of the companies that they have recommended
for investment are providers of goods and services that touch the every day life of most of
us. Their belief is that the comfort level of investing in such companies, therefore, would
be very high.
ORGANIZATIONAL STRUCTURE
CEO
(Mr. Darshan Mehta)
Management Committee
West Maharastra
North,
South (only East (except
Gujarat
Mumbai) Mumbai)
Compliance,
Accounts/ Research
HRD Liasioning
Finance
Regional
Divisions
Depository Settlement Information Functional
Participant Technology Divisions
India has had a vibrant capital market that is more than a century old, and the
Indian shareholders are very much involved in it, which has largely contributed to its
economic growth and development. Two of the major share markets in India, BSE and
NSE, are widely reflective of the pattern of growth of the Indian economy. We can see
that a large numbers of players are stepping into the share bazaar with an expectation of
reaping huge benefits – some for long-term investment purposes and others for windfall
profits. Most of these new players are tech-savvy and constantly in shortage of time.
In this new technology-driven era, can the share market be left behind?
Modernization in the trading and settlement system has been witnessed in the
capital market through automated trading mechanism of Demat. The advent of Electronic
trading and settlement has brought in transparency in trading and has eliminated risks
associated with Bad Delivery and handling huge load of paperwork. The country has
made a remarkable growth in the capital market by switching over to electronic trading.
Indian investor community has undergone sea changes in the past few years. India
now has a very large investor population and ever increasing volumes of trades.
However, this continuous growth in activities has also increased problems associated
with stock trading. Most of these problems arise due to the intrinsic nature of paper based
trading and settlement, like theft or loss of share certificates. This system requires
handling of huge volumes of paper leading to increased costs and inefficiencies. Risk
exposure of the investor also increases due to this trading in paper.
In this chapter we intend to discuss in detail the basics of a depository system, the
depository participants (DP) and the dematerialization of shares.
DEPOSITORY SYSTEM
Bank Depository
Holds funds in accounts Holds securities in account
Transfers funds between accounts Transfers securities between accounts
Transfers without handling money Transfers without handling securities
Safekeeping of money Safekeeping of securities
The risk of loss, mutilation is common for physical certificates and completely
removed in electronic shares.
Handling of a large number of physical certificates is ended in the Depository
mode.
In the electronic segment, there are no bad delivers as in physical segment.
There is no stamp duty payable in electronic shares compared to the duty of
0.50% in the physical segment while transferring ownership.
In loans against shares, banks usually charge a lower interest rate and margin
money than in the physical share certificates.
Settlements in the Stock Exchanges have commenced in the electronic segment
and have proven to be far more efficient and convenient compared to physical
shares.
As per claims of NSDL, in the physical environment, about 20% of delivered stock
constitutes bad deliveries. Of these, about 1% is ultimately absorbed by the system as bad
delivery cost.
Physical Certificates are usually exposed to security risks due to theft of Stocks. The
buyers of the Securities are also exposed to mutilation and / or loss of certificates during
movements through and from the registrars. This requires the investor to incur additional
burden for obtaining Duplicate Certificates including cost of advertisements, etc. This
problem does not arise in the Depository Environment.
Section 30 of the Depositories Act, 1996, has made special provision, which exempt the
Transfer of Equity Instruments & Units of Mutual Funds in the Depository from
incidence of Stamp Duty.
In case of Physical mode of Transfer of Equity instruments & Units of Mutual Funds, the
buyers had to shell out for Stamp Duty @ 0.5% of the purchase cost.
In the Depository environment, investors (Clients) become Legal Owner of the Securities
once the Securities are credited to the investors account with the Depository Participants
on pay out, here in after the investors becomes the Beneficial Owner of the Depository.
The Depository System has relived the Buyer of the Securities from the exercise of
sending the Securities to the Issuer for getting the securities transferred to his own name
as Depository itself is the registered owner of Dematerialized Stocks is empowered to
effect transfer of Ownership.
In the Physical mode of Transfers usually takes around three to four months and is rarely
completed within the statutory framework of two months. The delay in the process might
The Depository affects transfers through Book Entry, and usually follows rolling
settlement cycle of T+3. In the T+3 settlement, all trades are settled on the 3rd working
day from the trade day. This enables faster turnover of stock and prompt liquidity to the
investor.
6. Pay-in and Pay-out of Securities / Funds on the same day for Demat trades.
As mentioned above, in the Demat Segments the settlement of trades (both securities and
funds) is on the 3rd working day from the trade day. This enables the Client / Buyer who
makes the payments on the 3rd working day, to receive the securities in his Accounts
with his/her D.P. on the same day in the evening and a Seller / Client who delivers the
securities on the 3rd working day to receive the funds on the same evening.
7. Faster Disbursement of Non Cash Corporate Benefits like Rights, Bonus, etc.
The Beneficial Owner who opts for Demat Credit of Securities for Bonus / Rights, these
non-cash Corporate entitlements are credited to Client's A/c with D.P. electronically. This
ensures faster disbursement of entitlements and reduces the risk of loss of certificates in
transit.
Some market friendly Banks / Financial institutions provide loans at confessional rates
against pledge of dematerialized securities. The pledge of dematerialized stock provides
the institution with greater control and opportunity for recovery in case of default by the
loanee. The Dematerialized Stocks further enable the institution hassle free transaction,
while getting securities registered in their (Bank / Institutions) name at the time of book
closure.
In case of change of address or transmission of demat shares, investors are saved from
undergoing the entire change procedure with each company or registrar. Investors have to
only inform their DP with all relevant documents and the required changes are effected in
the database of all the companies, where the investor is a registered holder of securities.
The investors receive the Statement of Holding and Transaction Statement regularly.
This enables them to have a better control over their operations.
DEPOSITORY
Depository means a company formed and registered under the Companies Act,
1956 and which has been granted a certificate of registration under sub-section (1A) of
section 12 of the Securities & Exchange Board of India Act, 1992. A Depository is an
A Depository interacts with the investors through its agents called Depository
Participants (DPs). If an investor wants to avail the services offered by the Depository,
he/she has to open an account with a DP. This is similar to opening an account with any
branch of a bank, in order to utilize the bank's services.
The Depository is obligated to maintain the Client Holdings, enable Demat and
Remat of eligible securities, disbursement of corporate benefits, effect settlement of
securities traded
Main concerns of the Investors, after receiving deliveries of securities is to get the
securities registered in his / her own name. However, in most of the times, investors are
exposed to Risk related to Capital Market and due to various reasons Investors are not
able to register his / her ownership.
The above list shows that except for one reason, buyer of the Securities is always
at Risk of losing the ownership of the share purchased, due to seller's default. To provide
much needed protection / relief to the Buyer Investors, Govt. of India had decided to
introduce the Depository System in India.
At present, there are two Depositories in India, National Securities Depository Limited
(NSDL) and Central Depository Services (CDSL).
National Securities Depositories Ltd. (NSDL) was set up as the first depository in
the country having various depository participants registered with it. NSDL was
inaugurated on 8th November 1996. It was set up with an initial capital of Rs.124 crore,
promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI),
Although India had a vibrant capital market, which is more than a century old, the
paper-based settlement of trades caused substantial problems like bad delivery and
delayed transfer of title till recently. The enactment of Depositories Act in August 1996
paved the way for establishment of NSDL, the first depository in India. This depository
promoted by institutions of national stature responsible for economic development of the
country has since established a national infrastructure of international standard that
handles most of the trading and settlement in dematerialized form in Indian capital
market.
Using innovative and flexible technology systems, NSDL works to support the
investors and brokers in the capital market of the country. NSDL aims at ensuring the
safety and soundness of Indian marketplaces by developing settlement solutions that
increase efficiency, minimize risk and reduce costs. NSDL plays a quiet but central role
in developing products and services that will continue to nurture the growing needs of the
financial services industry.
In the depository system, securities are held in depository accounts, which is more
or less similar to holding funds in bank accounts. Transfer of ownership of securities is
done through simple account transfers. This method does away with all the risks and
hassles normally associated with paperwork. Consequently, the cost of transacting in a
depository environment is considerably lower as compared to transacting in certificates.
BASIC SERVICES
Under the provisions of the Depositories Act, NSDL provides various services to
investors and other participants in the capital market like, clearing members, stock
exchanges, banks and issuers of securities. These include basic facilities like account
maintenance, dematerialization, rematerialisation, settlement of trades through market
transfers, off market transfers & inter-depository transfers, distribution of non-cash
corporate actions and nomination/transmission. The Depository System, which links the
issuers, depository participants (DPs), NSDL and clearing corporation/ clearing house of
stock exchanges, facilitates holding of securities in dematerialized form and effects
transfers by means of account transfers. This system, which facilitates scripless trading,
offers various direct and indirect benefits to the market participants.
SPECIAL SERVICES
NSDL has taken the initiative for providing the facility of enabling brokers to
deliver contract notes to custodian / fund managers electronically through its STEADY
facility. STEADY (Securities Trading - information Easy Access and DeliverY) was
launched by NSDL on November 30, 2002. STEADY is a means of transmitting digitally
signed trade information with encryption across market participants electronically and
efficiently, through Internet.
JOINING NSDL
NSDL carries out its activities through service providers like Depository
Participants (DPs), Issuing companies and their Registrars and Share Transfer Agents,
Clearing corporations/ Clearing Houses of Stock Exchanges. These entities are called
business partners in NSDL terminology. These entities need to get integrated into NSDL
depository system to be able to provide various services to the investors and Clearing
Members.
The investor can obtain depository services through a depository participant of NSDL.
Just as one opens a bank account in order to avail of the services of a bank, an investor
opens a depository account with a depository participant in order to avail of depository
facilities.
A clearing member can open a special account in the depository system for the purpose
of settling trades done on stock exchanges. The clearing account enables the clearing
member to receive securities from its clients for delivery to the Clearing House/Clearing
Corporation as pay-in, and to distribute the payout to its clients received from the
Clearing-House.
Bye Law: 6.4 Provides for Rights & Obligations of Participants & Clients.
6.4.1.
Provides that no Participant shall conduct business as a Participant with its Clients unless
it has entered into an agreement with its Clients.
6.4.2.
The Annexure " B " at clause No.1 has enumerated, client obligations towards the
Participant.
Clause No.1: Stipulates that " The Client shall pay the charges to the Depository
Participant for the purpose of opening & maintaining his account, for carrying out the
instruction of the Client & for rendering such other services as may be agreed to between
the Depository Participant & the client as set out in Schedule " A ".
Schedule " A “: This Schedule has listed below mentioned charges for inclusion in this
schedule, such as:
NSDL & SEBI had conveniently ignored the act of DP’s to include without authority the
charges of Dematerialization in Schedule " A “ of the agreement.
Clause No.2: Inter alia it stipulates that " The Client shall have the Right to get the
Securities which have been admitted on the Depository, Dematerialized in the form &
manner laid down under the Bye Laws & Business Rules ".
Accordingly this Clause had empowered the investors the right of Dematerialization in
the form & manner laid down under the Byelaws & Business Rule.
Hence if the depository participant is providing services of Dematerialization, they are
under obligation to provide the same to the investors for which no charges can be levied.
NSDL claims to have undertaken sufficient security measures. These measures are:
• Every day, there is a system driven mandatory reconciliation between the DP and
NSDL.
• There are periodic inspections into the activities of both DP and R&T agent by
NSDL. This also includes records based on which the debit/ credit are affected.
• The data interchange between NSDL and its business partners is protected by
standard protection measures such as encryption. This is a SEBI requirement.
• There are no direct communication links between two business partners and all
communications between two business partners are routed through NSDL
• All investors have a right to receive their statement of accounts periodically from
the DP.
• In the depository, the depository holds the investor holdings on trust. Therefore, if
the DP goes bankrupt the creditors of the DP will have no access to the holdings
in the name of the clients of the DP. These investors can then either dematerialize
their holdings or transfer them to a different account held with another DP.
Besides all these safety measures efforts have been done to make this electronic system
foolproof.
The systems are accepted by NSDL only after a rigorous testing procedure.
System has spare disk configuration where data is automatically copied from the main
disk upon encountering the first failure (due to RAID implementation - first failure does
not result in loss of data).
All network components like router, communication controllers etc, have on-line
redundancy and thus a failure does not result in loss of transaction.
Disaster back up site: In addition, a disaster back up site equipped with a computer
identical to the mainframe computer & computing resources has been set up at a remote
location about 175 km away from Mumbai. This site has been tested for operations from
the site.
Back-up in case of power failure: Continuity in power supply to the main systems is
assured by providing for; dual uninterrupted power supply (UPS) for IBM-Mainframe
and related components wherein the two UPSs are connected in tandem. In case of failure
of primary UPS, the secondary UPS takes over instantaneously and thus, there is no
interruption in operation, and back-up diesel generator set.
If an investor looses his statement of holdings, he may inform his DP and obtain a
duplicate statement of holdings. The loss of statement of holding will not affect his actual
holdings.
Depository account details are confidential. There are strict systems and procedures
established to protect the confidentiality of investor information at the depository to
ensure that these are available to only authorized persons. Even a DP other than your
own, cannot have access to your account.
The second depository, Central Depository Services (India), was promoted by the
Stock Exchange, Mumbai (BSE) jointly with leading banks such as State Bank of India,
Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of
India and Centurion Bank. CDSL got the certificate of commencement on 8th February
1999 and commenced limited operations at Bombay Stock Exchange, of opening
accounts and processing Demat request from 22nd March 1999. The initial capital of the
company is Rs.104.50 crores.
CDSL was set up with the objective of providing convenient, dependable and secure
depository services at affordable cost to all market participants. Some of the important
milestones of CDSL system are:
The following are the major benefits of having an account with CDSL.
CONVENIENCE:
Wide DP Network: CDSL has over 200 DPs spread around 114 cities/towns across the
country, offering convenience for an investor to select a DP based on his location.
Wide Spectrum of Securities Available for Demat: More than 4600 companies have
admitted their equity into CDSL. Further, CDSL has also admitted an entire gamut of
debt instruments viz. bonds, debentures, commercial paper, government securities,
certificate of deposits, etc. Thus an investor can hold almost all his securities in one
account with CDSL.
Competitive Fees Structure: CDSL has kept its tariffs very competitive to provide
affordable depository services to investors. CDSL also does not collect any custody fees
or ISIN fees from its DPs.
Internet Access: A DP, which registers itself with CDSL for Internet access, can in turn
provide demat account holders with access to their account on the Internet.
DEPENDABILITY:
Audit and Inspection: CDSL conducts regular audit of its DPs to ensure compliance of
stringent operational and regulatory requirements.
Helpdesk: DPs and investors obtain clarifications and guidance from CDSL's prompt and
courteous help line facility.
SECURITY:
Computer Systems: CDSL has installed state-of-the-art computer system and data
storage devices. All data is stored at CDSL and is auto mirrored separately and also
transmitted to a Disaster Recovery site. Data is also backed up on digital linear tapes,
which are stored in fireproof cabinets at the main and disaster recovery sites.
Claims on DP: If any DP of CDSL goes into liquidation, the creditors of the DP will
have no access to the holdings of the BO.
Insurance Cover: CDSL has obtained adequate insurance cover in the unlikely event of
any loss to a BO due to the negligence of CDSL or its DP.
TECHNOLOGY USED
Software:
Hardware:
Hewlett Packard provides the hardware. HP 9000 (64 Bit) Enterprise server system
(super computer technology with a robustness of enterprise class), is the highest
performing RISC/UNIX server system available in the marketplace.
This system is connected to a near fault tolerant storage system from EMC2 Corporation
featuring multiple RAID levels and intelligent diagnostics (automatic disk fault finding
system). This is the world's best storage system and the first of its kind to be installed in
India; imported from United States of America after due certification by the relevant US
Agency and installation at our site was also subject to inspection by the US Consulate.
The load handling capacity of Unix systems used is virtually limitless.
Database Architecture:
The balances in the investors account recorded and maintained with CDSL can be
obtained through the DP. The DP is required to provide the investor, at regular intervals,
a statement of account, which gives the details of the securities holdings and transactions.
The depository system has effectively eliminated paper-based certificates, which were
prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient
and instantaneous transfer of securities.
By looking at the spread of their operations, one would find out that the NSDL is way
ahead of CDSL. This is because of various reasons- the major reason being that NSDL
started much earlier in 1996, as compared to CDSL, which started operating from 1999.
Many believe that the over-all set-up of the infrastructure developed by NSDL for DPs is
much superior to that of CDSL. For example, it is a known fact that NSDL has a much
better back-up system than CDSL.
These agents are appointed by NSDL with the approval of SEBI. According to SEBI
regulations, amongst others, three categories of entities i.e. Banks, Financial Institutions
and Members of Stock Exchanges [brokers] registered with SEBI can become DPs. All
the DPs are appointed subject to fulfillment of uniform requirements of SEBI
You can select your DP to open a Demat account just like you select a bank for opening a
savings account. Some of the important factors for selection of a DP can be:
There are no restrictions on the number of DPs you can open accounts with. Just as you
can have savings or current accounts with more than one bank, you can open accounts
with more than one DP.
The Participant shall have the discretion to charge any fees to its Clients. Further, the
Participant may charge different types of fees to its various Clients.
Moreover, an issuer may pay a one-time custody fee to NSDL and consequent upon such
payment, NSDL shall not levy any custody fee on the Participants.
This necessarily concludes that the Depository Participants are neither empowered to
collect the Demat charges nor morally recover excess Custody Charges from the Clients.
The charges prescribed by the NSDL for the DPs are as follows:
Clause No.1 stipulates that the client shall pay the charges to the Depository Participant
for the purpose of opening & maintaining his account.
(b) Annual Membership Charges: Without clearly specifying the difference between
Accounts Maintenance Charges, the same charge is recovered under the different
nomenclature as Annual Membership Charges.Depository Environment had actually
provided Depository Participants with free hand to Charge same Charge time & again
under different nomenclature as per their own will.
2. Custody Charges:
No periodicity for collecting these charges is fixed by the NSDL. Hence some Depository
Participants are collecting Custody Charges at Quarterly Interval & some are collecting at
Yearly Interval. Collection at Quarterly Interval has an effect of compounding nature.
Again at NSDL " scale of Custody Charges varies from one Depository Participant to
another Depository Participant ". As per our contention the Custody Charges are
recovered twice from the Beneficial Account Holder.
First, through issuer where in the Beneficial Account Holder is a Share-Holder & when
this issuer pays to the Depository One Time Custody Charges. Secondly, in spite of
paying one time custody charges, the Beneficial Account holder are again made to pay
custody charges to the Depository Participants as a Client. The absolute minimum
custody charge is another ploy to recover much more than the applicable rate.
3. Transaction Charges.
The DP levies these charges for effecting Credit or Debit to the Clients Accounts.
A) Non-Scheduled Charges of Dematerialization. The Schedule " A " at Annexure " B "
has not prescribed this sort of Charges, which referred as Charges of Dematerialization.
The NSDL business rule has prescribed fee for dematerialization & rematerialisation as
under: The Depository on Dematerialization requests shall charge no fee. However, in
case of Rematerialisation, a fee at the rate of 0.10% of the value of the securities
requested for rematerialisation or Rs.10/- per certificate, whichever is higher will be
charged.
4. Rematerialisation Charges.
This charges becomes payable at the time of Beneficial Owner Opting to withdraw from
the Depository Environment & requires his Securities in Physical Mode.
DEMATERIALIZATION
Securities registered in your name are surrendered to depository participant (DP) and
these are sent to the respective companies who will cancel them after "Dematerialization"
and credit your depository account with the DP. The securities on Dematerialization
appear as balances in your depository account. These balances are transferable like
physical shares. If at a later date, you wish to have these "Demat" securities converted
back into paper certificates, the Depository helps you to do this by a process called
Rematerialization.
Dematerialization of shares is optional and an investor can still hold shares in physical
form. However, he/she has to Demat the shares if he/she wishes to sell the same through
the Stock Exchanges. Similarly, if an investor purchases shares, he/she will get delivery
of the shares in Demat form.
PROCESS OF DEMATERIALIZATION
Prescribed Demat Request Form (DRF) needs to be filled in by the client who wishes to
convert the physical shares into Demat form. Client should verify whether the scrip, he
wishes to Demat, is listed on NSDL or not. Only those scrips that are listed can be given
for dematerialization. The list of tentative scrips listed on NSDL is made available to the
branch. The same can be downloaded from NSDL's Internet site also, viz.
www.nsdl.com.
The client should also deface the share certificates with the rubber stamp stating
'SURRENDERED FOR DEMATERIALISATION'. The said stamp is made available to
the branch to facilitate the client to use the same. Also the said shares should be punched
with minimum two holes on / near the name of the Company.
Separate DRF needs to be filled in per account per scrip. The said DRF, received by the
branch from the client, should be verified for mandatory requirements in the DRF and
also should verify the Physical shares. The details mentioned on DRF needs to tally with
the physical shares and that the said shares are properly defaced with the required stamp
and holes. The complete form with share certificates should be send to Ho for further
processing. Normal process of completion of the Demat is 20 to 30 days.
As per NSDL Bye Law, Client in relation to a Participant means a Beneficial Owner who
has opened an account with the participant & has entered into the agreement in
accordance with the provision of Chapter 6 of NSDL Bye Laws.
MANDATORY REQUIREMENTS
Firstly the client has to open an account with a Depository Participant and get a unique
Client ID number. Thereafter, he has to fill the Dematerialization Request Form (DRF)
provided by the DP and surrender the shares in physical form to the DP. The Depository
participant on receipt of the above documents will send an electronic request to the
companies through the Depository for confirmation of demat. Each request will bear a
unique transaction number. The DP will surrender the DRF and the above-mentioned
documents with a covering letter requesting the company to confirm Demat. The
FUNDS
SECURITIES
PAY-IN
PAY-IN
Depository Broker
Clearing
Corp.
FUNDS PAY-
SECURITIES
OUT
PAY-OUT
Broker Broker
By looking at the spread of their operations, one would find out that the NSDL is
way ahead of CDSL. This is because of various reasons- the major reason being that
NSDL started much earlier in 1996, as compared to CDSL, which started operating from
1999. NSE, being one of the promoters of NSDL, made it mandatory for security holders
to dematerialize their securities phase-by-phase. Many believe that the over-all set-up of
the infrastructure developed by NSDL for DPs is much superior to that of CDSL. For
example, it is a known fact that NSDL has a much better back-up system than CDSL.
So, as of now, in India NSDL has more DPs under its umbrella than CDSL.
In our study of various DPs of Ahmedabad, we have found out that almost all the
DPs are registered with NSDL, however some of the DPs like HDFC, Ratnakar
Securities, Shah Investors and Stock Holding Corporation of India are also registered
with CDSL.
The Indian capital market moved along with international standards as it can be
seen in the case of dematerialization. It was realized by the broker community that it
would take more than stock broking services for them to survive in this new era of the
vibrant capital market. Therefore, the large broking houses of the country started offering
Demat services, thus providing a one-stop-shop for their clients. They now provide their
clients with broking services, Demat facilities, financial consultancy, asset management
services and so on. So dematerialization has helped them to retain their existing clientele
and expand it at the same time by attracting new clients.
On the other hand, the major financial institutions of the country were also
attracted by the opportunity, as they could also provide demat services using their
existing network of branches.
In our study, we found out that in Ahmedabad all the large and old brokerage
firms provide Demat services to their clients. And the competition doesn’t end here as
many banks like UTI, HDFC, KCCB and Nutan Nagarik also provide the demat services.
Thus, we can now conclude that the ball is in the customers’ court as it is up to the
customer to decide whether he should be loyal to his banker or broker.
NSDL is India’s first depository which started in the year 1996, and soon after
that, there were some early birds in Ahmedabad to. In our sample of 13 DPs in
Ahmedabad including banks, Shah Investors is the oldest DP to be incorporated in the
year 1994. Among the banks UTI seems to be the initiator, which started providing DP
services since 1996 followed by Investmentor Securities in 1995. The most recent players
in this field include Nutan Nagrik Sahakari Bank Ltd. and ACML, which started its
operation from 2001. Today there are more then 20 DPs in Ahmedabad. As Indian capital
market is in its growing phase, it seems that there is a good scope for new players to enter
this competitive market.
Earlier the Indian market makers were not conversant with Demat system. But
with the emerging capital markets and the transformation of the paper-based settlement to
electronic form, the incorporation of DPs would require technical know-how of the
process. As per the norms of NSDL it is mandatory for each and every DP including all
the branches to have at least one NSE Certificate for Financial Management (NCFM)
qualified employee. Kalupur Commercial Co-operative Bank ranks the highest among the
DPs surveyed with 18 out of 20 employees being NCFM qualified. Ratnakar has 10
NCFM certified employees. We found out in our study that this NCFM certified
employees to total employees ratio is increasing by the day. Since NCFM exam is taken
in English language, many of the DP employees find it difficult to clear the exams in
spite of having the technical knowledge.
Generally DPs have different kinds of clients such as individual clients, HUF
firms, NRIs, corporates, clearing members etc. In Ahmedabad, we found that almost all
the DPs surveyed had such a combination. And it turned out that individual clients
formed the major chunk of the pie. The individual clients form more than 95% of the
clientele across all the DPs. But it would be unwise to draw any conclusions from this.
Because business generated by other clients like corporates, clearing members etc is
much more than that of individual clients.
In our study we found out that Shah Investors has the highest number of clients
which stands at nearly 45000, next comes KCCB (35000), Ratnakar Securities (15000),
Invetmentor (13450) etc. Though Shah Investor has the highest number of individual
clients, the highest number of corporate clients is with Khandwala Securities. Khandwala
Securities also has the highest number of clearing members (4) as clients.
Another obvious difference found out was the volume of instructions per day for
different DPs. One can easily correlate it with the number of clients with the DPs. These
instructions are of three kinds namely Delivery instructions, Account opening
instructions and Demat requests.
We found out that ACML gets the highest number of instructions for delivery
followed by Stock Holding Corporation of India Ltd. In Account Opening category
Nutan Nagarik gets the highest number of instructions, which stands, at 60 instructions
per day. The next in line is Invetmentor, Pravin Ratilal securities and ACML. For the last
category of Demat request, Pravin Ratilal gets the highest number of instructions (350)
next comes Stock Holding Corporation of India (200) and Shah Investors (100).
Isn’t it? As we discussed earlier DPs have different kinds of clients. Some of the
clients form a major chunk of revenue, some clients generate major chunk of volume
with respect to sub-broker, Corporates etc. So DPs use different strategies to retain such
clients. DPs sometimes offer discounted charges to such clients, which bring more
business. This differentiation of clients can be done on various basis such as volume,
value, as per category of clients etc.
We found out that almost all the DPs in Ahmedabad have such differentiation,
though they have their own criteria for differentiating. There is also a possibility of
bargaining/negotiation between clients and DPs. We observed that most of the DPs
discriminate between the sub-brokers and clients. Discrimination is also done when the
volume of transaction varies a lot. Sometimes discrimination is reasonable, at least in
business!
Each time a client enters into a transaction, he/she needs to know the balance in
the account. For this purpose some clients may require the SoH and TS more frequently.
Therefore the DPs have started providing SoH and Ts on demand, for which additional
charges may be imposed. Anagram Stockbroking Ltd., Shah Investors and Stock Holding
Corporation of India provide these statements on demand for free which the clients have
to go and collect. It may also be e-mailed to the clients as UTI does. In the long run it
would be futile to charge the clients for on demand statements, as competition would
necessitate the use of technology, which would reduce the cost in any case.
Since the system of Dematerialization has come into existence it has become
much easier for the clients to enter into transactions. All one needs to do is to submit the
instruction slips duly filled to their respective DP. In doing so if the DP finds any error or
inaccuracy with regards to the amount, signature or the details regarding the shares, the
DP may reject the same. Some DPs may not charge for the rejected instructions.
Among those DPs that charge their clients for rejected instructions are Infinite
Financial Services Ltd., Pravin Ratilal, Investmentor Securities, Nutan Nagrik, Goldmine,
UTI and Shah Investors. Moreover these DPs also impose a service tax of approx. 8% on
these charges. Therefore small mistakes could cost the client dearly.
(12) MODE OF COMMUNICATION
In this new era of competition, DPs have introduced many innovative things to
retain and add to their clientele. And that reflects in their modes of communication to the
clients for sending Transaction Statement and Statement of Holding. We observed that
DPs used many new modes of communication apart from communication modes like post
and courier. New modes of communications include telephone, e-mail, fax, website and
telephone (automatic) where clients can get information 24*7.
In Ahmedabad, all the DPs use post/courier. But, the difference is apparent in
offering more convenience to clients through different modes. Shah investors uses e-mail,
telephone (automatic) and fax. HDFC and Ratnakar securities have their own website
which they update regularly for clients. Clients can access TS and SoH through it. E-mail
and Telephone (automatic) are also becoming increasingly common for DPs to serve their
clients.
(13) ‘SLIPS’ FOR CLIENTS!
As Demat services became more and more popular, and DPs spread their services
across all the sections of the clients, the DPs were driven by competition and thus started
giving more services and convenience to their clients. So as a result of this matters of
On the basis of our study of DPs, we observed that Pravin Ratilal, HDFC,
Khandwala and UTI have subscribed to SPEED-e services and provide the same to the
clients. As of now very few clients have availed of this service. This may be due to their
lack of willingness to use the Internet, but the future scenario is likely to change with the
gradual acceptance of Internet.
An interesting aspect of comparing the DPs is the charge structure as it affects the
choice of the clients for choosing a particular DP. We observed that the whole charge
structure could be divided in two parts- fixed and variable. All the DPs have set different
charges and in some case nothing is charged for some of the services. This is an area where
the DPs can attract the attention of the clients by charging differently as compared to
competitors.
Fixed component of charge structure includes A/c opening charges and annual
maintenance charges. Variable charges include purchase and sell charges based on number
of transactions, Demat and Remat charges based on the number of certificates etc.
Shah Investors is one of the DP that has high A/c opening charges (Rs.190/-
including stamp paper charges) followed by Ratnakar (Rs.175/-), ACML (Rs.150/-) and
Infinite (Rs. 150/-). Annual maintenance charge of Stock Holding Corporation of India is
the highest at Rs.350/-. Most of the other DPs charge Rs. 300 per year. ACML charges the
least at Rs.150/- per year.
As we discussed earlier also, it makes sense for prime brokerage firms to provide
dematerialization service as well. It works as a supporting service and a one-stop shop for
clients. We observed in our study that major clients like brokers, sub-brokers prefer their
principal which also provides demat service. It is because it would become easy for them
to settle any problems regarding pay-in. Thus it would save their time and would provide
them with more flexibility in their work.
(2) LOCATION
When clients decide about the DP, there are many issues on their mind. They also
consider many implicit costs. For example many clients would prefer a DP which is
nearer to their home/office because it would give them convenience. We found out in our
study that many individual clients consider this issue important while choosing a DP. It
doesn’t make much difference to big brokers and sub-brokers as they have far greater
volumes and so they give more importance to the charges, relationships and so on.
(3) CHARGES
All the clients, whether an individual, a sub-broker or a main broker, would consider
charges closely while choosing a DP. This is the most important factor which influences
the clients’ choice of DP. There are two types of charges in demat, namely, fixed and
variable. The major fixed charge is annual maintenance charge and the major variable
charge is the transaction (buy/sell) charge. Active clients would look at variable charges
closely while selecting a DP. On the other hand, those clients who are not so active
would look at annual maintenance charge closely.
Customer service is one of the most important issues for clients. It includes a variety of
things, starting from the sending of the statement of holding and the transaction statement
on time, to providing the latest internet-based SPEED-e and IDeAS facilities. The clients
look for that DP which matches their need of services. Certain clients require the
Statements more frequently than other clients and may find it cumbersome to visit the DP
everyday for the same. Now-a-days, the number of internet-friendly clients is increasing
(5) RELIABILITY
It is very important for DPs to provide satisfactory level of services with consistency.
This means that the quality of service should not keep changing from time to time. The
client should be able to estimate the timings and functioning of the services with a fair
level of accuracy. By providing services with consistency creates reliability. One
important aspect here is that the client should be assured that their transactions are all
valid and safe as far as the services of the DP are concerned.
(6) GOODWILL
Many clients also consider goodwill of the DPs, because ultimately they are putting their
securities with the DPs and therefore taking risk. So the clients would prefer well-
established DPs. We observed that clients have positive perceptions regarding Anagram’s
goodwill, the key reason behind this is the goodwill of Lalbhai Group in the industry. It
takes time, money and loads of efforts in building a good reputation for a company. The
clients should be convinced of the credibility and the reliability of the organization.
Anagram passes this test with flying colors as almost 90% of the clients are happy and
satisfied with it.
Familiarity with the organization is also one of the key issues for clients. We found out
that some of Anagram’s clients have very good relationship with the staff members.
Clients become aware of the culture, people, procedures etc of the organization over a
period of time. So this also influences the clients’ decision. Familiarity with the
organization gives certain level of comfort to the clients. We can say that a good
relationship will lead to good business. In any organization, maintaining relationships is
of utmost importance. As some of the clients have been dealing with Anagram since its
inception, it is like a second home to them. This is a very positive sign for Anagram.
Such satisfied clients spread through word of mouth the goodwill of Anagram, thus
attracting more clients.
The Indian systemic inefficiency has actually turned the virtual queue into a reality. The
dematerialization process for paperless trading of shares has created a virtual queue,
which will take months, if not years, to process. It highlights several inefficiencies in the
new system and has thrown up an important new tax issue.
Demat ought to take care of many inefficiencies. The tedious process of physically
transferring ownership of shares is shortened. Instead of several months, ownership is
supposed to change hands instantly. The chance of a bad transfer because a signature
doesn't match is reduced to zero. So are the opportunities of thievery in the mail or forged
share certificates. The twin problems of odd lots and jumbo lots both disappear since it is
possible to trade either a single demat share or lakhs at a shot.
So demat solves various familiar problems that plague every stock market that operates
with physical paper. No wonder when SEBI initiated the process of demat it was
welcomed wholeheartedly by most investors.
Demat shares are supposed to obviate these problems. Buying shares in the demat form
always guarantees you a good title as soon as the settlement is over. The biggest
attraction of trading in demat shares is that the shares you buy come with a clean title and
immediately after the settlement on the relevant stock exchange.
But then problems started surfacing. First of all, the demand for demat services was
severely under-estimated. According to estimates, there are now 9 million pending
individual applications for demat accounts. The system has been overloaded and reached
a breaking point. As a result, somebody opening a demat account can expect to spend
several months waiting for the paperwork to be completed.
Meanwhile, a physical trading route does exist for the individual investor who needs to
raise cash in a hurry. But while a physical sale is possible, all transfers (in the shares of
designated companies) now involve a compulsory demat. Since the buyer of physical
securities must factor in a long waiting period, there is a wide differential between paper
trade quotes and demat quotes. The discount on physical paper is now around 15 percent,
or more.
Brokers and banks are therefore quite reluctant to initiate the process for their clients.
Some refuse outright. Others disregard the SEBI directives and insist that demat clients
open low-interest or zero-interest accounts as a sort of extra fee. At a minimum deposit of
Rs 1,000 per demat account and 9 million individual accounts, the amount already
blocked in these low-interest or zero-interest accounts adds up to around Rs.900 crore.
Assuming this trend continues, and given that there are more than 23 million individual
investors, the eventual cost of demat would include sub-optimal returns on about Rs
2,300 crore. That is a large and unforeseen opportunity cost for any new system.
There are further problems. The simple fraud of stealing a share certificate out of the mail
and selling it in the kerb is no longer possible with a demat account. But the only proof of
ownership for demat shares is a receipt. Trades and transfers are carried out on the basis
of that piece of paper. Anybody who has the account number and knows the details can
order a transfer of shares from one account to the other very easily.
Forgery is actually easier. The receipt itself isn't too difficult to duplicate either. Frauds
of this nature haven't started happening yet at least on a large enough scale to draw
attention. But it is something that gives the investor pause for serious thought. It's bound
to occur sooner or later. And given the lack of a paper trail, it will be difficult to establish
the fraud, let alone prosecute and offer relief to victims.
Another problem lies in the tax treatment of demat shares. With dated physical transfer
certificates, it is fairly easy to calculate Capital Gains Tax (CGT) liability. Demat shares
are fungible and don’t have distinctive numbers. It is not easy to track the sale or trade of
shares after they are dematerialized.
Suppose the investor has two lots of shares of the same company. One lot was bought
several years ago and is hence, liable only to long-term capital gains tax, in case of a sale.
This is levied at 10 per cent flat or an inflation-indexed at 22 per cent whichever is lower.
The second lot was, however, bought within the last fiscal. This is liable to 33 per cent
short-term CGT in the event of a sale.
All this has of course changed, with the Budget 2004-2005 announced on 8th of July by
the Finance Minister, Shri P. Chidambaram. There will be no more long-term capital
gains tax, and a flat rate of 10% short-term capital gains tax.
If you sold a physical lot, presumably you would deliver the older set to minimize the
payout. But in case of a demat, there is an extremely grey area about which CGT rate
should be levied. The Central Board of Direct Taxes hasn't worked out a clear procedure
for distinguishing the earlier lot from the later lot. You could find yourself locked in a
There are several more niggling problems. In theory, the demat is supposed to be within
24 hours. However, PSU bank timings don't conveniently overlap trading times. Banking
hours close at 2 pm while trading continues till 4.30 pm. On average, a transfer will take
48 hours or more. On occasion, the demat account may be temporarily credited with
shares pending confirmation of a transfer. An unwary investor who sells without ensuring
that he has actually received a confirmed transfer is open to everything starting from
severe embarrassment and ending with charges of fraud.
None of these problems are insurmountable. But it will require a coordinated effort from
various agencies to sort them out. SEBI and RBI have to come up with a way of
streamlining the demat process and regularizing the status of deposits accepted, if any.
The NSDL and CSDL will have to speed up their registration procedures and devise a
more foolproof system of receipt and transfer. Banks and stock exchanges will have to
coordinate working hours and the use of temporary entries. The CBDT will have to come
up with clear tax guidelines.
Rule 100 of market regulator SEBI determines whether the shares delivered in a
settlement, are good or not. Under rule 100, the shares that have been transferred any
number of times can still be withdrawn by the company, if a transfer is found to be
invalid for any reason.
Suppose A sells physical shares to B and B gets them dematerialized. Later B sells the
shares in the stock exchange and C buys them. Meanwhile A discovers that his share
certificates were stolen and fraudulently sold by someone else. He gets a court order
restraining the company from further transferring the shares and attaching them
(currently in possession of C). This is known as 'stop transfer'. So C who has bought
dematerialized shares is now struck with the shares. He cannot sell these shares since
they would be frozen in his account
In demat shares, pre-demat problems about the validity of a share do not effect the
interest of the buyers after dematerialization. Shares go through a verification process at
the registrars' before they are dematerialized.
Therefore the responsibility lies with the registrar. The registrar must find a remedy if the
original transfer of shares, before their dematerialization comers under doubt. But there is
a catch. The company and its registrars are not responsible if the reasons for original
transfer being invalid were not available at the time of dematerialization. Matters have to
be dealt with on a case to case basis. Which means that even demat buyer may find that
This issue is not directly addressed in The Depositories Act, 1996. SEBI’s regulations on
depositories and depository participants also do not mention the issue. Matters get more
complex if an investor has traded further in shares of the same company in his demat
account.
Investors do not like receiving physical share certificate because the process of getting
the shares converted into dematerialised form takes anywhere between four to six weeks.
Many investors look to sell immediately on listing especially a stock that is up 60 per
cent on listing. Of course, if 25 per cent of all investors are barred from trading because
they hold physical shares it automatically reduces the floating stock and potentially
creates a perfect situation for stock prices to remain artificially high.
Based on the our first study done on the various depository participants in Ahmedabad
and on clients perspective, we came to know about Anagram’s status vis-à-vis other DPs.
(1) CHARGES
NSDL charges its DPs for the various services and the DPs in turn charge their
clients on the basis of their own standards, thus differentiating themselves from their
competitors. Based on our observations we can say that the annual maintenance charge of
ACML is the least, which stands at Rs. 150/-. They also charge the least for buy and sell
transaction, which charges nothing for purchase transactions and Rs. 13 for sell
transaction. Thus, those clients who consider the charges to be a major factor might go
for ACML. We have ranked the DPs that we studied on the basis of their AMC (The DP
charging the least gets the first rank and so on)
1 ACML Rs.150/-
2 Nutan Nagrik, Rs.200/-
Pravin Ratilal
3 KCCB Rs.225/-
4 Goldmine Securities Rs.250/-
5 Khandwala, Rs.300/-
Shah Investors,
Investmentor,
Infinite Securitiies.
We suggest that Anagram Securities remain with more or less with the same charges or at
the most discriminate among some of the clients while charging for the same services. It
should charge less to more active clients to retain them.
(2) SERVICES
2 Ratnakar - - -
Securities
3 Goldmine Stocks - - - -
4 Pravin Ratilal - - -
5 UTI - - -
Now it is becoming increasingly important for Anagram to come up with various options
of providing TS and SoH to the clients. Currently Anagram provides it through courier
only but in our opinion they should provide options to the clients. It should also consider
providing TS and SoH on demand. It might charge reasonable amount for the same,
which as per our calculations comes in the range of Rs.3/- to Rs.5/-. This, we think,
would be competitive enough.
We observed in our study that many DPs have started providing IDeAS and SPEED-e
services. This makes these DPs more competitive in terms of attracting those clients who
are internet savvy. We felt after reasonable observation that it would be quite necessary
for Anagram Securities to survive and compete in the long-run. So here, we strongly
recommend them to provide SPEED-e and IDeAS services. This is the area where they
can differentiate their services from others. One major thing which supports this
argument is the increasing trend of doing online transactions. So it is quite obvious that
the future in this area looks good.
The data of some of the competitors which have already started providing these services
in Ahmedabad is given below. HDFC and Khandwala Securities provide both the
services.
Ultimately how you provide the services matters the most. Services should be fast,
reliable and with fair degree of consistency. In our survey we asked the clients to rate the
different parameters which they consider relevant while choosing their DP. We have
included in our survey different aspects like location/ proximity, charges, customer
service, security level, reliability, goodwill etc. in our survey we got that customer
service is the most important aspect for clients. 25 out of 30 clients have rated it very
high while choosing the DP.
4 Customer Service 25 4 1 - -
5 Security System 14 9 7 - -
6 Reliability 18 10 2 - -
7 Goodwill 15 14 1 - -
8 Others’ Reference 6 5 10 7 2
9 Familiarity with 16 10 4 - -
The Organization
Apart form the above recommendations, some of the clients have given suggestions for
the scope of improvement in services for Anagram as a whole. They are as follows:
Anagram should focus on the retention of the existing clients by improving the
services rather than trying to increase the number of clients. This would ensure
client satisfaction and also increase its goodwill.
The website of Anagram should provide the latest information and it should make
sure that authentic information with respect to their research is available.
The major focus of Anagram has been on equity so far and it has done quite well.
Similarly it should try to concentrate on Mutual Funds which is an emerging area
in the financial market.
They should set up a committee that concentrates on the clients and their activities
and accordingly makes suggestions to the clients as per their risk- taking ability
and other requirements.
Note:
(1) We kindly request you to provide the following information to the best of your
knowledge.
(2) The information collected through the following questionnaire will be kept
confidential and will be used for study purposes only.
_______________________________________________________________________
_
NSDL
CDSL
Both
(4) Which of the following services do you provide apart from depository services?
Broking
Asset Management
Financial Advice
Banking
Others (specify): ____________
(10) Please give us an approx. break-up of the following categories of clients as per
the number of accounts.
(11) At your DP, what is the volume of instructions per day in terms of
Yes
No
Yes
No
If yes, to whom?
(14) What is the frequency of sending the Statement of Holding to the clients?
Daily
Weekly
Fortnightly
Monthly
______________________________________________________________
______________________________________________________________
______________________________________________________________
(15) Do you provide the clients with the Statement of Holding on demand?
Yes
No
If yes,
(16) What mode of communication do you use for sending the Statement of Holding?
Post/Courier
E-mail
Fax
Telephone - Human Interface
Telephone - Automatic
(17) What is the frequency of sending the Transaction Statement to the clients?
Daily
Weekly
Fortnightly
Monthly
Yes
No
If yes,
(i) Do you charge them for the service?
__________________________________-
_______________________________
(19) What mode of communication do you use for sending the Transaction
Statement?
Post/Courier
E-mail
Fax
Telephone - Human Interface
Telephone – Automatic
(20) What payment system do you follow for delivery instructions/demat charges?
Yes
No
(22) What are the timings for the submission of the instruction slips?
________________________________________________________________
Yes
No
If Yes,
(i) In which cases?
_________________________________________________________________
_________________________________________________________________
(ii) Do you charge for the same? _______________________________________
(iii)If yes, how much? _______________________________________________
(24) What is the deadline for the branches of your DP to submit the instructions to the
HO?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
(26) What is the mode of communication between the branch and HO for
instruction slips and client requests?
Post/Courier
E-mail
Fax
Others Please specify ____________________________________________
Yes
No
If yes,
(i) How many clients subscribe to these services?
___________________________________________________________
Yes
No
If yes,
(29) What are the special services that your DP provides to differentiate itself from other
DPs?
ANNEXURE – B
_______________________________________________________________________
_
Note:
(1) Please complete the following questionnaire to the best of your knowledge.
(2) The information collected will be kept confidential and will be used for study
purpose only.
_______________________________________________________________________
_
Below 25
26-35
36-50
Above 50
(7) Occupation:
Student Business
Housewife Trader
Landlord Agriculture
Service Broker
Profession Investor
Others (specify) _________________________________________
Below 25000
25000- 50000
50000-100000
100000-200000
200000-500000
Above 500000
Yes
No
Yes
No
Why?
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
Excellent
Very Good
Good
Fair
Yes
No
(16) How often do you require your Transaction Statement?
Weekly
Fortnightly
Monthly
Quarterly
Yes
No
(18) How often do you require your Statement of Holding?
Weekly
Fortnightly
Monthly
Quarterly
(19) How would you like to receive the Transaction Statement and the Statement of
Holding?
Post/Courier
Telephone
E-mail
Yes
No
Yes
No
If yes, which type do you prefer?
Password Based
(The user has to use his user I.D and password to access to the SPEED-e services.
You can enter transactions for pay-in into 3 pre-notified broker pool accounts)
None
Password Based for your residence/office
Password Based using computer system at Anagram
Yes
No
Yes
No
ANNEXURE - C
COMPARATIVE CHARGE STRUCTURE OF VARIOUS DPs - 1
Khandwala Int.
3 Fin Service Pvt. NIL Rs.300/- NIL Rs.18/-
Ltd.
Ratnakar
5 Rs.175/- Rs.200/- Rs.15/- Rs.15/-
Securities Pvt Ltd
Pravin Ratilal
13 Share & Stock NIL Rs.200/- NIL (0.02%* or Rs.20/-)**
Brokers Ltd.
Infinite Fin
14 Rs.150/- Rs.300/- (0.02%* or Rs.15)** (0.04%* or Rs.15/-)**
Services Pvt Ltd
Serial
Name of DP Demat Demat Per Certificate Remat Remat Per Certifiate
No.
Anagram
1 Rs.30/- Rs.2/- Rs.30/- Rs.20/-
Stockbroking Ltd
Khandwala Int.
3 Fin Service Pvt. Rs.28/- - - -
Ltd.
Ratnakar
5 Rs.30/- Rs.5/- NIL NIL
Securities Pvt Ltd
12 ACML Rs.30/- - NA NA
Pravin Ratilal
13 Share & Stock Rs.25/- Rs.2/- Rs.50/- Rs.10/-
Brokers Ltd.
Infinite Fin
14 Rs.25/- Rs.2/- Rs.25/- Rs.10/-
Services Pvt Ltd.
Serial
Name of DP Custody Pledge/Hypothecation
No.
Creation Closure Invocation
Anagram Stockbroking
1 Rs.1.50/- per quarter Rs.50/- Rs.50/- Rs.25/-
Ltd
Investmentor Securities
8 - Rs.30/- Rs.20/- -
Ltd.
Note:
(1) * means ‘on the value of the transaction’.
(2) ** means ‘whichever is more’.
m
(3) Service tax is applicable as per the norms.
(4) Account opening charges include form fees and stamp charges.
ANNEXURE – D
*
BREAK-UP OF CLIENTS OF VARIOUS DPs
A
Clearing
Serial No. Name of DP Total Individuals HUF NRI Corporates Others
members
Anagram
1 Stockbroking 10272 10000 130 15 125 2 0
Ltd
Khandwala
Int. Fin
2 12000 11066 300 30 400 4 200
Service Pvt.
Ltd.
Shah
3 45000 44498 100 300 100 2 0
Investors
Goldmine
4 Stocks Pvt. 9000 8923 15 10 50 2 0
Ltd.
Investmentor
5 Securities 13453 13338 71 19 24 1 0
Ltd.
Ratnakar
9 Securities 15000 14700 300 (rest all)
Pvt. Ltd
NOTE: SOME OF THE DPs WERE NOT WILLING TO DISCLOSE THE BREAK UP.
Books
Cooper, Donald R.; and Schindler, Pamela S. Business Research Methods. 6th edn. New
Delhi: Tata Mc Graw-Hill Publishing Company Limited, 2002. 703 pp.
Dalton, John M. How the Stock Market Works. 2nd edn. New Delhi: Prentice Hall of
India Limited, 1997. 325 pp.
Pathak, Bharati V. Indian Financial System. Delhi: Pearson Education (Singapore) Pte.
Ltd., 2003. 592 pp.
Pandian, Punithavathy. Security analysis and Portfolio Management. New Delhi: Vikas
Publishing House Ltd., 2001. 464 pp.
Internet Documents
www.nsdl.co.in
www.moneypore.com
www.indiainfoline.com
www.cdslindia.com
www.bseindia.com