A Project report on

A Study on Investors Awareness of

Depository system
At
IL&FS INVESTSMART

CH.RANJITH KUMAR
098-060-113

Project submitted in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION
By
Osmania University, Hyderabad-500007

DECLARATION

I hereby declare that this project report titled

A Study
on
Investors Awareness
of
Depository
System,
at
IL&FS
INVESTSMART Ltd. submitted by me to the
Department of Business Management, O.U.,
Hyderabad, is a bonafide work undertaken by me
and it is not submitted to any other University or

Institution for the award of any degree/ diploma/

certificate or published any time before.

Ch. Ranjith Kumar

Signature of the

Student

H.No.7-2-81, vegetable Market

Siddipet-502103

CERTIFICATION

This is to certify that the project report titled A Study on

Investors Awareness of Depository System, at IL&FS

INVESTSMART Ltd. submitted in partial fulfillment for the
award of MBA Program of Department of Business
Management, O.U., Hyderabad, was carried out by Ch.
Ranjith Kumar under my guidance. This has not been
submitted to any other university or institution for the award of
any degree/diploma/certificate.

Mr. VISHWANATH
Guide

Signature

of

the

Project Guide(M.B.A)

Abstract
Depository means one place where something is deposited for
safe

keeping;

one

who

receives

deposit

m o n e y,

securities,

investments or other property; a person to whom something is

entrusted;

trustee;

person

or

group

entrusted

with

preservation or safe keeping of something,

Depositories are promoted by institutions of statute have
been

responsible

for

economic

development

of the

c o u n t r y.

National infrastructure of international standards that handles

most of the trading and settlement in dematerialized (scripless) from in Indian capital market has been established.

Indian securities market has grown exponentially during the

last decade. So the problems associated with the settlement
of trade are also on rise.

The aim of the project is to find the awareness of

depository system among investors.

ACKNOWLEDGEMENT

I wish to extend my hearty thanks to Osmania, University for the

opportunity given to carry out this project which I thoroughly
enjoyed doing.
I am deeply indebted to my guide Mr. Vishwanath, for
taking keen interest and sparing his valuable time through out the
course of the project work and instructing at each level for the
proper outcome of this project.

I wish to express my sincere thanks, to Mr.Rajender, manager of

IL& FS Invests mart Ltd at Somajiguda. for enabling to
successfully complete my project study in there company.
At last I am thankful to my family, my friends for their
support and co-operation which they have given to me complete
the project successfully.

(CH.Ran
jith Kumar)

List of contents

Page no.

Introduction
Need For the study
Objectives

1
2

 Methodology
Scope

3
4

Review of Literature

Introduction
Limitations
Overview Of NSDL
Dematerialization
Rematerialization

6
10
11
14
18

The Company
Company Profile
Activities
Products and Services
Portfolio Management Services

37
43
44
46

Data analysis and presentation

Presentation

52

 Analysis and Interpretation

64

Summary and conclusion

Findings
Suggestions
Bibliography

90
92
94

Appendix
Questionnaire

96

Chapter 1
10

11

Introduction
NEED FOR THE STUDY

The

rapid

securities
number

in

of

growth

Indian

companies

in

number,

Capital

Market

issuing

volume
is

shares

and

taking

through

value

place,
IPOs,

of

large
which

requires the services of the Depository system. It will take

much

time

transactions.

of

allotment,

To

reduce

the

refund
delay

in
in

physical
transactions

form
and

of
to

eliminate malpractices Depository system helps allot.

The present study provides the overview of Depository

System in India. There is a need to study what extent the
depository services has benefits to the investors.

12

OBJECTIVES OF THE STUDY

The objectives of the study are:

To anal yz e the services of depositories to

investor Through depository participants.
To know the awareness of investors
towards
Depository system.
To present suggestions for i mproving
e f f i c i e n c y.

13

METHODOLOGY OF THE STUDY

In order to archive the above objectives both the primary and
secondary data one considered.

Primary data:

The primary data collected through a structured questionnaire

f r o m t h e i n v e s t o r s i n Twi n c i t i e s a n d t h r o u g h i n t e r v i e w s w i t h
the employees .

Sample size: 1 0 0 i n v e s t o r s
Sampling method: R a n d o m s a m p l i n g m e t h o d .
Secondary data:

14

The secondary data has been gathered from published

books, periodicals, journals, and annual reports and
through Internet.

SCOPE OF STUDY

It covers the depository system of India i.e. how the depository

evolved

in

India,

functions

and

regulations

of

depositories

various institution and individuals which will be participated in

the process (DPS, CCS, R&T Agent, companies, Investors etc,)
The

process

of

various

activities

and

special

services

of

depository and it covers NSDL.

15

Chapter 2

16

INTRODUCTION

Technolog y is revolutioniz ing ever y field of human endeavor

a n d a c t i v i t y. I n d i a n c a p i t a l m a r k e t i s b a r r o w m e t e r o f I n d i a n
economy; one of them is introduced technology into capital
market. A major development in the Indian capital market has
been setting up of Depository system. The rapid growth in
number, volume and value of securities in the Indian capital
market

exposed

the

limitations

of

handling

and

dealing

securities in the physical / paper mode; the short coming of the

market

became

in the manifest

in terms

of bad deliveries,

delays in transfer and irregular settlement etc. depository used

as elixir, bringing solution for all those problems.

The main objective s of depositor y s yste ms are to accelerate

scrip

less

trading,

to

make

trust

in

individual

investors

participation in depository system and to create a competitive

environment and be responsive to users interest and concern.

17

A depository holds securities in electronics form and provides

all services related to transaction of shares/ debt instruments.
A

depository

interacts

with

clients

through

depository

participant with who the client has to maintain a Dmat account.

Thus an investor who wishes to avail of all depository services

has to open a Dmat account. A depository participant is an
agent of depository and is authorized offer depository services
to investors.

MEANING OF DEPOSITORY

Depository means one place where something is deposited for

s a f e k e e p i n g ; o n e w h o r e c e i v e s a d e p o s i t m o n e y, s e c u r i t i e s ,
investments or other property; a person to whom something is
entrusted;

trustee;

person

or

group

entrusted

with

preservation or safe keeping of something

18

The Act defines Depository as:

An organization where the securities of shareholders are held

in the form of electronic accounts in the same way as bank
h o l d s m o n e y. T h e h o l d s e l e c t r o n i c c u s t o d y o f s e c u r i t i e s a n d
also arranges for transfer of ownership of securities on the
settlement dates.

According to section-2(e) of Depository Act:

Depository means a company formed and registered under the

companies act, 1956 and which has been granted a certificate of
registration under section-12(1a0 of Securities and Exchange
Board of India act, 1992.

A depository can not act as depository unless it obtains a

certificate of commence of business from the board (SEBI).

19

The objective of depository system is accelerate the growth of

scrip

less

trading

and

to

make

the

individual

investors

participation in depositories to create competitive environment

and

to

enhance

liquidity

and

improving

capital

market

e f f i c i e n c y.

REFERENACE PERIOD

The scope of the study is limited for a particular period

of time i.e. 45 days

20

LIMITATIONS OF THE STUDY

1. The study is confined to only depository participants

services through depositories and awareness of investors
about depository system only in twin cities.

2. By not considering the entire depository participants

implications relating to the pattern of trading may have
been missed in this study.

3. Some of the investors may show lack of interest in

providing

the

response

which

might

lead

to

biased

information.

21

OVERVIEW OF NSDL

Frame Work of NSDL:

NSDL:
NSDL is the first depository in India, established in
August 1996 and 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.

The Industrial Development Bank of India (IDBI),

The Unit Trust of India (UTI) and The National Stock Exchange
(NSE) to provide electronic depository facilities for securities
traded in equity and Debt market promoted NSDL.

22

CDSL:

CDSL is the other Indian depository promoted by

stock exchange, Mumbai in association with Bank of India,
Bank of Baroda, and State Bank of India and HDFC Bank. The
Central

Depository

Services

Limited

(CDSL)

commenced

operations in the year 1999.

SERVICES OF NSDL :

NSDL
functionaries
linked

its

carries

called
Business

out

Business
Partners

its

operations

Partners,
viz.,

through

NSDL

depository

various

electronically
participants,

Registrar and Transfer Agents, Clearing Corporations / Clearing

Houses. They are National Stock Clearing Corporation Limited
(NSCCL) and Bank of India Stock Limited (BOISL).

23

This

is done on order to facilitate settlement of

trades and to perform a daily reconciliation of all account

balances held with a NSDL/CDSL. The entire system is called
NEST (National Electronic Settlement & Trading) system. Thus,
a highly integrated set up for maintenance of investor accounts
have been developed and implemented.

Depositories and its Business Partners are regulated by SEBI

and

Governed

by

SEBI

(Depositories

&

Participants)

Regulations, 1996. The functioning and operations of NSDL are

governed by provisions of NSDL /CDSL byelaws and business
rules framed in accordance with the regulations.

Basic functions:

The main functions of Depositories (NSDL) are:

Dematerialization

24

 Re materialization

Dematerialization:

It is the process by which a client can get physical

certificates
maintained

converted
in

its

into

account

electronic
with

the

balances

agent

called

Depository Participant. In simple terms the conversion

of holding from physical to electronic form.

The securities held in dematerialized from are fungible.

They

do

distinctive

not

bear

any

numbers,

distinguishable

folio

numbers

features
or

like

certificate

numbers.

25

Process of Dematerialization:

INVESTOR

R&T
AGENT

DEPOSITORY
PARTICIPANT

NSDL/CDSL

26

PROCESS:

1. THE INVESTORS ARE SUBMITS THE Dmat Request

From (DRF) duly filled to his Depository Participant
along with physical certificate.

2. The

Depository

(NSDL)

of

Participant
the

informs

investors

depository

request

for

dematerialization.

3. The

Depository

Participant

sends

the

physical

c e r t i f i c a t e s t o t h e R e g i s t r a r s o f t h e c o m p a n y.

4. The NSDL confirms the request to the Registrars.

27

5 . A f t e r s u f f i c i e n t s c r u t i n y, t h e R e g i s t r a r s a c c e p t t h e
request by giving electronic credit. This is conveyed
to the NSDL.
(The Registrar updates to the NSDL of the Electronic
credit)

6. The

NSDL

apprises

of

the

credit

to

Depository

Participant.

7 . S u b s e q u e n t l y, t h e i n v e s t o r i s a p p r i s e d o f h i s c r e d i t
in his account.

28

Rematerialization:

Rematerialization is the exact reverse of dematerialization. It

refers to the process of issuing physical securities in the place
of the securities held electronically in book-entry form with a
D e p o s i t o r y.

Under

this

process,

depository

account

of

beneficial owner is debited for the securities sought to be

rematerialized and physical certificates for the equitant number
of securities are issued.

PROCESS:
1. The investors request for Rematerialized Request Form
(RRF) to its Depository Participant.

2. If

RRF

is

found

in

order,

the

Depository

Participant

should accept RRF and issue an acknowledgement to the

client.

29

3. The Depository Participant in turn will also apprise the

Registrar & Transfer Agent.

4. The

depository

will

appraise

the

Registrar/Transfer

Agents.

5. The Issuer or its Registrar & Transfer Agent should verify

that RRF and after that printing the physical certificates
will update the Depository Participant.

6. The Issuer or its Registrar & Transfer Agent should then

proceed to issue the physical security certificates and
dispatch the m to the Beneficial Owner.

7. The Depository Participant, on receiving conformation of

d e b i t e n t r y i n D P M , s h o u l d i n f o r m t h e c l i e n t a c c o r d i n g l y.
This entire process takes a maximum of 30 days.

30

Thus NSDL play a major role in this process. They also

provide basic services as follows.

Account maintenance:

NSDL interfaces their investors through its agents

called Participants. The investors are open a account
with

Depository

Participant

is

similar

to

the

opening of a bank account.

Settlement of trades through market transfer:

In

India

electronic

the

stock

exchanges

connectivity

with

have

NSDL

established
to

facilitate

settlement is respect of dematerialized securities.

The NSDL provides investors to buy or sell their
share in any of the stock exchanges linked to NSDL
through a broker of his choice.

31

The NSDL includes the facilities like

Off market transfers

Inter depository transfer

Distribution of non corporate actions

Nomination / transmission

D E P O S I TORY PARTI C I PAN T S :

Depository

services

are

extended

through

its

agents

called

Depository Participants (DPs). The Depository Participant is

the

link

between

the

shareholder,

the

Company

and

the

D e p o s i t o r y. B a n k s , F i n a n c i a l I n s t i t u t e s , S t o c k B r o k e r s e t c . c a n
become

DPs

subject

to

their

meeting

certain

requirements

prescribed by the depositories and SEBI.

32

An investor can open his/her account with one or more DPs as

he/she likes. The procedure for opening an account with the
Depository Participant is similar
account

with

bank. After

to opening a saving bank

having

opened

the

account,

an

investor can hold shares of many numbers of companies in

his/her account, provided all such companies have entered the
depository system.

E L I G I B I L I T Y:

Persons

belonging

to

one

of

the

following

categories

are

eligible to become a Depository Participant.

A Public Financial Institute as defined as section 4A

of the Companies Act.

A Bank included for the time begin in the second

schedule to the Reserve Bank of India Act. 1934.

33

A Foreign Bank operating in India with approval of

Reserve Bank of India.

A State Financial Corporation established under the

provisions

of

section

of

State

Financial

Corporation Act, 1951.

An

Institution

services

engaged

promoted

jointly

in
or

providing
ever

by

financial

any

of

the

institutions mentioned in the four mentioned clauses.

A N o n b a n k i n g F i n a n c i n g C o m p a n y.

A Clearing Corporation or Clearing house of a stock

exchange.

A stock broker who has been granted a certificate of

registration by SEBI

34

Depository participant Services:

The depository participant is the link between the shareholder,

the company and NSDL and provides the following services.

Account Opening

To u t i l i z e t h e s e r v i c e s o f f e r e d b y a d e p o s i t o r y, a n y
person

having

investment

in

any

security

or

intending to invest in securities needs to have a dm a t a c c o u n t w i t h a D e p o s i t o r y D P. T h i s h o l d e r o f

such d-mat account is called as Beneficial Owner
(BO). A BO can maintain a d-mat account with zero
balance in such account. A BO can open more than
one account with the same or multiple Depository
Participants, in the same name/s and order, if he/she
desires so. The investor can approach any Depository
Participant/s

of

his/her

choice

to

open

d-mat

account.

35

 Dematerialization

Dematerialization
certificates

is

(of

process

by

which

shares/debentures/other

physical

securities)

are converted into electronic balances. A BO has to

submit

the

request

submitting

the

completed

along

for

d-mat

dematerialization

request

with

the

form

(DRF)

concerned

by
duly

physical

certificates, to his/her Depository Participant.

Processing Delivery & Receipt Instructions

To settle trades done on a stock exchange (on

market trades) and trades, which are directly settled
between tow BOs (off market trades), BOs submit
duly

completed

prescribed

from

delivery
to

instructions

Depository

in

the

Participant.

For

36

receipt of securities into his/her account, a BO can

give one time standing instruction to depository

Participant.

Once

such

standing

instruction

is

given to the Depository Participant, there is no need

to submit separate instructions for receipt every time
the investor busy securities.

Account Statement

Generally a Depository Participant sends to the BO,

a s t a t e m e n t o f h i s a c c o u n t , m o n t h l y, i f t h e r e i s a n y
transaction in the account or every quarter if the
account is not operated during that period.

Rematerialization

37

Rematerialization

is

the

process

by

which

the

electronic balances held I the d-mat account can be

converted back into physical certificates.

Pledging
If the BO decides to pledge any securities in his BO
account, he can avail of the same by submitting the
pledge

creation

form

duly

complete,

to

his

Depository Participant.

Nomination
BO accounts also have a facility for nomination in
favor of any person.

Tra n s m i s s i o n of s e c u r i t i e s

38

NSDL offers a facility for transmission of balances held in

BO account/s (to other BO account/s) if so required due to
d e a t h , l u n a c y, b a n k r u p t c y, a n d i n s o l v e n c y o r r e q u i r e d d u e t o
operation of any law

Changes in Address

A BO who wishes to register his change in address submits

his/her request in writing to his/ her depository Participant.
The changes entered by the Depository Participant in the
CDSL system will be automatically downloaded to all the
companies

in

which

the

BO

is

holding

securities.

This

f a c i l i t y o f f e r e d b y C D S L s a v e s m o n e y, t i m e a n d e f f o r t f o r
the BO.

Bank Account Details

39

SEBI has made it mandatory for companies to print details of

bank account of the BOs on dividend/interest warrants etc. to
prevent possibilities of misuse of the warrants. All BOs
should

submit

Participant

if

request

they

wish

in
to

writing

to

the

record/challenge

Depository
their

bank

account details.

Role of Depository participants :

Depository

participants

are

described

as

an

agent

of

the

d e p o s i t o r y. T h e y a r e t h e i n t e r m e d i a r i e s b e t w e e n t h e d e p o s i t o r y
and

the

investors.

The

relationship

between

the

depository

participants and the depository is governed by an agreement

made between the two under the depositories act. In a strictly
legal

sense

depository

participant

is

an

entity

that

is

registered as such with SEBI under the provisions of the SEBI

Act. NSDL offers a host services to the investors through its
network of depository participants.

40

Issuer / R & T Agent:

Corporate / companies which issue any kind of security are

known

as

Issuer

in

the

Depository

System.

Only

those

securities, which are admitted into the depository system are

available for dematerialization to the holders of such securities
or can be allotted in electronic record form b y the Issuer.

It

is

necessary

for

the

issuer

to

establish

an

electronic

electivity with NSDL either directly or through a Registrar and

Transfer Agent, who was already established connectivity with
CDSL.

Role

of

Issuer

&

Agent

in

Dematerialization

of

securities:

The depository electronically intimates on a daily basis all

Dematerialization
a g e n c y.

The

requests to respective

issuer

are

its

R&T

Agent

issuer or its R&T

have

to

verify

the

validity of security certificates as well as the fact that demat

41

request has been made by the person recorded as member in its

registrar members. After such verification, issuer or its R&T
agent intimates NSDL & authorizes an electronic credit for that
security in favor of the client.

In the event of an intimation being received by the depository

from issuer or R&T Agency to credit the account of the client
with securities, which dont match, with the details the client
or

depository

participant,

the

balance

is

held

in

suspense

account

i.

Role

of

Issuer/R&T

Agent

in

Rematerialization

of

Securities:

A client may withdraw its security balances with NSDL at

any

point

of

time

by

making

Rematerialization

to

NSDL

participant.

the

investor

When

an

through
submits

application
its
the

for

depository
RRF

the

issuer and/or its R&T agent.

42

ii.

Role

of

Issuer/R&T

Agent

in

Corporate

benefits:

Its the function of issuer/R&T agent inform NSDL about

the corporate action relating to prescribing dates for book
closers, record dates, and dates for redemption or maturity
o f s e c u r i t y, d a t e s o f c o n v e r s i o n o f d e b e n t u r e s , w a r r a n t s ,
call money dates and such other action from time to time.

T h e I s s u e r / R & T a g e n t m a y, i f t h e b e n e f i t s i n t h e f o r m o f
securities, distributes such benefits clients through NSDL.
Clearing Corporation/Clearing House:

This term applies to any entity engaged in the activity of

clearing and settlement of trades on any recognized stock
exchange may be admitted as user on NSDL subject to its
entering into an agreement as raid down in the bye-laws of
NSDL.

A different agreement has to be drawn up if a clearing

house of a stock exchange is not a legal counter party to
the

trades

on

the

exchange

and

the

trade/settlement
43

guarantee fund is held and managed by the exchange. A

third kind of agreement has to be entered into if the
members/dealers

of

the

exchange

are

not

the

clearing

members of the clearing house.

Admission criteria:

i.

The clearing corporation or a clearing house of

stock exchange has adequate hardware and software
systems to interact with NSDL as specified in the
business rules.

ii.

NSDL is satisfied that the clearing corporation or a

clearing

house

stock

exchange

operates

in

such

manner that it ensures payment against delivery or

guarantee settlement.

iii.

The clearing corporation or a clearing house of

stock exchange under takes to corporation at all
times

to

redress

the

grievances

of

clients

&
44

depository participants on respect of its operation

in relation to NSDL.

Clearing members/Brokers:

Clearing

Members/Brokers

are

the

members

of

the

clearing

corporation/clearing houses, who facilitate settlement of trades

done on stock exchanges. They could be a broker or custodian
registered with SEBI as such is an important intermediary in
the

capital

market

and

essential

link

in

the

depository

participant

Role of clearing members/Brokers:

45

Clearing

members/

Brokers

are

continuously

monitor

the

deliveries received for pay in or from pay out for the

s u b s e q u e n t r e c o n c i l i a t i o n o f t r a d e s e t t l e m e n t s v e r y e a s i l y.

They

subsequently

reduce

const

of

his

operations

for

himself as well as for his clients.

Clearing members/Brokers are also offering one-stop services

to clients in respect of trading and Depository service, not only
the increases his business but also can effectively monitor
client account position and insulate from failure in settlement

46

Chapter -3
47

C O M PAN Y P R O F I L E

In

the

world

multiplex,
financial
corporates

of

IL&FS
service
with

financial
Invests

services

mart

organization

customized

and

Limited

(IIL)

providing

financial

India's
is

financial
a

premier

individuals

management

and

solutions.

IL & FS work towards understanding customers financial goals

and helping them to their goals. Our institutional expertise,

48

combined
markets

with

results

thorough
in

understanding

appropriate

of

investment

the

financial

solutions

for

investors. At IL&FS Investsmart, we recognize that investor s

dreams, needs, aspirations, concerns and resources are unique.
This is reflected in the approaches of the company towards
there

investors.

IL&FS

concentrates

at

having

deep

appreciation for the value and building a long term participant

with their investors.
Divisions of IL&FS Investsmart Limited
o The Investment Advisory and Broking Divisions
o Merchant Banking Division
o The Project Syndication Division
o Institutional Equity Broking Division
o Institutional Debt Broking Division

The Investm ent Advisory and Broking Division (IAB)

The Investment Advisory and Broking Division (IAB) of IIL,

provides

end

to

services,

which

end

personalized

includes

planning,

investment
a d v i s o r y,

management

execution

and

monitoring. IAB has a presence across asset classes equities,

fixed-income, mutual funds, derivatives, and insurance, with
offline as well as online equity execution capabilities. It is a
partner

in

planning

its

customers

complete

investment
49

decisions towards wealth generation, retirement planning and

capital

built

pioneered

up

the

at

different

concept

of

stages

life

of

cycle

their

life.

investing

IAB

has

though

its

specializ ed life c yc le investment advisory plans. Its strong

team of Relationship Managers, Customer Service Executives,
Advisory

Managers

and

Research

Analys ts,

offers

efficient

execution backed by in-depth research, knowledge and expertise

t o i t s c u s t o m e r s a c r o s s t h e c o u n t r y, t h r o u g h i t s n e t w o r k o f m o r e
than

150

outlets

in

over

61

cities

and

its

content

rich

transactiona l website www.investsmar tindi a.com.

The Investment Advisory and Broking Division (IAB) of IIL,

provides

end

to

services,

which

end

personalized

includes

investment

planning,

a d v i s o r y,

management

execution

and

monitoring. IAB has a presence across asset classes equities,

fixed-income, mutual funds, derivatives, and insurance, with
offline

as

partners

well
in

as

online

planning

its

equity

execution

customers

capabilities.

complete

It

investment

decisions towards wealth generation, retirement planning and

capital

built

pioneered

the

up

at

different

concept

of

stages

life

of

cycle

their

life.

investing

IAB

has

though

its

specializ ed life c yc le investment advisory plans. Its strong

team of Relationship Managers, Customer Service Executives,
Advisory

Managers

and

Research

Analys ts,

offers

efficient

execution backed by in-depth research, knowledge and expertise

t o i t s c u s t o m e r s a c r o s s t h e c o u n t r y, t h r o u g h i t s n e t w o r k o f m o r e

50

than

150

outlets

in

over

61

cities

and

its

content

rich

transactiona l website www.investsmar tindi a.com

Merchant Banking Division

The

Merchant

Banking

function

of

IL&FS

Investsmart

comprising of the Equity Capital Market division, offers a

comp lete range of services. This includes manage me nt of IPOs,
rights

issues,

buy

back

offers,

open

offers,

and

private

p l a c e m e n t s o f e q u i t y. I t s e x t e n s i v e c o n t a c t b a s e a n d s t r o n g
r e l a t i o n s h i p s d e v e l o p e d w i t h Ven t u r e C a p i t a l F u n d s a n d P r i v a t e
Equity Funds for equity placements contributes to an effective
delivery platform for its clients.

The Project Syndication Division:-

The Project Syndication Business of IL&FS Investsmart has

been inherited from IL&FS. The syndication desk has so far
worked on Debt Syndication of large Infrastructure Projects
being

implemented

by

IL&FS.

The

mandate

includes

Debt

structuring of highly complex and difficult projects. Project

51

S yndication focuses on the role of an Arranger of Project and

Structured loans. While fund mobilization services are provided
across various areas, infrastructure sectors remain key focus
area

for

syndication

a c t i v i t y.

The

services

under

Project

Syndication include project loan syndication, structured debt

syndication and debt restructuring. The syndication business
thrives on its extensive contact base and strong relationships
developed over the years with Banks and Financial Institutions.
Institutional Equity Broking Division:-

Institutional
(IEB}thrives

Equity
on

Business

strong

of

relationships

IL&FS
it

has

Investsmart
built

among

domestic mutual funds, banks, financial institutions, insurance

companies and private sector funds over the past few years.
IEB also has well-developed relationships among corporates,
leveraged from its institutional pedigree. Efficient execution,
quality

research

and high

degree

of compliance

with stock

exchange regulations and ethical business standards back IEBs

services

to

institutional

investors

through

IPOs,

Equities,

Derivatives and Mutual Funds. IEB is well positioned to offer

support to the complete range of investment banking services to
corporates

Institutional Debt Broking division:-

52

The Debt division has an active presence in the secondary and

primary debt placement markets. It deals in various products
including

Govt.

Securities,

Treasury

Bills,

Bonds

and

Debentures, State guaranteed papers and Commercial papers. It

has strong relationship with Institutional clients like Banks,
Primary

Dealers,

Mutual

Funds,

Provident

Funds

and

Corporates. Debts on Net address all Fixed Income participants

with attendant advantages of Speed, Transparenc y and lower
costs in the primary Market. It also offers one of its kinds,
complex and robust investment valuation tools, in addition to
value research and information on the debt and money markets
in India
PEDIGREE: IL&FS Limited

IL&FS Investsmart leverages on its pedigree of IL&FS, which

has the core competency of institutional and retail financial
services.
Infrastructure Leasing and Financial Services Limited (IL&FS),
the promoters of IL&FS Investsmart Limited, is a multi-faceted
organization providing a range of fund and non-fund based
financial

services.

IL&FS

amongst

the

Institutions

few

was

incorporated
in

the

in

country

1987

and is

specifically

mandated to implement infrastructure projects on a commercial

format.

53

Promoters and Shareholdings

IL&FS was promoted as a joint venture between Central Bank
of India, (CBI), Unit Trust of India, (UTI) and Housing and
Development Finance Corporation (HDFC) With the objective of
extending

its

shareholding,
investors

reach
IL&FS

such

&

resources

inducted

as

&

the

reputed

International

broad

domestic

Finance

base
&

its

foreign

Corporation,

Was h i n g t o n , O R IX C o r p o r a t i o n , J a p a n , C r e d i t C o m me r c i a l s d e
France (CCF), State Bank of India and the Government

of

Singapore as its shareholders. Within a short span, IL&FS has

grown into a multifaceted company with a net worth of over Rs
6700 million and an asset base of over Rs 39000 million.

Activities of IL&FS
Broadly the activities of IL&FS include:
Financial Services including Investment Banking, Asset
Financing.
Commercialization
Asset

Management

of
Services

Infrastructure
to

wide

range

Projects.
of

funds.

54

 Capital

Markets

&

Merchant

Banking

Services.

Securities brokerage including distribution of Financial

Securities

&

Investment

Management planning services.

PRODUCTS AND SERVICES

Not everybody is an investment professional there is
always a need for someone who can guide investors through the
complex maze of investment options with unbiased and expert
advice. Someone, who can be a friend and an expert who would
understand the needs of the investor and help him achieve his
financial goals.
55

IL&FS
organization,
institutions

Investsmart

catering
by

to

providing

is

one

such

requirements
a

broad

financial
of

spectrum

service

individuals
of

value

&

added

products and services for both of them.

Here is our range of financial solutions for both individuals
as
well
as
institutions
Retail Offering

Institutional Offering

Wea l t h
Management
Services
Portfolio
Management
Services
Securities
Broking
Equities &
Derivatives
Depository & Custodial
Services
Distribution of Financial
Products

Merchant
Banking
Product
Syndication
Institutional
Equity
Broking
and Sales
Institutional debt Broking
and sales

I n v e s t m e n t Ad v i s o r y a n d Wea l t h M a n a g e m e n t S e r v i c e s
Managing your money:-

At IL&FS Investsmart, we believe in partnering your

investments all the way through. This distinguishing feature is
implemented
Solutions.

through

Most

of

us

InvestSaathi,
require

some

Wea l t h
assistance

Management
in

making
56

s e l e c t i o n s a p p r o p r i a t e t o o u r i n d i v i d u a l n e e d s . We n e e d s o u n d
advice from people who have the expertise to decipher the
financial

jargon

of

investment

options

available

t o d a y.

InvestSaathi is like the Smart Friend that you can rely on, who
will

help

you

maximize

your

investments

and

reach

your

financial goals. Our relationship managers interact with you on

a periodic basis to discern your changing needs. In tune with
t h e c h a n g i n g e n v i r o n m e n t . Ac c o r d i n g l y, t h e y w i l l a l s o h e l p yo u
review, re-evaluate and restructure your existing portfolio, as
and when needed.
Our experienced teams customized plans are based on
your investment objectives, your risk profile, time horizon and
financial

needs.

We

assist

you

through

the

process

of

maximizing your wealth. Research is the fundamental basis of

all sound investment decisions and superior research allows us
to

deliver

superior

solutions.

Our

investment

solutions

are

backed by in-depth research generated by a top-drawer research

team.

Portfolio Management Services:

Extending

our expertise

to personal financial

advisory

services, we also offer portfolio management services to our

investors.
services

is

The

primary

focus

of

our

portfolio

management

to

provide

individualized

portfolio

management

through personalized portfolios, designed to fit your specific

57

i n v e s t m e n t p a r a m e t e r s . Yo u c a n c h o o s e y o u r o w n s e c u r i t i e s ,
e n s u r i n g t r a n s p a r e n c y a n d f l e x i b i l i t y i n a l l o p e r a t i o n s . We h a v e
a

range

of

portfolio

management

services

to

suit

your

individual needs.

Securities Broking Equities and Derivatives

E q u i t y Tra d i n g : -

Personal, transparent, prompt and convenient, trading

through

IL&FS

Investsmart

is

simple

and

effective.

Being

member of the National Stock Exchange (NSE), Bombay Stock

Exchange (BSE) and an institutional promoted broking house,
we

cater

to

your

trading

needs,

through

network

of

experienced dealers across the country & our comprehensive

website www.investsmar tindi a.com.

D e r i v a t i v e s Tra d i n g : We a l s o o ffe r yo u d e r i v a t i v e t r a d i n g i n e q u i t i e s , i n t h e
NSE Futures and Options segment, through specialist dealers in
this division. Under derivatives trading, we recommend trading
on futures, strategies and options, hedging with Nifty and other

58

products

and

opportunities

of

risk

less

arbitrage

between

various segments.
Depository & Custodial Services:-

IIL facilitates the entire process of dematerializing

shares

through

its

parent

company

IL&FS.

IL&FS

DP

provides personalized service with the highest standards of

efficiency. For your convenience you w ill continue to deal
with Investsmart.

We a l s o a r r a n g e t o o p e n C u s t o d i a l Ac c o u n t s f o r t h e s a f e
keeping of your securities through our parent company IL&FS.
This service keeps track and takes care of all your shares
related

activities,

ranging

from:

share

transfer,

issues

of

dividends and interest payments, to monitoring announcements

of rights / bonus issues etc.

Distribution of Financial Products:-

Investsmart,
investment

with

solutions

to

its
its

expertise
clients,

in

delivering

offers

various

complete
different

59

financial products into categories like Mutual Funds, Fixed

Income Products, Home Loans, Insurance etc.
MutualFunds:-

Our experts help you to select the right scheme from over 500
offerings, which will match your needs, goals and risks. In
addition to this, they also help you constantly monitor your MF
portfolio, making changes to adapt to your changing needs or
the market scenario, in order to make your money work for you
more.
Fixed Income Products

A gamut of fixed deposits, bonds and debt instruments

make up this section of investments. Our managers evaluate
t h e s e o p t i o n s t h o r o u g h l y, t o m a t c h y o u r i n d i v i d u a l l i q u i d i t y
requirements.

HomeLoans

O u r f a c i l i t i e s a l s o e x t e n d t o H o m e L o a n s C o n s u l t a n c y, t o
help you select the scheme that is best suited to your financial

60

profile. Prompt and convenient loan processing procedures help

you realize yo ur dreams late r.
InsuranceAdvisory
Our Insurance team assesses your insurance needs and
then advises you on the choices that match your requirements.
We o ffe r a r a n g e o f i n s u r a n c e p r o d u c t s , i n c l u d i n g p e n s i o n p l a n s
through our subsidiary companies

Merchant Banking Services

The Merchant Banking function of IL&FS Investsmart

comprising of the Equity Capital Market division, offers a
comp lete range of services. This includes manage me nt of IPOs,
rights

issues,

buy

back

offers,

open

offers,

and

private

p l a c e m e n t s o f e q u i t y. I t s e x t e n s i v e c o n t a c t b a s e a n d s t r o n g
r e l a t i o n s h i p s d e v e l o p e d w i t h Ven t u r e C a p i t a l F u n d s a n d P r i v a t e
Equity Funds for equity placements contributes to an effective
delivery platform for its clients.

The Project Syndication Services

The Project Syndication Business of IL&FS Investsmart

has been inherited from IL&FS. The syndication desk has so far
worked on Debt Syndication of large Infrastructure Projects
61

being

implemented

by

IL&FS.

The

mandate

includes

Debt

structuring of highly complex and difficult projects. Project

S yndication focuses on the role of an Arranger of Project and
Structured loans. While fund mobilization services are provided
across various areas, infrastructure sectors remain key focus
area

for

syndication

a c t i v i t y.

The

services

under

Project

Syndication include project loan syndication, structured debt

syndication and debt restructuring. The syndication business
thrives on its extensive contact base and strong relationships
developed over the years with Banks and Financial Institutions

62

Chapter 4

P R E S E N TATI O N
India has a 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 and so
on.

Therefore,

e f f i c i e n c y,

with

enhancing

the

objective

of

t r a n s p a r e n c y,

improving
checking

the
unfair

market
trade

practices and bring the India up to liberalize, regulate and to

63

develop the securities market was introduced in 1990s. The

enhance of Depositories Act in August- 1996 paved the way for
establishment of Depositories in India. NSDL was inaugurated
as first Depository in India in November 1996.
Depositories are promoted by institutions of statute have
been

responsible

for

economic

development

of the

c o u n t r y.

National infrastructure of international standards that handles

most of the trading and settlement in dematerialized (scripless) from in Indian capital market has been established.
Depositorys

aims

at

ensuring

safety

and

soundness

of

the

Indian market places by developing settlement solutions that

maximize

e f f i c i e n c y,

minimize

risk

and

minimize

cost

as

comp ared to the ph ys ica l transfer.

In

depository

system

ownership

transfer

of

securities

electronically by book entry without making securities move

from person to person. The Act had made the securities of all
public limited companies freely transferable, restricting the
comp an ys right to use discretion in effecting the transfer of
securities

and

the

transfer

deed

and

other

procedural

requirements under the Companies Act have been dispensed

with.
NEED FOR SETTING UP DEPOSITORY SYSTEM:

64

Indian securities market has grown exponentially during the

last decade. So the problems associated with the settlement of
trade are also on rise.
The technology has changed the face of Indian stock markets in
the

post-liberalized

era.

Competition

amongst

the

stock

exchanges, increase in the number of players and changes in the

trading system led to a clearing system proved to be inadequate
d u e t o o p e r a t i o n a l i n e f f i c i e n c y. H e n c e , t h e r e e m e r g e d a n e e d t o
replace the traditional system with a new system called the
Depository System.
This need was realized in the 1990s due to various reasons. The
reasons are:
i.

Large-scale irregularities in the securities scam of

1992

exposed

the

imitations

of

consumed

in

the

prevailing

settlement system.
ii.

lot

of

time

was

the

process

of

allotment and transfer of shares, impending healthy

growth of the capital market.
iii.

Wit h t h e o p e n i n g u p o f t h e I n d i a n e c o n o m y, t h e r e
was a wide spread equity cult which resulted in an
increased volume of transactions.

65

iv.

Mounting the fiscal deficit made the Government to

realize the foreign investment for the growth of the
economy and that was being restricted due to nonavailability of Depositories.

v.

There are various problems associated with dealing

in physical shares, such as
a).Unwanted delay in transfer of shares.
b ) . Var i o u s p r o b l e m s s u c h a s t h e f t , f a k e a n d / o r
forgery transfer.

c).Paper work involved in buying selling and transfer leading

to costs of handling, storage, transportation and other back
office stocks.
All these problems served as barriers to the
e n t r y o f i n v e s t o r s i n t o t h e ma r k e t . To o v e r c o m e t h e s e p r o b l e ms
the Government of India programulated the Depository in sept1995. Thus paying the way for setting of the Depository system
i n t h e c o u n t r y.
The objective of depository system is
accelerate the growth of
individual
competitive

investors

scrip less trading and to make the

participation

environment

and

to

in

depositories
enhance

to

liquidity

create
and

i m p r o v i n g c a p i t a l m a r k e t e f f i c i e n c y.

Some features of Depository Ordinance are as follows:-

66

a)

The

depository

is

registered

owner

of

share

while

the

shareholders is the beneficial owner (BO) retaining all the

economic and voting rights arising out of share ownership.
b) Shares in the Depository will be fungible.
c) Transfer pertaining to sale and purchase will be indemnified
b e t h e d e p o s i t o r y.
d)

If trades are routed through depository; there is no need to

p a y s t a m p d u t y.

K E Y F E ATU R E S O F D E P O S I TORY SY S T E M IN I ND I A
Multi-Depository System:
The depository model adopted in India provides for a
competitive multi- Depository system. There can be various
entitles providing depository services.
D E M ATE R I A L I S ATI O N AS AG A I N S T I M M O B I L I Z ATI O N
The model adopted in India provides only for
dematerialization of securities. This is a significant step in the
direction of achieving a complete paper-free securities market.
Many of the developed countries have opted for immobilization
(e.g. Hong Kong) or both immobilization and dematerialization
(e.g. Japan) of securities.

67

Immobilization:
Immobilization of securities is done by sorting or
lodging the physical security certificates with one organization
t h a t a c t s a s a c u s t o d i a n - a s e c u r i t i e s d e p o s i t o r y. Al l s u b s e q u e n t
transactions in such immobilized securities take place book
entries. The actual owners have right to with draw the physical
securities from custodial agent whenever required by them.

Dematerialization:
Dematerialization

of

securities

occurs

when

securities issued physical form are destroyed and equivalent

number of securities are credited into the beneficiary owners
account.

India

has

adopted

dematerialization

route

to

d e p o s i t o r y.
In a Depository system the investors stand to gain by
way of efficient settlements, lower costs and lower risk of theft
o r f o r g e r y, e t c . B u t t h e i m p l e m e n t a t i o n o f t h e s y s t e m h a s t o
secure and well governed. All the players have to be conversant
with rules and regulations as well as with the technology for
processing. The intermediaries in this system have to obey the
rules and regulations laid by the regulatory Authorities.
Depository Services through Depository Participants:

68

The

Depository

can

provide

their

services

to

investors through their agents called Depository participants.

These agents are appointed subject to the conditions prescribed
under SEBI (Depository & participants) regulations, 1996 and
other applicable conditions.
Fungibility:
In

the

dematerialized
certificate

Depository

are

not

numbers

as

System,

identified
in

by

physical

the

securities

distinctive

number

or

environment.

These

all

securities in the same class are identical and interchangeable.

NSDL /CDSL
ISSUER R & T AGENT
Registered owner / Beneficial Owner (BO):
In depository system,

the ownership of securities

dematerialized is bifurcated registered Owner and Beneficial

Owner.

For

the

securities

dematerialized,

NSDL

is

the

R e g i s t e CLEARING
r e d O w n e r i n t h e b o CLEARING
o k s o f t h e i s s u e r , b uDEPOSITORY
t ownership
r i g h t s CORPORATION
a n d l i a b i l i t i e s r e s t w i t hMEMBER
B e n e f i c i a l O w n e r . APARTICIPANT
ll the rights,
duties

and

liabilities

underlying

the

securities

are

on

the

b e n e f i c i a l o w n e r o f t h e s e c u r i t y.

STOCK
EXCHANGE

TRADING
MEMBER

INVESTOR

69

F r e e Tra n s f e r a b i l i t y o f S h a r e s :
Transfer of shares held in dematerialized form takes
place freely through electronic book entry system.

D E S I G N O F D E P O S I T O R Y:
NSDL

carries

out

its

operations

through

various

functionaries called Business Partners. The depository interface

with

the

interface

and

these

business

partners

represented

above:

70

NSDL is electronically linked its business partners, viz., the

Issue of compan y and / or its Registers & Transfer agents and
clearing corporations, clearing house of the stock exchange.
This is done on order to facilitate settlement of trades and to
perform a daily reconciliation of all the account balances held
with

NSDL.

Electronic

The

entire

Settlement

&

system

is

Transfer)

called

NEST

(National

system.

Thus,

highly

integrated setup for maintenance of investor accounts has been

developed and implemented.

A Depository very much like a Bank in operations:

NSDL-BANK- AN Analogy
S.No

BANK

NSDL

.
1.
Holds funds in accounts

Holds

securities

in

accounts

2.
Transfer

funds

the accounts

between Transfer

securities

between accounts

71

3.

Transfer without holding Transfer without handling

cash

physical securities

Safe keeping of money

Safe keeping of securities

4.

NSDL BANK The Difference:

S.N
O.
1.
2.

BANK
Either

NSDL
of

holders

can

sign

instruction
Minimum

balance

to

be

maintained
3.

5.

to sign

No minimum balance required

Interest can be earned

Entitled for interest

4.

All joint holders

by

participating

leading scheme
Does not move

Uses balance in accounts

Nomination is kept confidential

in

only
stock

balances

account holders authorization

Signature and photograph of
nominee to provide

F U N C T I O N S O F D E P O S I T O R Y:
Dematerialization:
One of the primary functions of the depository is to
eliminate or minimize the movement of physical securities in
the

market.

securities.

This

is

achieved

Dematerialization

through
is

in

the

dematerialization

process

of

of

converting

72

securities held in physical form into holding in book entry

form.
A c c o u n t Tra n s f e r :
The depository gives effect to all transfers resulting
form the settlement of trades and other transactions between
various beneficial owners by recording entries in the accounts
of such beneficial owners.

Tra n s f e r a n d R e g i s t r a t i o n :
A

transfer

is

the

legal

change

of

ownership

of

security in the records of the issuer. For affecting a transfer,

certain legal steps have to be taken like endorsement, execution
of

transfer

instrument

and

payment

of

stamp

d u t y.

The

depository accelerates the transfer process by registering the

o w n e r s h i p o f e n t i r e i s s u e i n t h e n a m e o f t h e d e p o s i t o r y. U n d e r
a

depository

system,

transfer

of

security

occurs

merely

be

passing book entries in the records of the depositories, on the

instructions of the beneficial owners.
Corporate Actions:

73

A depository may handle corporate actions in two

ways. In the first case, it merely provides information to the
issuer about the persons entitled to receive corporate benefits.
In the other case, depository itself takes the responsibility of
distribution of corporate benefits.

Pledge and Hypothecation:

Depositories allow the securities place with them to
be used as collateral to secure loans and other credits. In a
manual environment borrowers are required to deliver ledged
securities in physical form to the lender or its custodian. These
securities are verified for authenticity and often need to be
transferred in the same of lender. This has a time and money
c o s t b y w a y o f t r a n s f e r f e e s o r s t a m p d u t y. I f t h e b o r r o w w a n t s
to substitute the pledged securities, these steps have to be
repeated. Use of depository services for pledging/hypothecating
the securities make the process very simple and cost effective.
The

securities

pledged/hypothecated

are

transferred

to

segregated or collateral account through book entries in the

r e c o r d s o f t h e d e p o s i t o r y.
Linkage with clearing system:
The

clearing

system

performs

the

functions

of

ascertaining the pay-in (sell) or pay-out (buy) of brokers who

74

have traded on the stock exchange. Actual delivery of securities

from the clearing system to the buying broker to is done by the
d e p o s i t o r y. To a c h i e v e t h i s , d e p o s i t o r y a n d c l e a r i n g s y s t e m
should be electronically linked.

A N A LY S I S A N D I N T E R P R E TAT I O N

Analysis is done on the basis of information gathered through

the questionnaire to ascertain the awareness of investors about
depository

system.

The

data

analysis

is

based

on

seven

parameters they are Age, Source of awareness of depository

system, mode of communication between depository participant
and

Investors

and

Accessibility

of

depository

participant

service center.

75

TAB L E - 1

Awa r e n e s s o f s h a r e m a r k e t
Options
Investors
Percentage

Ye s
No
Tot a l
84
16
100
84.00 16.00 100

76

Interpretation
The above table reveals that 84% of the investors are aware
about the share market and 16% of the investors are not aware
about the share market.

TAB L E 2

2). Investors awareness of depository system

Options
Investors
Percentage

Yes
72
86.00

No
12
14.00

Total
84
100

77

Interpretation
The

above

table

reveals

86%

of

investors

know

about

depository system remaining 14% investors are not aware of

depository system.

TABLE 3

Participation in Depositories
Options
Yes
Investors
43
Percentage 60.00

No
29
40.00

Total
72
100

78

Interpretation
In the table 60% of the investors are participants in depository
system

remaining

40%

of

investors

are

not

participants

in

depository system.

79

Above analysis present days most of the investors are

look into security and less time consume for trading of shares
through electronic mode.

TABLE 4

Motivational factors
Options
Security
Investors
24
Percentage 56.00

Transparency Regulation Total

9
10
43
21.00
23.00
100

80

Interpretation

Above table shows that 56% of investors preferred depositories

for

security

reasons

and

21%

of

investors

interested

for

transparency remaining 23% are preferred for regulation.

81

Above analysis

most of the investors interested

in

security because the benefit of security is elimination of bad

deliveries and all risks associated with physical certificates,
such as loss, theft etc.,

TABLE 5

Services offered by depository system

Options
HSE
Investors
19
Percentage 44.00

IL & FS
12
28.00

NSE
12
28.00

TOTAL
43
100

82

Interpretation
Above table observed that 44% investors are interest
through HSE and 28% of investors are interest through IL &
FS remaining 28% of investors are interest through NSE.

83

According above table tells most of the investors are

interest of trading activities through HSE . NSE and IL &
FS are equal importance of trading activities with investors
and depository participants.

TABLE 6

Satisfaction of the investors in depository system

Options
Yes
Investors 38
Percentage 88.00

No
5
12.00

Total
43
100
84

Interpretation
Above

table

observed

that

88%

of

investors

are

satisfaction of depository system and 12% of the investors are

not satisfaction of depository system.

85

Above analysis most of the investors satisfied because in

depository system all tractions are made in electronic mode.
When investors trade in depository system shares, there is no
more need for delivery and receipt of scripts.

Instead, sellers account is debited and the buyers account

is credited.

TABLE 7

Company of the depository participant

Options
NSDL
Investors 28
Percentage 65.00

CDSL TOTAL
15
43
35.00 100

86

Interpretation

In t h e a b o v e t a b l e r e v e a l s 6 5 % o f i n v e s t o r s a r e i n v e s t m e n t
in NSDL Ltd and 35% of investors are interest in CDSL Ltd.

87

Above analysis most of the investors investment in NSDL

Ltd because

they provide good services like Maintenance of

beneficiary holdings through Dps, dematerialization, settlement

in dematerialized form and rematerilisastion.

TABLE 8

Satisfaction with companys depository procedures

Options
Yes
Investors 23
Percentage 82.14

No
5
17.86

Total
28
100

88

Interpretation:-

Above table reveals that 82% of investors satisfied with

company depository procedures and 17.86% of investors are not
satisfied with company depository procedures.

89

Above analysis

observed that investors are interest in

dematerialization means physical shares convert into electronic

mode this is used for investors in pledging and hypothecation
facilities,

freezing/locking

of

investors

account

and

stock

lending and borrowing facilities.

TABLE 9

Level of satisfaction of investors

Options
Fully satisfied
Investors
22
Percentage 79.00

Partly satisfied Total

6
28
21.00
100
90

Interpretation:-

Above analysis 79% of investors are fully satisfied with

procedures of the company and 21% of the investors are partly
s a t i s f i e d w i t h p r o c e d u r e o f t h e c o m p a n y.

91

Most

of

the

people

are

fully

procedure because company provides

satisfied

in

company

carries out settlement of

trades not done on the stock exchange, transfer securities and

maintains investor holding in the electronic form etc.,

TABLE 10

Provide up-to-date information in depository system

Options
Investors

Yes
33

No
10

Total
43
92

Percentage

76.74

23.26

100

Interpretation:-

Above survey observed that 76% of investors are satisfied

for depository system provide up-to date information and 24%
of investors are not satisfied regarding depository system not
providing up-to-date information.

93

TABLE 11

Effective source of you are depository system

Particulars No of Investors Percentage
Magazines 05
12%
94

Brokers
Friends
Dp

04
23
11

9%
53%
26%

INTERPRETATION

It is found in the survey that 12% of the investors know

about

Depository System

through

magazines

and Depository

Participants. 9% of investors know about Depository System

95

through

brokers

and

53%

investors

know

through

friends

remaining investors known through Dps.

It is the friends who are playing a major role in creating
awareness about Depository System among the investors.

TABLE 12
Mode of communication between Dp and Investors
Particulars
E-mail
Post
Personnel
information

No. of investors Percentage

18
42%
22
51%
03

07%

96

INTERPRETATION

The

above

table

reveals

that

42%

of

Depository

Participants are communicating with the investors through EMail. 51% of investors are informed through post and 7% are
i n f o r m e d p e r s o n a l l y.
97

Above analysis most of the investors

communicating

with

company

and

depository

participant

through E-mail services.

TABLE 13

Type of investment
Particular

No of investors

Percentage

Equity
Preference

31
8

72%
19%
98

shares
Debentures
Total

4
43

09%

INTERPRETATION
It is found in the survey that majority of the investors are
investing in a combination of instruments. The below table
explains the pattern of investments of investors.

99

Few of the investments are dealing with all the varieties of

instruments such as Equities, Debentures and Mutual Funds
etc.

Above

analysis

most

of

the

investors

interested

in

d e m a t e r i a l i z e d i n e q u i t y.

100

Chapter 5

Findings

101

In this study found that most of the investors investing in the

share market, most of them are aware about the depository
system

The investors are managing their funds mostly through brokers

and online trading.

The study reveal that most of the investors are know about
Depository System through brokers and friends followed by the
Depository Participants and magazines.

The investors are opening the Depository Participant account

because of Dmat and settlement of market trades and electronic
form account.

The

investor

services

mostly

communicating
through

their

E-Mail

and

Depository
personal

Participant

intimation

as

compare to post and others.

102

The investors are comfortable with their Depository Participant

service and these are accessible to the investors.

The awareness of the serves provided by NSDL is not reaching

the investors who are below 25 age group.

SUGGESTIONS
The minimum balance for opening an account maintenances
charges should be minimized to attract the great volumes of
investors.
103

It is suggested to Depository Participant and other regulatory

authorities

success

SEBI to conduct

awareness

programs

in

rural area.

In

the

survey

it

was

found

that

only

high-income

group

investors are familiar with Depositary system. it was succeed in

attracting middle and lower income group it will improve the
inflow of funds.

Educating the investors about Depository Services that will

creates awareness about Depository Services. This will enhance
the number of investors.

The Depository Participants are suggested to advertise in

regional language, it will facilitate the investors to understand
e a s i l y.
104

Now the awareness is restricted to only above 25 years age.

Depository Participants have to concentrate on below 25 years
age investors

BIBLIOGRAPHY
http://www.sharekhan.com/common/default.aspx?code=depositery
http://www.bse.com/
http://www.nse.com/content.do?contenttype=homepage
105

https://nsdl.co.in/
http://www.ilfsindia.com/
http://www.ilfsinvestsmartindia.com
http://www.shopping.com/xfs?kw=depositery+system&clt=sch

M. Y. Khan (2007) INDIAN FINANCIAL SYSTEM ( 5TH EDITION ),

The

McGraw Hill , NOIDA.

Dr. S.N. Maheshwri (2006) MAGEMENT ACCOUNTING & FINANCIAL
CONTROL
Punithavathy

( 15th EDITION ), SULTAN CHAND & SONS , NEW DELHI.

Pandian

{2007)

SECURITY

ANALYSIS

&PORTFOLIO

MANAGEMENT(5thEDITION),VIKAS PUBLISHING HOUSE PVT LTD,NOIDA.

106

Appendix

107

QUESTIONNAIRE TO UNDERSTAND INVESTORS

AWARENESS OF DEPOSITORY SYSTEM

NAME
AGE
QUALIFICATION
PROFESSION
ANNUAL INCOME

:
:

:
:

1). Are you aware of share market?

a) Yes

b) No

2). If yes do you know about depository system?

a) Yes

b) No

3). Are you client of any depository participant?

a) Yes

b) No

4). If yes what motivated you to opt for depository system?

a) Security

b) Transparency

c) Regulations

5). In which company you are the depository participant?

a) HSE

b) IL & FS

6). Are you satisfied with the services provided by depository system?
a) Yes

b) No

108

7). In which company you are the depository participant?

a) NSDL

b) CDSL

8). Are you satisfied with the companys depository procedure?

a) Yes

b) No

9). If yes what is your level of satisfaction?

a) Fully satisfied

b) Partly satisfied

10). Does your Depository system provide up to date information

regarding the changes in your depositary account?
a) Yes

b) No

11). By which source you came to know about your depository system?
a) Magazine
c) Friends

b) Brokers
d) Depository participants

12). what is the medium of communication between

Depository participants & Investors?
a) E-mail

b) Post

c) Personal Information

13). which of these you want to investment in dematerialized form?

a) Equity

b) preference shares

c) Debentures

14). If no please give suggestions

109

110