What is Depository ?
A depository is an organization where the securities of an investor are held in
electronic form. A depository can be compared to a bank. To avail of the services
of a depository, an investor has to open an account with the Depository through
a depository participant, just as he opens an account with the bank. Holding shares
in the account is akin to holding money in the bank.
Why should I prefer to buy shares in the depository mode? Why should I have a demat
As an investor you will enjoy many benefits if you buy and sell shares in the depository
mode. The following are some of the benefits you will enjoy: No bad deliveries.
No risk of loss, mutilation or theft of share certificates No stamp duty for transfer
of shares. Reduced paper work. Fast settlement cycles. Low interest rates on loans
granted against pledge of dematerialized securities by banks. Low margin on securities
pledged with banks. Increase in liquidity of your securities because of faster transfer
and registration of securities in your account. Instant disbursement of non-cash
benefits like bonus and rights into your account. Regular account status updates
available from MODES at any point of time.
At present, India has only two depositories: National Securities Depository Ltd
(NSDL) and Central Depository Services Ltd (CDSL). NSDL is the first depository
to have started in India, whereas CDSL followed them. However, most of the services
offered by both these depositories are similar. Today almost all the companies listed
in dematerialized form with NSDL are available with CDSL.
Who is a Depository Participant?
A Depository Participant(DP) is an agent appointed by the Depository and is authorized
to offer depository services to all investors. An investor cannot directly open
a demat account with the depository. An investor has to open his account through
a DP only. The DP in turn opens the account with the Depository. The DP in turn
takes up the responsibility of maintaining the account and updating them as per
the instructions given by the investor from time to time. The DP generates and provides
the holdings statement from time to time as required by the investor. Thus, the
DP is basically the interface between the investor and the Depository. Example:
BVC Modes is a DP of both Depositories (NSDL as well as CDSL). For the purpose of
Internet Trading, you will have to open a demat account with BVC, who is authorized
to offer you this service. We will be opening your demat account with CDSL. The
balances in your account are maintained with the depository and are available to
you through us. You can find the status of your holdings or transactions from time
Who is a Beneficiary Owner(BO)?
The person who holds a demat account is a beneficiary owner. In case of a joint
account, the account holders will be beneficiary holders of that joint account.
What is a BO Id?
The demat account number of the beneficiary holder(s) is known as the BO Id.
What is a DP Id?
A DP Id is the number of the depository participant allotted by the depository.