Date post: | 20-Jan-2015 |
Category: |
Economy & Finance |
Upload: | harvidutta |
View: | 233 times |
Download: | 0 times |
A Study of Customer Satisfaction towards Depository Participants
EXECUTIVE SUMMARY
Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals
in shares. Apart from security broking Karvy is in to Demat services,
Mutual fund and Insurance services. It offers a wide range of financial
services in order to meet different individuals financial planning.
The project emphasizes on “Customer satisfaction towards
depository participants”
Objectives of the Study:
To know the function of DP.
To know the percentage of have satisfied the service of DP.
To know how demat account is helping in the trading
To know the exception of the customer.
To know the loops and draw backs of DP.
Research Methodology:
Data source:
Primary Data: Through Questionnaire
Secondary Data: Karvy’s Record & Report, Magazine & Websites. Sample size: 100 customers of Karvy Stock Broking Ltd.
Area Covered for research: Only Dharwad KARVY customers.
1
A Study of Customer Satisfaction towards Depository Participants
Sampling Procedure: Random sampling method from available database.
In the present scenario the service industry has given an utmost
importance of doing a particular task at a fastest time in order to satisfy
the customer and to attract new customer. In this project we can find out
the customer of Karvy Consultant have satisfied with demat service and
this DP is overcoming the disadvantages of the physical trading of the
securities in the stock exchange.
2
A Study of Customer Satisfaction towards Depository Participants
FINDINGS:
1) I have carried out this exercise on Dematerlisation. So in my studies I
have tried to see whether the customer have satisfied the service given by
depository participants.
2) I have also seen that awareness of KARVY service given by Karvy
finical consultant is from friends.
3) It is also seen that more than 84% of the respondent have satisfied with
the service of demat.
4) It is also seen that more than 55% to 60% of the respondent has
satisfied with the service of Freezing/ Defreezing and loan against share.
Also 40% respondents are not aware about these services.
5) Also found that nearly 2% of the respondents are dissatisfied with bill
Acceptance.
6) 5% improper format of Holding/Transaction statement and 4%
Frequently reminders are given to karvy consultant ltd., for update the
information Are Dissatisfied.
7). 38% of respondent feel tariff structure of Karvy Stock Broking Ltd
charged is high and very high.
4
A Study of Customer Satisfaction towards Depository Participants
8) Also found that 53% respondent have satisfied 80% of the service
9). 35% of respondent prefer Karvy Stock Broking Ltd DP to Other Dp
because
Of Quality service And, 40% for safety service.
INTRODUCTION
India has two hundred years old tradition in Securities. Infact that
first India stock exchange established in Bombay is the oldest in Asia.
The earliest security dealings were Transactions in loan securities of East
India Company, the dominant institution of those days. Corporate Shares
came into the picture by 1830’s and assumed significance with the
Companies Act of 1956. In 1887 the broker community gave birth to the
“Native share and stock brokers Association” which is now known as the
Bombay Stock Exchange.
The Indian Capital grew at a very moderate rate from 1951 to
1980. However it registered an impressive growth in 1980s. the process
of liberalization and the transparency in operation has raised the interest
of foreign investors in India. Till 1978 there were only 8 recognized
exchanges in India. Initially the exchange operated on an outcry system
5
A Study of Customer Satisfaction towards Depository Participants
i.e. manual system of trading Due to increase in the trading volumes, the
number of issuer increased substantially, and the birth of NSES highly
transparent automated system come into existence Even then there was an
increase in paper work causing a gridlock at every stage in the stock
market This delays the clearance and settlement of traders, registration of
securities in the shareholder name and due this it increased the back
office paper work intermediaries These outdated systems have increased
settlement risks and have rendered the implementation of a delivery of a
versus payment system impossible. National Stock Exchange of India
Limited to provide electronic depository facilities for securities traded in
the equity and the debt market. NSDL commenced its operations in the
year 1996 and is the first depository in India.
6
A Study of Customer Satisfaction towards Depository Participants
DESIGN OF THE STUDY
Tile of the project:
“Service Analysis & Customer satisfaction towards Depositary
participants”.
Statement of the Problem: KARVY STOCK BROKING Ltd is providing
the Demat service. Hence in this report an attempt is made to know the
present customer satisfaction towards depository participants.
RESEARCH OBJECTIVES:
To know the function of DP.
To know the percentage of have satisfied the service of DP.
To know how demat account is helping in the trading
To know the exception of the customer.
To know the loops and draw backs of DP.
.
7
A Study of Customer Satisfaction towards Depository Participants
METHODS AND METHODOLOGY
Sampling Design:
Sampling since segment wise investors in KARVY STOCK
BROKING Ltd were available the overall customers were
considered for the study. Hundred Percent coveraged. Hence
random sampling survey method was adopted for the purpose of
the study.
Sampling Size: A sample of 100 was chosen for the purpose of the
study. Sample consisted of small investor, large investors and
traders of KARVY STOCK BROKING Ltd.
Sampling Procedure: From large number of customer of KARVY
STOCK BROKING Ltd. Were randomly selected from the
available customer database.
Field Study: Directly approached respondents.
DATA COLLECTION METHOD:
1. PRIMARY DATA: For a study of this nature primary data is collected
through Questionnaire.
2. SECONDARY DATA: This is been is collected through Karvy’s
Record & Report, Magazine & Websites.
8
A Study of Customer Satisfaction towards Depository Participants
MEASUREMENT TECHNIQUE:
For this purpose measurement technique used for survey is
questionnaire to collect information from the respondent
ANALYTICAL TECHNIQUE:
Statistical technique used for measuring the response is in terms of
percentage.
LIMITATION OF STUDY
Since Sample size is only 100 all Hundred customers are
approached .
Since segment wise investor is available in KARVY STOCK
BROKING Ltd. Overall concept is taken for the study.
Information is partly based on secondary data and hence the
authenticity of the study can be visualized and is measurable.
Level of accuracy of the results of research is restricted to the
accuracy level with which the customers have given their answers
and the accuracy level of the answers cannot be predicted.
BACKGROUND
Karvy Stock Broking Limited, one of the cornerstones of the Karvy
edifice, flows freely towards attaining diverse goals of the customer
through varied services. Creating a plethora of opportunities for the
9
A Study of Customer Satisfaction towards Depository Participants
customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes
no boundaries. Helping the customer create waves in his portfolio and
empowering the investor completely is the ultimate goal.
KARVY, is a premier integrated financial services provider, and
ranked among the top five in the country in all its business segments,
services over 16 million individual investors in various capacities, and
provides investor services to over 300 corporate, comprising the who is
who of Corporate India. KARVY covers the entire spectrum of financial
services such as Stock broking, Depository Participants, Distribution of
financial products - mutual funds, bonds, fixed deposit, equities,
Insurance Broking, Commodities Broking, Personal Finance Advisory
Services, Merchant Banking & Corporate Finance, placement of equity,
IPOs, among others. Karvy has a professional management team and
ranks among the best in technology, operations and research of various
industrial segments.
The birth of Karvy was on a modest scale in 1981. It began with
the vision and enterprise of a small group of practicing Chartered
Accountants who founded the flagship company…Karvy Consultants
Limited. We started with consulting and financial accounting automation,
and carved inroads into the field of registry and share accounting by 10
A Study of Customer Satisfaction towards Depository Participants
1985. Since then, we have utilized our experience and superlative
expertise to go from strength to strength…to better our services, to
provide new ones, to innovate, diversify and in the process, evolved
Karvy as one of India’s premier integrated financial service enterprise.
Thus over the last 20 years Karvy has traveled the success route,
towards building a reputation as an integrated financial services provider,
offering a wide spectrum of services. And we have made this journey by
taking the route of quality service, path breaking innovations in service,
versatility in service and finally…totality in service.
Our highly qualified manpower, cutting-edge technology,
comprehensive infrastructure and total customer-focus has secured for us
the position of an emerging financial services giant enjoying the
confidence and support of an enviable clientele across diverse fields in
the financial world.
Over the years we have ensured that the trust of our customers is
our biggest returns. Factors such as our success in the Electronic custody
business has helped build on our tradition of trust even more.
Consequentially our retail client base expanded very fast. Our values and
vision of attaining total competence in our servicing has served as the
11
A Study of Customer Satisfaction towards Depository Participants
building block for creating a great financial enterprise, which stands solid
on our fortresses of financial strength - our various companies.
With the experience of years of holistic financial servicing behind
us and years of complete expertise in the industry to look forward to, we
have now emerged as a premier integrated financial services provider.
And today, we can look with pride at the fruits of our mastery and
experience – comprehensive financial services that are competently
segregated to service and manage a diverse range of customer
requirements.
GROUP OF COMPANIES
KARVY SECURITY LTD
Deals in distribution of various investment products, viz, equities,
Mutual fund, bounds debenture fixed deposits, insurance policies
& other financial products
Member –Hyderabad stock Exchange (HSF)
12
A Study of Customer Satisfaction towards Depository Participants
KARVY STOCK BROKING LTD.
Deals in buying & selling equity shares & debenture &on the
national stock exchange (NSE), the Hyderabad stock exchange &
over the counter exchange of India (OTCEI)
Member-national stock exchange (NSE)
KARVY CONSULTANTS LTD
Transfer agency services for corporate & mutual funds
Registrar for IPO\book building
Depositary participant services
Registered with both NSDL/CDSL
It enable services –MT/call center /data classification
Karvy .com comprehensive financial advisory site
KARVY INVESTER SERVICES LTD.
Deals in issue management, investor banking & merchant
banking of fixed income & other financial products.
Trading through BSE
DEPOSITARY SEVICES
Registered as DP both with NSDL & CDSL
Serving over 2 lac investors
13
A Study of Customer Satisfaction towards Depository Participants
Online connectivity at Hyderabad, Lucknow &Bangalore
Ranked among the top 5 DPS in the country
High synergy with registry & broking activities for higher services
levels to the customer information
Web based customer information
Provision of service in over 75 locations
IT SERVICES GROUP
1. Medical transcription
First strategic initiative into global processing
Among the top MT companies in India
2.E-BUSINESS GROUP
Strategic intent: to develop a comprehensive financial services
portal which includes
Investor servicing: mutual funds, corporate shareholders &
depository clients.
Distribution of financial products
Net trading
Insurance distribution
1. Call center
2. Started with a 30 agent e-call center
14
A Study of Customer Satisfaction towards Depository Participants
MISSION
Our mission is to be a leading, preferred service provider to our
customers, and we aim to achieve this leadership position by building an
innovative, enterprising and technology driven organization which will
set the highest standards of service and business ethics.
QUALITY POLICY
To achieve and retain leadership, Karvy shall aim foe complete
customers satisfaction, by combining its human and Technological
resources, to provide superior quality financial Services. In the process,
Karvy will strive to exceed Customer’s expectations.
QUALITY OBJECTIVES
As per the Quality Policy, Karvy will:
1. Build in- house process that will ensure transparent and harmonious
relationship with its clients and investors to provide high quality of
services.
2. Establish a partner relationship with its investor service agents and
vendors that will help in keeping up its commitments to the customers.
3. Provide high quality of work life for all its employees and equip them
with adequate knowledge &skills so as to respond to customer’s need.
4. Continue to uphold the values of honesty & integrity and strive to
establish unparalleled standards in business ethics.
15
A Study of Customer Satisfaction towards Depository Participants
5. Use state –of – the art information technology in developing new and
innovative financial products and services to meet the changing needs
of investors and clients.
6. Strive to be a reliable source of value-added financial products and
services and constantly guide the individuals and institutions in
making a judicious choice of it. Strive to keep all stake- holders
(shareholders, clients, investors and regulatory authorities) proud and
satisfied.
Achievements
Among the top 5 stock brokers in India (4% of NSE volumes)
India's No. 1 Registrar & Securities Transfer Agents
Among the to top 3 Depository Participants
Largest Network of Branches & Business Associates
ISO 9002 certified operations by DNV
Among top 10 Investment bankers
Largest Distributor of Financial Products
Adjudged as one of the top 50 IT uses in India by MIS Asia
Full Fledged IT driven operations16
A Study of Customer Satisfaction towards Depository Participants
MILESTONE
18
A Study of Customer Satisfaction towards Depository Participants
ORGANIZATION CHART
Managing Director
Chief Managing Director
Vice-President Vice-President Vice-President Vice-President
Karvy Karvy Karvy Karvy Securities Stock Broking Consultants Investors Services Ltd. Ltd. Ltd. Ltd.
Deputy Deputy Deputy Deputy General General General GeneralManager Manager Manager Manager
Senior Senior Senior SeniorManager Manager Manager Manager
Branch Manager
N number of Team Leaders
N number of Executives
19
A Study of Customer Satisfaction towards Depository Participants
INTRODUCTION
Dematerialization or "Demat" is a process whereby your securities
like shares, debentures etc, are converted into electronic data and stored
in computers by a Depository. 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 Depose Depository functions like a securities bank, where the
dematerialized physical securities are traded and held in custody. This
facilitates faster, risk free and low cost settlement.
In order to dematerialize certificates; an investor will have to first
open an account with a DP & then request for the dematerialization of
certificate by filling up a dematerialization request form (DRF), which is
available with DP & submitting the same along with the physical
certificates. The investor has to ensure that before the certificate are
handled over to the DP For demat, they are defaced by marking
20
A Study of Customer Satisfaction towards Depository Participants
“Surrendered for dematerialisation” on the face of the certificates.
Depository is much like a bank and perform many activities that are
similar to a bank.
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.
Following table compares the two.
Bank Depository
Holds funds in accounts Holds securities in account
Transfers funds between accountsTransfers securities between
accounts
Transfers without handling moneyTransfers without handling
securities
Safekeeping of money Safekeeping of securities
Transacting the depository way has several advantages over the
traditional system of transacting using share certificates. Some of the
benefits are:
21
A Study of Customer Satisfaction towards Depository Participants
Trading in demat segment completely eliminates the risk of bad
deliveries, which in turn eliminates all cost and wastage of time
associated with follow up for rectification. This reduction in risk
associated with bad delivery has lead to reduction in brokerage to
the extent of 0.5% by quite a few brokerage firms.
In case of transfer of electronic shares, you save 0.5% in stamp
duty.
You also avoid the cost of courier/ notarization/ the need for
further follow-up with your broker for shares returned for company
objection
In case the certificates are lost in transit or when the share
certificates become mutilated or misplaced, to obtain duplicate
certificates, you may have to spend at least Rs500 for indemnity
bond, newspaper advertisement etc, which can be completely
eliminated in the demat form.
You can also receive your bonuses and rights into your depository
account as a direct credit, thus eliminating risk of loss in transit.
You can also expect a lower interest charge for loans taken against
demat shares as compared to the interest for loan against physical
shares. This could result in a saving of about 0.25% to 1.5%. Some
banks have already announced this.
22
A Study of Customer Satisfaction towards Depository Participants
RBI has increased the limit of loans against dematerialized
securities as collateral to Rs2mn per borrower as against Rs1mn
per borrower in case of loans against physical securities.
RBI has also reduced the minimum margin to 25% for loans
against dematerialized securities as against 50% for loans against
physical securities.
In short the advantages of opening a demat account are
Shorter settlements thereby enhancing liquidity
No stamp duties on transfer of securities held in demat form.
Elimination of risk associated with physical certificated such as
bad delivery, fake securities.
Reduction in handling large volume of paper;
Nomination facility
Transmission of securities (such as shares, debentures, bonds
and units) is done by DP eliminating the need to correspond
with each company separately.
Change of name, address, dividend mandate, registration of
power of attorney, transmission etc. can be effected across
companies held in demat form by a single instruction to the DP
23
A Study of Customer Satisfaction towards Depository Participants
Though under the Depositories Act, 1996, there is no compulsion
and the investor can hold shares either in physical or in dematerialized
form. But according to Sebi’s directive certain shares have to be traded
compulsorily in dematerialized form where the seller cannot sell in
physical form. However, after he has bought the shares the investor can
ask for rematerialization of the shares.
The Depository Account must be opened with a Depository
Participant. NSDL interfaces with investor trough Depository Participants
(DPS). A list of names and addresses of all Authorized DP’s is available
with the NSDL and CDSL and one can meet any of these DP’s place and
make a choice at your based on your comfort and convenience. Opening
a depository account is as simple as opening a bank account. One can
open a depository account with any DP.
To open a Depository Account, you have to submit the duly filled
in Account Opening form along with the following documents:
Fill up the account opening form, which is available with the DP.
Residential Proof - Copy of Ration Card, Passport, Driving
License, Telephone Bill, Electricity Bill or Rental Agreement.
Sign the DP-client agreement, which defines the rights and duties
of the DP and the person wishing to open the account.
24
A Study of Customer Satisfaction towards Depository Participants
Receive your client account number (client ID).
This client ID along with your DP ID gives you a unique
identification in the depository system.
There is no restriction on the number of depository accounts a
person can open. However, if your existing physical shares are in joint
names, you have to open the account in the same order of names before
you submit your share certificates for demat. A sole holder of the share
certificates cannot add more names as joint holders at the time of
dematerializing his share certificates.
However, if the investor wants to transfer the ownership from his
individual name to a joint name, he should first open an account as the
sole holder (account A) and dematerialize the share certificates. He
should then open another depository account (account B) in which he is
the first holder and the other person is the second holder and make an off
market transfer of the shares from the account A to account B. The
investor will incur a charge on this transaction. Alternatively, the
certificates can be transferred to the joint ownership and then sent for
Dematerialization.
Right now, as per the Companies Act, there is no nomination
facility for shares (whether in the physical or in the electronic form). The
25
A Study of Customer Satisfaction towards Depository Participants
nomination facility for shares can be availed of only when the relevant
provisions in the Companies Act are amended. NSDL captures the details
of the nominee when the account is opened so as to offer the facility as
soon as the relevant amendments are effected in the Law.
A client can choose to open more than one account with same DP.
In addition to this, he has a choice of opening accounts with more than
one DP. However a broker can open just one Clearing Member account
per card/ stock exchange for clearing purpose, but he can still open
multiple beneficiary accounts Beneficiary is the personal account wherein
brokers can keep their personal holdings.
Account opening
Any investor who wishes to avail depository services must first
open an account with a depository participant of NSDL The process of
opening a Demat account is very similar to a bank account The investor
can open an account with any depository participant of NSDL An
investor may open an account with several DPs or he may open several
account with single There are several DPs offering various depositary
related services. Each DP is free to fix its own fee structure Investors
have the freedom to choose a DP based on criteria like convenience ,
comfort has to enter into an agreement with the DP The form and
contents of this agreement are specified by the business rules of NSLD26
A Study of Customer Satisfaction towards Depository Participants
Types of depositary account depends on the operation to be
performed There are three types of Demat accounts which can be opened
with a depositary participant viz
(a) Beneficiary Account (b) Clearing member Accounts and (c)
intermediary account
27
A Study of Customer Satisfaction towards Depository Participants
Types of accounts
Beneficial owner Clearing member Intermediary
Account Account Account
House Non-House
A DP may be required to open three categories of accounts for
client –beneficiary account, clearing member account and
intermediary account
A beneficiary account is an ownership account The holder/s of
securities in this type of account own those securities
The clearing member account and intermediary account are
transitory account The securities in these are held for commercial
purpose only
A clearing member account is opened by a broker or a clearing
member for the purpose of settlement of trades
An intermediary account can opened by a SEBI registered
intermediary for the purpose of stock leading and borrowing
28
A Study of Customer Satisfaction towards Depository Participants
BENEFICIARY ACCOUNT
This is an account opened by investor to hold their securities in
dematerialized from with a depository and to carry out the transactions of
sale purchase of such securities in book entry form through the depositary
system A beneficiary account holder is legally entitled for all rights and
liabilities attached to the securities held in that account Therefore, the
account is called “beneficial owner account” a beneficial account can be
in the name of individual, corporate, HUF, minor, bank, financial
institution , trust etc or the broker himself for the purpose of his personal
investments in demat form . The account is opened with a DP
House account vs. non –house account opened by a DP for the
custody of and transactions in its own investment is referred to as a house
account DPS Are required to open house accounts for their own
investments to prevent co-mingling of asset with that of their clients
Neither the depositories ACT nor the regulations made under
the act lay down any specifications about who can open a beneficiary
account since all beneficial owners are deemed to be member of a
company (under section 41 (3) of the companies act) only those who are
eligible to become members of a company act can open a beneficiary
account with a depository Thus all legal entities with the exception of
partnership firms can open an account in the depository system
29
A Study of Customer Satisfaction towards Depository Participants
Documents for verification: For the purpose of verification, all investors
have to submit the following documents along with the prescribed
account opening form
Proof of identity- a beneficiary account must be opened only after
obtaining a proof of identity of the applicant The applicants signature and
photograph must be authenticated by an existing account holder or by the
applicant bank or after due verification made with the original of the
applicants valid passport , voter id , driving license or PAN card with
photograph and further
Proof of address- The account opening form should be supported with
proof of address such as verified copies of ration card/ passport/ voter ID/
PAN card/driving license / bank passbook an authorized official of the
participant, under his signature, shall verify the original documents
In case any account holder fails o produce the original documents
for verification within the foreside period of 30 days, it must be
immediately brought to the notice of NSDL Failure to produce the
original within the prescribed time would invite appropriate action
against such account holder, which could even include freezing of their
accounts
30
A Study of Customer Satisfaction towards Depository Participants
Common information: The process of opening an account with a
depository, nature of such an account, and various factors to be
considered for opening a depository account are explained below. Some
details are common to all types of accounts. These are:
1. Name of the holder
2. Date of birth (for individual accounts)
3. Occupation
4. Address & phone / fax number
5. Bank details like name of the bank, type of the account
(current/savings), accounts number, branch address, MICR, etc
6. PAN number, if applicable
7. Details of nomination
8. Specimen signatures
Beneficiary account- procedure for opening an account
Investor have the choice of selecting a DP based on their
convenience, comfort, service, levels, safety, reputation charges, etc they
have flexibility to have more than one account with the same DP or any
other DPS No minimum balance is required for opening a depository
account Investor also have the freedom to close an account with one DP
and open another one with any other DP
31
A Study of Customer Satisfaction towards Depository Participants
The type of the account opening from to field by an investor and
the list of documents required depend on the type of beneficiary account
to be opened –whether it is for NRI’s or corporate or individual Further,
the individual account can be in a signal name or joint name clearing
members and brokers have to open in a beneficiary account if they have
to deal with their own holdings
There are several client types in the depository system and
different codes are allotted to them. These are listed below
1. Resident
Ordinary
HUF
2. Financial institutions
Government –sponsored FI
State financial corporation
Other
3. FIIS
Mauritius –based
Others
4. NRI
Repatriable
Non-Repatriable
Depository receipt
5. Body corporate
32
A Study of Customer Satisfaction towards Depository Participants
Domestic company
Overseas corporate body Repatriable
Government company
Central government
State government
Co-operative body
NBFC
Non –NBFC
Broker
Foreign bodies
Group companies
Others
OCB-Nonrepatriable
Depository receipt
6. CM (clearing member)
7. Foreign national – national /depository receipt
8. Mutual fund –depository receipt
9. Trust, Bank
10.Intermediary
Clearing Member Account
The entities that are authorized to pay out from a clearing
corporation/ clearing house against traders done by them or their clients
are known as clearing members. CMs are identified in the system through
33
A Study of Customer Satisfaction towards Depository Participants
their CM-BP ID. All pay-in and pay-out transactions are carried out
through their accounts.
There are two types of clearing members:
1. All members of a stock exchange popularly know as brokers, are
clearing members;
2. Custodians who are permitted by the stock exchange to act as a
clearing members.
34
A Study of Customer Satisfaction towards Depository Participants
PROCEDURE TO OPEN A CLEARING MEMBER ACCOUNT
The steps undertaken to open the account are same as those of the
individuals, difference lies in the type of the clearing members has to first
register itself with the depository and obtain a business partner
identification number (CM-BP-ID). The clearing member is identified by
the combination of CC-CM-ID given by the DP.
Immediately after opening a clearing account, the DP should
inform the depository the details of clearing members name, CM-BP-ID,
client-ID, and date of the opening the account in DPM system.
The clearing account should only be for clearing and settlement
purpose and nit for any other purpose, e.g., holding of securities received
in a settlement received in a settlement account should be transferred to
the transferred to respective beneficial accounts as soon as possible, but
in no case later than the time prescribed by the depository/ stock
exchange/ SEBI in this regard. The opening of clearing members account
constitutes a “standing instruction” to receive credits from the clearing
corporation when there is a pay-out.
The Clearing House deals with ONLY ONE designated account
for pay-in and pay-out with the Broker. This single account allows you to
know to which account securities must be delivered and received from.
35
A Study of Customer Satisfaction towards Depository Participants
One Clearing Member Pool Account is opened per card / Stock Exchange
to settle trades in the Dematerialised form.
Structure Of Clearing Account
The clearing account is identified in the depository system by its
CM-BP-ID. The internal structure of the Clearing Account consists of
three parts to facilitate easy book keeping.
Arrangement of clearing account
Pool Account
Delivery Account
Receipt Account
Clearing Corporation (CC)/Clearing House (CH)
Clearing Account
Delivery
Account
Pool AccountReceipt Account
a) Pool Account: It has two roles in clearing of Securities, viz.,
before pay-in, the selling client of the clearing member transfers
securities from his client Account to the Clearing Account. After 36
Selling client
BuyingClient
A Study of Customer Satisfaction towards Depository Participants
receiving pay-out, the clearing member transfers securities from his
Clearing Account to the account of the buying client.
b) Delivery Account: The securities before pay-in, the securities move
from the Pool Account To the Delivery Account. The movement
will be automatic if clearing member has given such an
undertaking to its Clearing If the Clearing Corporation. It will be
effected on the basis of instruction received from the Clearing
house/ Clearing Corporation. If the clearing house/ Clearing
Corporation has not taken such undertaking, the clearing member
to its DP must submit a delivery instruction form. At the time of
pay-in, NSDL flushes out the securities in the Delivery Account &
transfers the same to the Clearing house/ Clearing Corporation.
c) Receipt Account: On pay-out day, the Clearing house/ Clearing
Corporation transfers securities to the Pool Account (to The extent
of net receipt) through the Receipt Account. This account can be
used to trace details of settlement-wise receipt of the clearing
member.
Market Type & Settlements Number: A clearing account can be broken
into compartment and sub-compartments. Each compartment can be
called as market type and be as settlement number. Hence, if securities
are moved from any clearing account, apart from the CM-BP-ID, the
37
A Study of Customer Satisfaction towards Depository Participants
combination of market type and settlement number must be provided. A
diagrammatic illustration of the internal structure of a clearing account is
depicted in next page.
38
A Study of Customer Satisfaction towards Depository Participants
Settlement calendar: Settlement calendar is decided by the stock
exchange. It contains details for each market type & settlement number.
The detail for each settlement consists of the date of trading, pay-in time,
pay-out date, settlement number etc. Clearing member can obtain the
settlement calendar from its own stock exchange. This is also available in
the depository software of the DP.
39
Physical Rolling Action Rolling
2000014Delivery Pool Receipt
2000015Delivery Pool Receipt
2000248Delivery Pool Receipt
9000152Delivery Pool Receipt
9000153Delivery Pool Receipt
9000152Delivery Pool Receipt
2000016Delivery Pool Receipt
2000249Delivery Pool Receipt
2000248Delivery Pool Receipt
Clearing Account(IN503265)
A Study of Customer Satisfaction towards Depository Participants
MARKET TRANSFERS: Any trade, which is cleared & settled by the
clearing house/ Clearing Corporation of the stock exchange, is considered
as a market trade in the depository. Consequently, the transfers routed
through the clearing account. Typically, a market trade has the following
legs of transactions.
a. Receiving securities for pay-in from clients (client to clearing
members)
b. Delivering securities to the clearing house/clearing corporation
for pay-in. (clearing house/clearing corporation)
c. Receiving pay-out from the clearing house/clearing corporation.
(Clearing House/clearing Corporation to clearing member)
d. Distribution of pay-out to clients. (Clearing member to client)
A diagrammatic illustration of the settlement of a market trade in a
depository is depicted below:
D C
A B
40
DP of Buyer’s CM
NSDL CH/CC
DP of buyer
A Study of Customer Satisfaction towards Depository Participants
41
DP of Seller’s CM
DP of Seller
A Study of Customer Satisfaction towards Depository Participants
Receiving securities for pay-in from clients (client to clearing member)
A selling client of a clearing member (broker) would transfer
securities from his beneficial owner account to the clearing account of the
clearing member for onwards delivery to the clearing house/clearing
corporation. This transfer is effected by his DP on the basis of a delivery
instruction provided by the selling client. A diagrammatic Illustration for
securities received for pay-in from clients is depicted below:
Indicates flow of securities
Indicates paper /electronic instruction
given.
42
NSDL
DP1 DP2
Seller A
AAAller A
Clearing Member
Seller C
Seller B
A Study of Customer Satisfaction towards Depository Participants
OFF MARKET TRANSFERS: Any trade, which is not cleared and
settled by the clearing house/clearing corporation of the stock exchange,
is considered as an off-market trade in the depository. Consequently, the
transfer is not routed through the clearing account. Such transfers take
place directly between two beneficiary accounts. Both buyer and seller
may open account either with the same DP or with different DPs. The
buyer and seller will trade amongst themselves and later on will exchange
money, i.e., settle funds amongst themselves. The selling client would
deliver securities from its beneficiary account to the beneficiary account
of the buying client. This transfer is effected by the DP of the selling
client on the basis of a delivery instruction provided by the selling clients.
A diagrammatic illustration of the settlement of an off-market trade in
depository is depicted below:
43
A Study of Customer Satisfaction towards Depository Participants
Indicates flow of securities
Indicates paper /electronic instruction
given.
44
A Study of Customer Satisfaction towards Depository Participants
Depository:
A Depository is a Company where the shares of an individual are
held in the electronic form, at the request of the shareholder. This
eliminates the physical form of holding. IDBI, UTI, SBI and NSE
promoted the National Securities Depository Limited (NSDL). The
Central Securities Depository Limited (CDSL) was promoted by BSE.
Your money may be held in the form of liquid cash at your home
or may be deposited in a bank. The bank holds your funds in the
electronic form and subsequently debits or credits the account. Depending
on your issuance of cheques or deposit of cheques. The advantages of
safety and convenience of dealing with a Bank overweigh the reasons for
holding liquid cash in your home. Your financial assets such as Equity
Shares may be compared to the above example. You may hold physical
share certificates in your home and be exposed to the various risks of lack
of safety, mutilation, loss etc. Alternatively, you may deposit your shares
in an organization called a Depository, which holds your shares in the
electronic form. You can dematerialize shares of only those companies
that have signed agreement to dematerialize their shares with the
depository. You cannot dematerialize shares if they are not in your name,
i.e. shares held in street name (market deliveries) cannot be 45
A Study of Customer Satisfaction towards Depository Participants
dematerialized. However, when you send shares to the registrar to be
transferred to your name you can request that you want those shares in
dematerialized form.
Karvy Consultants Ltd. has four DPMs as on date. They are:
1.Hyderabad-IN300394
2.Lucknow - IN301557
3.Bangalore- IN301926
4. Mumbai - IN302470
In India depositories are required to be registered with SEBI and
are governed by the provision of the Depositories Act, 1996 and
regulation and bylaws framed for depositories by the SEBI.
The depositories work in a completely computerized environment
with electronic linkages with the point of origination for the transactions
that may cause the change in ownership of securities. A depository will
be electrically linked with the Register of the members maintained by the
company/registrar, clearing and settlement system in the stock exchanges,
stock lending organization (if in existence), custodians of securities,
depository participants and brokers.
46
A Study of Customer Satisfaction towards Depository Participants
Function of Depository
Dematerlisation: one of the primary functions of depository is to
eliminate or minimize the movement of the physical securities in the
market. This is achieved through dematerialisation of securities.
Dematerlisation is the process of converting securities held in physical
form into holdings in book entry form.
Account Transfer: The depository gives effect to all transfers resulting
from the settlement of trade and other transactions between various
beneficial owners by recording entries in the accounts of such beneficial
owners.
Transfer and Registration: A transfer is the legal change of ownership of
a security in the records of the issuer. For effecting a transfer, certain
legal steps have to be taken like endorsement, execution of a transfer of
security occurs merely by passing book entries in the records of the
depositories, on the instructions of the beneficial owners.
Corporate Actions: 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,
47
A Study of Customer Satisfaction towards Depository Participants
depository itself takes the responsibility of distribution of corporate
benefits.
Pledge and hypothecation: Depositories allow the securities placed with
them to be used as collateral securities in physical form to the lender or
its custodian. These securities are verified for authenticity and often need
to be transferred in the name of lender. This has a time and money cost by
way of transfer fees or stamp duty. If the borrower wants to substitute the
Pledging/Hypothecating the securities makes the process very simple and
collateral accounting through book entries in the records of the
depository.
Linkage with clearing system: whether it is a separating clearing
corporation attached to a stock exchange or a clearing house (department)
of a stock exchange, the clearing system performs the function of
ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded
on the stock exchange. Actual delivery of securities to the clearing system
from the selling and delivery of securities from the clearing system to the
buying broker is done by the depository. To achieve this, depositories and
the clearing system should be electronically linked.
48
A Study of Customer Satisfaction towards Depository Participants
Depository Participant:
Depository Participant (DP) is an organisation that acts as an Agent
of the Depository and interacts with the investor. A DP is responsible for
maintaining your securities account and operating it only under your
written instructions. The Depositories Acts mandates that investors can
use Depository facilities only through DP’s. The distribution channel and
geographical spread of the DP’s offices allows you to access the
Depository at a low cost. DP can only access their own clients'
information. They cannot access the client information of any other DP.
The information of your holdings in the account is completely
confidential& it is similar to your account balance in a bank.
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:
1. Convenience - Proximity to your office/residence, business hours.
2. Comfort - Reputation of the DP, past association with the
organisation, whether the DP is in a position to give the specific
service you may need?
3. Cost - The service charges levied by DP and the service standards.
49
A Study of Customer Satisfaction towards Depository Participants
Individual accounts can be opened by Ordinary Resident, HUF,
NRI Repatriable and NRI Non-Repatriable. Body Corporate, Banks,
Trusts, Financial Institutions, Foreign Institutional Investors, and
Overseas Commercial Banks etc can open corporate Accounts. An
account can be opened in the name of HUF in a similar way to individual
account and mentioning the account category as HUF. However, Kartha
of HUF will sign the application, agreement and all transactions under the
account
An account cannot be opened in the name of the firm. It has to be
opened in the name of any of the Partner as an Individual account only.
Procedure for Dematerialisation
Dematerialisation Process:
1
2A 2 5
3
4
Steps:
1. Client/ investor submits the DRF (Demat Request Form) and
Physical certificates to DP. DP checks whether the securities are 50
Investor
R & T Agent
DP
NSDL
A Study of Customer Satisfaction towards Depository Participants
available for demat. Client defaces the certificates by stamping
‘Surrender for Dematerlisation’. DP punches two holes on the
name of the company and draws two parallel lines across the face
of the certificate.
2. DP enters the demat request in his system to be sent to NSDL. DP
dispatches the physical certificates along with the DRF to the R &
T Agent.
3. NSDL records the details of the electronic request in the system
and forwards the request to the R&T Agent.
4. R&T Agent, on receiving the physical documents and the
electronic request, verifies and checks them. Once the R&T Agent
is satisfied, Dematerialisation of the concerned securities is
electronically confirmed to NSDL.
5. NSDL credits the dematerialized securities to the beneficiary
account of the investor and intimates the DP electronically. The DP
issues a statement of transaction to the client.
a. DPs provide Dematerlisation request forms (DRF) to their
clients.
b. The client completes the DRF in all respect 7 submits to the
DP along with the security certificates to be dematerialized.
51
A Study of Customer Satisfaction towards Depository Participants
c. The DP checks the DRF for validity, completeness and
correctness. The following points should be checked particularly:
The security certificate sought to be dematerialized
are attached to DRF.
The attached security certificates are marked (defaced)
with the words ‘surrendered for dematerialisation’. This is a
precautionary measure to prevent misuse of share certificates by
anyone.
The certificate are not mutilated or defaced in a
manner affecting any material information.
The name of client on DRF and the certificates is
exactly the same as in the client’s account in DPM. However,
minor variations in the name (like abbreviated name, initials in
the place of first name, middle name, minor name mistake in the
name) may be permitted if it can be reasonably established that
both names are of the same person. The permitted variations
refer to initials not being spelt out fully or put prior to after the
surname. In such cases, if the signature on the DRF matches the
specimen signature available with the DP, the securities can be
considered for demat.
Details like security type, face value, paid-up value,
pari passu status, certificate numbers, distinctive numbers,
number of certificates, total quantity of securities and lock-in
statues are filled-in correctly.52
A Study of Customer Satisfaction towards Depository Participants
d. If the DRF & the accompanying security certificates are
found in order, the DP should accept the DRF and certificates.
e. If DRF and the accompanying security certificates are not
found in order, the DP should return the DRF and certificates.
f. The DP should enter the dematerialisation request in the
DPM. DPM generates a request number (DRN), which should be
mentioned on DRF.
g. An authorized person, other than one who entered the DRF
details in the DPM, should verify the details of DRN and release a
request to NSDL.
h. Once the DP has received the certificates defaced by
investor, the DP punches two holes on the name of the issuer or its
R&T Agent for dematerialisation. DRF and enclosures have to be
sent at the “address to which physical certificate to be sent”
communicated by NSDL. The forwarding letter should refer to the
allotted DRN and should refer to the allotted DRN and should Be
sent within seven days of accepting it from the client.
i. The issuer or its R&T Agent verify the DRF & the
accompanying certificate for validity, completeness and
correctness. They also match the details with the intimation
received from NSDL against the same DRN.
53
A Study of Customer Satisfaction towards Depository Participants
j. In case DRF is not found in order, the issuer or its R&T
Agent send an objection memo to the DP, with or without DRF &
security certificates depending upon the reason for rejection.
k. DRFs & Certificate are sent back on the following grounds:
DRN does not match with message from DM
Quantity of actual securities is less than DRF
Quantity of actual securities is more than DRF
l. DRF & certificate are not sent back:
If the certificate is fake
If the certificate has been reported to be stolen
If the duplicates of the original certificates sent for demat have
already been issued
If the endorsements are forged
If the securities are not in the name of the account holder as per
DRF
If the details of the certificates do not pertain to the R&T Agent
If the signatures differ
If there is any court order on the securities
If the certificate are received after 15 days of the electronic request.
m. The DP informs the client accordingly & requests removal
of reasons for objection. The DP removes these or provides
54
A Study of Customer Satisfaction towards Depository Participants
additional information to the issuer or its R & T Agent within
15days of receiving the objection memo.
n. The DP, if the client so requires, may generate a new
dematerialisation request & send the securities again to the issuer
or R &T Agent.
Precaution to be taken while processing DRF
Ensure account to have the same sequence of names of holders
and name structure as printed on the physical certificate.
Ensure ISIN is activated
Separate DRF for:
Partly & fully paid-up shares
Locked & free holding
Holdings locked in for different reasons
Locked in holdings having different release date
Different ISINs of the company
ISIN to be entered by DP.
All joint holders to sign DRF.
Check DRF form with details on certificate.
55
A Study of Customer Satisfaction towards Depository Participants
DEMAT PROCESS
The demat process requires defacing of securities which will make
the security certificate undeliverable unless the demat formalities are
completed. Therefore, the client should be assisted in ascertaining
whether the securities in question are available for demineralisation.
Clients should be helped in filling up the demat request properly. Demat
rejection causes great inconvenience to the client. DP should attend to
this area with care and caution. One of the important reasons for demat
rejection is signature mismatch. Taking the following precaution can
reduce this:
If the client is aware that the signature with the company&
signature of the client should be advised to the register the new
signature.
If the signature is slightly different, client should be advised to sign
as per the signature that was recorded by the company and as
recorded with the DP.
Ensure dispatch of DRFs and certificate to R &T Agents within
seven days.
56
A Study of Customer Satisfaction towards Depository Participants
Client may be encouraged to use the Transfer-cum-demat facility if
it is offered by the company. They should be made aware of the
procedures of the scheme.
In case of joint holdings, the clients should be informed about the
availability of Transposition cum Demat facility.
57
A Study of Customer Satisfaction towards Depository Participants
CLOSURE OF ACCOUNT:
Closure on Client’s Request- A DP can close a depository account
on receipt of an application in the prescribed format. The application
should be made by the account. In case joint-holders. An account can be
closed sought to be closed, the following steps are necessary.
a. Re-materialization of all securities standing to
the credit of the same account making the application for
closure; or
b. Transferring the balance to the credit of another
account opened by the same account holder(s) either with the
same participant or with a different participant.
Before closing the account the DP should ensure that all pending
transactions have been settled. The request for closure should be
processed only after ensuring that there is no balance lying in the account.
Consolidations of accounts- Some clients have opened multiple accounts
to dematerialize their shares held in multiple combination and sequence
of names. However, they may not need so many accounts after they have
dematerialized their shares and may want to bring all their share holdings
into one or fewer accounts. This can be achieved by using normal off
Market transfer instruction.
58
A Study of Customer Satisfaction towards Depository Participants
Closure by DP – the DP may also initiate closure of a client’s account if
the client has defaulted in performing should give sufficient notice to the
client before initiating closure of his account. The notice should clearly
state the reasons for closure of his account. The notice should clearly
state the reasons for closure of account. The process of closing account in
such a case is the same that of client-initiated closure.
Closure/ Shifting of Clearing Account –A clearing member may transfer
its clearing account from one DP to another DP. For this, simultaneously
applications have to be made for closure of account to the earlier DP and
for opening of new clearing member account to the new DP. On receipt
of the application, the new DP forwards the application to the depository
for approval and allotment of a new CM-BP-ID is allotted, the new DP
opens a new Clearing account and intimates the depository about the new
client- ID. On receipt of intimation from the intimates the clearing
member. All pay-out of securities, subsequent to the closure of old
clearing account, take place in the new account. Pg-17-3
59
A Study of Customer Satisfaction towards Depository Participants
TRADING & SETTLEMENT:
This is the an area where the DP must the DP must take immense
care while accepting and processing request listed below should from the
account of his client to another account. The aspects listed below should
be kept in mind.
Ensure that the delivery instruction book given to each client has
pre-printed serial number and client-ID.
Inform clients about the pay-in deadline of the stock exchange and
the deadline of the DP.
Each DIS received should be inwarded correctly with the date and
time stamp.
Late stamp must be affixed on the instructions received after the
expiry of the deadline set by the DP.
Ensure the correctness of execution date on the DIS.
Ensure signature on DIS matches with the records of the DP.
Ensure that the signatures of all holders are obtain in case of joint
accounts.
If the client has not issued “standing instructions”, he should be
made aware that a receipt in instruction will be required to the
credits into the account on purchase of shares.
Client should be made aware of the accounting freezing facility.
60
A Study of Customer Satisfaction towards Depository Participants
SETTLEMENT
The settlement of trades in the stock exchanges is undertaken by
the clearing corporation (CC)/ clearing house (CH) of the corresponding
stock exchanges. While the settlement of dematerialized securities is
effected through depository, the funds settlement is effected through the
clearing banks. The clearing members directly with the CC/ CH settle the
physical securities.
Exclusive demat segment follows rolling settlement (T+5) cycle
and the unified (erstwhile - physical) segment follows account period
settlement cycle. In case of rolling settlement cycle, the account period is
reduced to one day.
In case of settlement of trades done in exclusive demat segments,
the pay-in and pay out of funds and securities are effected on the
same day afternoon and evening (same day) thus reducing the
blockage of funds and limiting exposure to the clearing
corporation.
Settlement of funds is effected through the clearing banks and
depository plays no role in this.
Settlement of securities is effected through NSDL depository
system.
62
A Study of Customer Satisfaction towards Depository Participants
Clearing and settlement of the regular market trades is effected
through the clearing members of the clearing houses of respective
stock exchanges. All trading members of stock exchanges are
clearing members of clearing houses. In addition, for settlement of
institutional trades, custodians are also allowed to act as clearing
members.
Clearing members of clearing house, dealing in dematerialized
securities are expected to open a clearing account with any DP for
the purpose of settling trades in dematerialized securities. As, in
the mixed (unified) segment, there is a possibility for all clearing
members to receive dematerialized securities, they are expected to
open clearing accounts.
If there is any short delivery at the time of pay-in of securities,
these short positions are auctioned in the Demat segment as done in the
Unified (erstwhile-physical) segment.
Selling and Buying Of Shares:
Selling dematerialized shares in stock exchanges is similar to the
procedure for selling physical shares. Instead of delivering physical
shares to the broker, you instruct your DP to debit your account with the
number of shares sold by you and credit your broker's clearing account. 63
A Study of Customer Satisfaction towards Depository Participants
For this, a delivery instruction has to be given to your DP in a
standardized format, which will be available with your DP.
In short, for selling demat shares;
You can sell shares in any of the stock exchanges linked to a
depository through a broker of your choice.
Give an instruction to your DP to debit your account and credit
your broker's clearing member pool account. (this is a depository
account used exclusively for settling transactions by a broker)
On the pay-in day, your broker gives instruction to his DP for
delivery of the shares to clearing corporation of the relevant stock
exchange.
The broker receives payment from the clearing corporation
You receive payment from your broker for the sale in the same
manner you would receive payment for a sale in the physical mode.
64
A Study of Customer Satisfaction towards Depository Participants
Buying Demat Shares:
The procedure for buying dematerialized shares in stock exchanges
is similar to the procedure for buying physical shares. When you want to
purchase shares in electronic form, you have to instruct your broker to
purchase the dematerialized shares from the stock exchanges linked to a
depository.
Once the order is executed, you have to instruct your DP (vide a
simple format which is available with the DP) to receive securities from
your broker's clearing account.
Alternatively, you may give a standing instruction to receive
credits into your account and do away with giving a separate receipt
instruction each time you expect a credit. You have to ensure that your
broker too gives a matching instruction to his DP to transfer the shares
purchased on your behalf into your depository account.
You should also ensure that your broker transfers the shares
purchased from his clearing account to your depository account, before
the book closure. This is really important because shares that remain in
the clearing account of the broker on the book closure/ record date will
not be eligible for corporate benefits.
In brief, the transactions relating to purchase of shares are:
65
A Study of Customer Satisfaction towards Depository Participants
You can purchase shares in any of the stock exchanges connected
to a depository through a broker of your choice and make a
payment to your broker;
Your broker receives credit in his clearing account with his DP on
the pay-out day;
Broker gives instructions to his DP to debit his clearing account
and credit your account;
You instruct your DP for receiving credit into your depository
account either through a specific receipt instruction or using the
"standing instruction" facility.
In case you are not using the "standing instruction" facility then,
your depository account is credited only if the instructions given by
you and your broker match.
Other Services
Besides demat and trading Depositories also offer other services, these
are:
o Pledging/ hypothecation of dematerialized securities.
o Electronic credit in public offerings of companies.
o Receipt of non-cash corporate benefits such as bonus, rights in
electronic form.
o Stock lending and borrowing.
66
A Study of Customer Satisfaction towards Depository Participants
o Transmission of securities.
Pledging: Dematerialized shares could be pledged; in fact, this is more
advantageous as compared to pledging share certificates.
To pledge your Demat shares
Both you (pledgor) as well as the lender (pledgee) must have
depository accounts.
You must initiate the pledge by submitting the details of the
securities to be pledged in a standard format (available with DPs).
The pledgee should confirm the request through his DP.
Once this is done, your securities are pledged
All commercial documentation between the pledgor and the
pledgee are handled outside the depository system.
After you have repaid your loan, you can request for a closure of
pledge by instructing your DP through a standard format. The pledgee on
receiving the repayment as well as the request for closure of pledge will
instruct his DP accordingly.
Even the locked-in securities can be pledged, however they cannot
be invoked before the lock-in release date.
67
A Study of Customer Satisfaction towards Depository Participants
Even after the securities are pledged, the pledgor continues to
remain the beneficiary holder of those securities and will receive benefits
of a corporate action, if any.
68
A Study of Customer Satisfaction towards Depository Participants
Initial Public Offerings: Credits for public offers can be directly received
into demat account. In the public issue application form of depository
eligible companies, there will be a provision to indicate the manner in
which securities should be allotted to the applicant. All you have to do is
to mention your client account number and the name and identification
number of your DP.
Any allotment due to you will be credited into your account.
If the applicant is allotted securities in dematerialized form, but the
details regarding the beneficiary account are incomplete/ wrong, the
person will get physical delivery of allotted securities.
If securities were allotted in the dematerialized form, these would
be credited to applicant’s account any day between allotment date and
listing date, at the discretion of the company.
The issuer company/ their R&T agent will forward the applicant
the allotment advice giving the number of shares allotted in
dematerialized form. Through this you can come to know that you have
been allotted shares.
An amendment to the company law requiring all future public
issues above Rs100mn to compulsorily offer securities in dematerialized
69
A Study of Customer Satisfaction towards Depository Participants
form is awaiting legislative approval. After this all the issues above
Rs100mn will require investors to trade only in demat way.
Partly paid up and fully paid up shares in the depository, will be
given separate ISINs (International Securities Identification Number).
These are also traded separately at the stock exchanges.
The company issues call notices to the beneficial holders of
securities in the electronic form. The details of such beneficial holders
will be provided to the issuer/ their R&T agent by NSDL. After the call
money realization, issuer/ their R&T agent will electronically convert the
partly paid up shares to fully paid up shares.
Receipt Of Cash/ Non-Cash Benefits: When any corporate event such as
rights or bonus or dividend is announced for a particular security,
depository will give the details of all the clients having electronic
holdings in that security as of the record date to the registrar. The
registrar will then calculate the corporate benefits due to all the
shareholders. The disbursement of cash benefits such as dividend/ interest
will be done directly by the registrar. In case of non-cash benefits,
depository will directly credit the securities entitlements in the depository
accounts of all those clients who have opted for electronic allotment
based on the information provided by the registrar.
70
A Study of Customer Satisfaction towards Depository Participants
The bonus/ rights issue against holding in dematerialized form can
be either in the physical/ dematerialized form as per the choice of the
investor. If no choice is given, by default, the securities will be issued in
the physical form.
Even if an investor has holdings in physical form, he can receive
the bonus/ rights issue against this in the dematerialized form.
In case of fractional part, as in the physical segment, it would be
paid in cash and the remaining whole part would be credited to the
investors account.
The statement of holding and transaction statement is sent by the
investors DP, it will show the bonus/ rights credit into investor’s account.
This report is sent to the investor every fifteen days. In addition, an
allotment advise will be send by the issuer/ their R&T agent for bonus/
rights entitlement.
Stock Lending and borrowing: Through the depository account securities
in the demat form can be easily lent/ borrowed. Securities can be lent or
borrowed in electronic form through an approved intermediary, who has
opened a special 'intermediary' account with a DP.
71
A Study of Customer Satisfaction towards Depository Participants
To Lend Securities: You have to instruct your DP through a standard
format (which is available with your DP) to deposit your securities with
the intermediary.
If the intermediary accepts your deposit of securities, the securities
will be moved from your account into the intermediary's account. If you
wish to recall the securities lent by you, you can make a request vide a
standard format available with your DP.
To Borrow Securities: You have to instruct your DP through a standard
format (which is available with your DP) to borrow securities from the
intermediary.
If the intermediary accepts your request, the securities will be
moved from the intermediary's account to your account. If you wish to
return the securities borrowed by you, you can make a request vide a
standard format available with your DP.
Transmission Of Securities: Transmission of securities due to death,
lunacy, bankruptcy, and insolvency or by any other lawful means other
than transfer is also possible in the depository system. In the case of
transmission, the claimant will have to fill in a transmission request form,
(which is available with the DP) supported by valid documents. The DP,
after ensuring that the application is genuine, will transfer securities to the
72
A Study of Customer Satisfaction towards Depository Participants
account of the claimant. For this, the claimant must have a depository
account. The major advantage in transmission of dematerialized holdings
is that the transmission formalities for all securities held with a DP can be
completed in one go, unlike in the case of share certificates, where the
claimant will have to interact with each issuing company or its R&T
Agent.
In case where the deceased was one of the joint holders in the
Client account, the surviving client(s) shall be the person(s) recognized
by depository as having title to the securities held in that joint Client
account. In case where the deceased was a sole holder of the Client
account, his legal heir(s) or the legal representative(s) will be the
person(s) recognized by depository as having title to the securities held in
that sole Client account.
Security: National Security and Depository Limited claims to have
undertaken sufficient security measures. These measures are:
A DP can be operational only after registration by Sebi, which is
based on the recommendation from NSDL and Sebi’s own
independent evaluation. Sebi has prescribed criteria for becoming a
DP in the regulations.
73
A Study of Customer Satisfaction towards Depository Participants
DPs are allowed to effect any debit and credit to an account only
on the basis of valid instruction from the client.
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 effected.
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.
Every month NSDL forwards statement of accounts to a random
sample of investors as a counter check.
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
74
A Study of Customer Satisfaction towards Depository Participants
DP. These investors can then either dematerialize their holdings or
transfer them to a different account held with another DP.
Investor grievance: All grievances of the investors are to be
resolved by the concerned DP. If they fail to do so the investor has
the right to approach NSDL.
Insurance Cover: NSDL has taken a comprehensive insurance
policy to protect the interest of the investors in cases of failure of
the DP to resolve a genuine loss. The details of the policy is as
under:
Upper limit per claim: Rs200mn.
Number of claims allowed: unlimited
Minimum value of the claim: Rs150, 000
To cover claims valued less than Rs150, 000 NSDL has an investor
protection fund in place.
Besides all these safety measures efforts have been done to make this
electronic system foolproof.
DEMAT SHARES: ARE THEY 100% SAFE
When you buy physical shares from the stock market, you could
never be certain of the validity of the title of shares. There were many
75
A Study of Customer Satisfaction towards Depository Participants
reasons- the sellers' signature did not match, or the certificates were fake,
forged or stolen, and so on.
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.
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 the company can still withdraw any number of
times, 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
76
A Study of Customer Satisfaction towards Depository Participants
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 his shares have been frozen in his demat
account. This kind of case has to be contested in court by the parties
involved.
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. Demat shares are
77
A Study of Customer Satisfaction towards Depository Participants
fungible and don’t have distinctive numbers. It is not easy to track the
sale or trade of shares after they are dematerialized.
In a rare event of your DP going bankrupt or closing the
operations, the interests of the investors will be fully protected. In such a
situation, the investors will be given an option of either transferring the
securities to a new DP or they may rematerialise the securities
78
A Study of Customer Satisfaction towards Depository Participants
ANALYSIS OF CUSTOMER SATISFACTION
Sample size selected: 100
Total Number of customer available for survey: 100
The sample size selected for the survey was 100.(Hundred)
customers of KARVY CONSLUTANT STOCK BROKING were
available for survey. So opinion was taken to know the customer
satisfactions towards demat account.
79
A Study of Customer Satisfaction towards Depository Participants
1.Respondent came to know the about “KARVY FINANCIAL CONSULTANT “
Total no. Of sample taken: 100
1 2 3 4 5
Friends
News Papers/Business Magazines Online
Agent/Financial Others
47 18 10 14 11
Source: Survey Data The above table and chart shows the respondents know
KARVY FINANCIAL CONSULTANT :-
47.00% of respondent know KARVY FINANCIAL
CONSULTANT through their Friends.
18% of of respondent know KARVY FINANCIAL
CONSULTANT through News Papers & Magazine.
80
A Study of Customer Satisfaction towards Depository Participants
14% of respondent know KARVY FINANCIAL CONSULTANT
through Agents & Financial Institutions.
11% of respondent know KARVY FINANCIAL CONSULTANT
through Others.
2.They are interested to visit “KARVY FINANCIAL CONSULTANT “
Source: Survey Data
Yes No
94 6
81
A Study of Customer Satisfaction towards Depository Participants
The above table and chart shows that 94% of respondents are
interested to visit KARVY FINANCIAL CONSULTANT & only 6% of
Respondent are not interested to visit the same .
82
A Study of Customer Satisfaction towards Depository Participants
Agree Just agree No OpinionJust Disagree
Disagree
47 45 8 0 0 3. They Respondents are interested to visit “KARVY FINANCIAL
CONSULTANT “ because of visual pleasure, hospitality & Excellent
Guideline etc
Source: Survey Data
The above table and chart shows that 47% of Respondents are
interested to visit “KARVY FINANCIAL CONSULTANT “ , 45% of
Respondent just agree & 8% of Respondent are not interest to give there
opinion .
83
A Study of Customer Satisfaction towards Depository Participants
4. They Respondents are definitely use service “KARVY FINANCIAL
CONSULTANT
“Because attitude of employee.
Agree Just agree No OpinionJust Disagree Disagree
69 24 7 0 0
Source: Survey Data
The above table and chart shows that 69% of Respondents are interested
to visit “KARVY FINANCIAL CONSULTANT “Because of there
attitude, and, 24% of Respondent just agree only 7% of Respondent are
constant.
84
A Study of Customer Satisfaction towards Depository Participants
5. They Respondents are definitely using service of “KARVY FINACIAL CONSULTANT because what they benefit gets from them.
Agree Just agree No OpinionJust Disagree
Disagree
50 41 8 1 0
Source: Survey Data
The above table and chart shows that 50% of Respondents are
interested to visit “KARVY FINANCIAL CONSULTANT because they
get that much of benefits from them , and, 41% of Respondent just agree
only 8% of Respondent constant..1% of Respondent just disagrees.
86
A Study of Customer Satisfaction towards Depository Participants
6 They Respondents are interested “KARVY FINANCIAL
CONSULTANT “
because they introduce new scheme and we get benefit .
Source: Survey Data
The above table and chart shows that 86% of respondents are
interested to use service of “KARVY FINANCIAL CONSULTANT”
because they introduce new scheme and we get benefit & only 14% of
Respondent are not interested to visit the same.
Yes No
86 14
88
A Study of Customer Satisfaction towards Depository Participants
7 They Respondents use “KARVY FINANCIAL CONSULTANT
“because Karvy People know customer value and money value.
Agree Just agree No Opinion
Just Disagree Disagree
54 39 6 1 0
Source: Survey Data
The above table and chart shows that 54% of respondents are
satisfied with the service of “KARVY FINANCIAL CONSULTANT”
because the Karvy People know customer value and money value. 39%
89
A Study of Customer Satisfaction towards Depository Participants
Respondents just agree .6% of parole say no opinion and only 1% of
Respondent say just disagree.
8. They Respondents specify “KARVY FINANCIAL CONSULTANT “better then other Dp.
Agree Just agree No OpinionJust Disagree
Disagree
41 37 20 1 1
90
A Study of Customer Satisfaction towards Depository Participants
Source: Survey Data
The above chart shows that 41% of respondents are interested in
“KARVY FINANCIAL CONSULTANT” because of their best service
which is better then other DP services. 41% of Respondents agree.31% of
Respondents just agreed. 20 % of Respondent has not given their opinion.
Only 1% of Respondent disagrees.
91
A Study of Customer Satisfaction towards Depository Participants
9. Demat
Extremely satisfied
Satisfied Neither satisfied/ norunsatisfied
Unsatisfied Extremely unsatisfied
38 46 16 0 0
Source: Survey Data
The above table and chart shows demat services offered by
KARVY FINANCIAL CONSULTANTS are satisfied. 38% of the
Respondents are extremely satisfied, 46% just Satisfied, 16%of of
Respondents neither satisfied / Unsatisfied..
92
A Study of Customer Satisfaction towards Depository Participants
b. Settlement (Selling/ Buying)
Extremely Satisfied
Satisfied
Neither satisfied/nor Unsatisfied
Unsatisfied
Extremely unsatisfied
25 49 26 0 0
Source: Survey Data
The above table and chart shows that 25% of the respondents
are extremely satisfied by the service of Karvy, 49% of respondents are
satisfied and 26% of the respondents are having neutral opinion about the
service provided by the Institution.
93
A Study of Customer Satisfaction towards Depository Participants
c. Freezing/Defreezing
ExtremelySatisfied Satisfied
Neither satisfied/norUnsatisfied
Unsatisfied
Extremely unsatisfied
6 49 45 0 0
Source: Survey Data
The above table and chart shows the services of freezing/
defreezing 49% of the respondent are aware and satisfied with these
services. And 45% of respondent are having neutral opinion about
freezing/ defreezing, 6% of respondent are dissatisfied with this service
because they are don’t have understood the core concept.
94
A Study of Customer Satisfaction towards Depository Participants
d. Loan against Shares
Extremely satisfied
Satisfied Neither satisfied/nor unsatisfied
Unsatisfied Extremely unsatisfied
22 33 45 0 0
Source: Survey Data
The above table and chart shows most of the respondent are
having neutral opinion i.e., 45% and 33% have satisfied this service. 22%
of respondent are extremely satisfied.
95
A Study of Customer Satisfaction towards Depository Participants
e. Share Trading
ExtremelySatisfied
Satisfied
Neither satisfied/norUnsatisfied
Unsatisfied
Extremelyunsatisfied
49 47 4 0 0
Source: Survey Data
The above table and chart shows the service of share trading, 49%
of the respondent have Extremely Satisfied with this service, and 47% of
respondent are satisfied; In all we can say that 96% respondent have
satisfied with the services of Share trading.
96
A Study of Customer Satisfaction towards Depository Participants
F. Periodic statements
ExtremelySatisfied Satisfied
Neither satisfied/ unsatisfied Unsatisfied
Extremely unsatisfied
48 44 8 0 0
Source: Survey Data
The above table and chart shows the services given by Karvy about
Periodic statements 48% of the respondent are extremely satisfied &
44% of the respondent is satisfied .In all 92%(appr) of respondent have
satisfied with this service.
97
A Study of Customer Satisfaction towards Depository Participants
g. Telephone Quires
Extremelysatisfied Satisfied
Neither satisfied/norunsatisfied
Unsatisfied
Extremely unsatisfied
40 48 12 0 0
Source: Survey Data
The above table and chart shows the 48% of the respondent are
satisfied with the Telephonic service; 40% of the respondent are mostly
satisfied & in all 88% of the Respondent satisfied; 12% having neutral
opinion.
98
A Study of Customer Satisfaction towards Depository Participants
h. Co-operation by Staff
Extremely satisfied
Satisfied Neither satisfied/nor unsatisfied
unsatisfied Extremely unsatisfied
60 35 5 0 0
Source: Survey Data
The above table and chart shows overall 60% of the respondent
are extremely satisfied with the co-operation by staff; 35% of the
99
A Study of Customer Satisfaction towards Depository Participants
respondents are satisfied & 5% of the respondents are having neutral
opinion.
100
A Study of Customer Satisfaction towards Depository Participants
I. Bills acceptance.
Extremelysatisfied
SatisfiedNeither satisfied/nor unsatisfied
unsatisfiedExtremely unsatisfied
50 32 16 1 1
Source: Survey Data
The above table and chart shows overall 50% of the respondent
are extremely satisfied; 32% of the respondents are satisfied &16% of the
respondents are having neutral opinion.
101
A Study of Customer Satisfaction towards Depository Participants
10. Dissatisfied with services/ scheme
AFrequently reminders are given to karvy consultant ltd., for update the information
4 4%
B Irregular receipt of Holding/Transaction statement 1 1%
CImproper attention given to the enquires
5 5%
D Improper format of Holding/Transaction statement 1 1%
EBilling problems
1 1%
F Inadequate information 2 2%
a B c d e f4 1 5 1 1 2
Source: Survey Data
The above table and chart shows that 5% of the respondents are
unsatisfied with Improper attention given to the enquires . & 4% of the
respondent are unsatisfied with frequently reminders are given to karvy
102
A Study of Customer Satisfaction towards Depository Participants
consultant ltd., for update the information given by DP .So proper
communication with the Respondent & update information is required.
11.
Tariff Structure
Source: Survey Data
The above table and chart shows that 62% of the respondents think
the tariff structure of the KARVY CONSULTANT is very
Very high
High Reasonable Low Very low
13 25 62 0 0
103
A Study of Customer Satisfaction towards Depository Participants
reasonable.25% of the respondent thinks the tariff structure is high. 13%
of the respondent feels the tariff structure is very high.
12. Rate of Satisfaction for DP services
0% 20% 40% 60% 80% 100%0 0 11 31 53 5
Source: Survey Data
The above table and chart shows that 53% of the
respondent have satisfied 80% of service given by DP; 31% of the
respondent have satisfied 60% of service and 11% of the respondent have
104
A Study of Customer Satisfaction towards Depository Participants
satisfied 40% of the service. Only 5% of respondent have satisfied 100 of
the service.
105
A Study of Customer Satisfaction towards Depository Participants
13. Preference of own DP over other DP
Quality service
Rate Charged
Nothing in particular Safety Reach
35 14 10 40 1
Source: Survey Data
The above table and chart shows that 40% of the respondents
preferred this DP because of Safety & 35% of the respondents preferred
this DP because of the quality service. In all 75% prefer KARVY
CONSULTANT because of safety& quality.
106
A Study of Customer Satisfaction towards Depository Participants
Recommendation
Customer service should be improved and more co-operation also
provide.
Time taken for transfer of script from trading account into demat
account should be reduced.
Statement copy should made more clear and figure should be
mention in respective column.
More space provide in trading place.
The commission charged should be reduced.
The office should be situated near bus stand or subhas road.
107
A Study of Customer Satisfaction towards Depository Participants
CONCLUSION
Since it is service based industry, the customer plays vital role, so
in order to satisfy the customer appoint more no of well qualified agents
who can communicate respondents to improve the services, hence give
more advertisement in News paper, local TV channel, to over come the
over crowding and non availability of telephone links proper measure
should be taken.
108
A Study of Customer Satisfaction towards Depository Participants
QUESTIONNAIRE
Dear Sir/ Madam
NAME : ____________________________
ADDRESS : ____________________________
__________________________
OCCUPATION: __________________________ Phone No:
__________
1. I came to know about KARVY FINANCIAL CONSULTANTS from
1 2 3 4 5Friends News Papers
/Business Magazine
Online Agent/Financial Agency
Others
2. I am interested in visiting KARVY FINANCIAL
CONSULTANTS because they provide quick and timely service.
1) Yes 2) No
3. I have been using service of KARVY FINANCIAL CONSULTANTS because of the low cost, visual pleasure, Hospitality, Communication, and new concept of financial consultancy
1 2 3 4 5Agree Just Agree No opinion Just
disagreeDisagree
109
A Study of Customer Satisfaction towards Depository Participants
4. In future I will be definitely using the service of KARVY
FINANCIAL CONSULTANTS because of the attitude of the employees
towards customers.
1 2 3 4 5Agree Just Agree No opinion Just
disagreeDisagree
5. I will definitely use service of KARVY FINANCIAL
CONSULTANTS because of the benefit I get from KARVY
FINANCIAL CONSULTANTS
1 2 3 4 5Agree Just Agree No opinion Just
disagreeDisagree
6. I am interested in KARVY FINANCIAL CONSULTANTS
because of the new scheme introduced frequently and benefit from such
scheme
1) Yes 2) No
7. I use KARVY FINANCIAL CONSULTANTS because they know
customer
value as well as money value of customers
1 2 3 4 5
110
A Study of Customer Satisfaction towards Depository Participants
Agree Just Agree No opinion Just disagree
Disagree
8. KARVY FINANCIAL CONSULTANTS service of dp are better
then other dp services.
1 2 3 4 5Agree Just Agree No opinion Just
disagreeDisagree
111
A Study of Customer Satisfaction towards Depository Participants
9. Express your satisfaction level about the following scheme/service please tick.
Schemes/servicesExtremely Satisfied
Satisfied Neither satisfied/norunsatisfied
unsatisfied
Extremely Unsatisfied
a. Dematb. Settlement(Selling/purchasing)c. Freezing/ defreezing Of an accountd. Loan against sharese. Share tradingf Periodic statementsg. Telephone queriesh. Co-operation by staffi. Bills Acceptance
10. If you have faced any when dealing through your DP or you are unsatisfied with the above mentioned services/schemes.
Frequently reminders are given to KARVY FININCIAL CONSULTANTS., for
update the information Irregular receipt of Holding/Transaction statement
Improper attention given to the enquires
Improper format of Holding/Transaction statement
Billing problems
Inadequate information
Other specify___________________
112
A Study of Customer Satisfaction towards Depository Participants
11. Please tick the following:
TariffStructure
1 2 3 4 5
Very High
High Reasonable Low Very Low
12. How do you rate the services of your DP
0% 20% 40% 60% 80% 100%
13. How do you justify your preference for your KARVY FINANCIAL
CONSULTANTS DP over other DP’s?
1 2 3 4 5QualityService
RatesCharged
Nothing in particular
Safety Reach
14. A) Your age (Yrs)
<25 26-35 36-45 46-60 > 60
B) Income (Pa) <60000 60000-1.2 L 1. 2 L– 2.4 L
2.4 L– 3.6L 3.6 L – 6.0.L 6.0 L –12.0 L
C) Education
Up to Xth Graduate Post Graduate. PhD. Others.
D) Yearly of investment.
113
A Study of Customer Satisfaction towards Depository Participants
1L-5 L 5L-10L >10L
15. Suggestion ______________________________________________
______________________________________________
Thank you for your co-operation
114
A Study of Customer Satisfaction towards Depository Participants
CODE SHEET OF CUSTOMER RESPONSE
Q. 9. Extremely Satisfied: 1; Satisfied: 2;Neither Satisfied/Nor
Dissatisfied: 3; Unssatisfied:4; Extremely Dissatisfied: 5
Q11. Very High: 1;High: 2;Reasonable: 3;Low: 4;Very Low:
Q12. 0%: 1; 20%: 2; 40%: 3; 60%: 4;80%: 5;100%:
Q813. Quality Service: 1;Rates charged: 2;Nothing in particular: 3; Safety: 4;Reach: 5
DATA CODE - SHEETSl No
123456789a9b9c9d9e9f9g9h9i10a10b10c10d10e10f111213a13b13c13d13e
1 1 1 1 1 1 1 1 2 2 2 3 3 1 2 1 1 2 2 3 5 3 2 1 1 1 1 1 2 2 2 1 2 2 2 2 2 2 1 2 3 4 1 3 1 1 1 1 1 1 2 1 2 2 2 2 2 2 3 2 3 3 2 4 4 4 1 1 2 2 2 2 2 2 2 2 3 3 2 2 2 2 2 2 3 3 5 1 1 1 1 1 1 1 1 1 2 2 3 1 1 1 2 2 3 5 1 6 1 1 2 1 1 1 2 1 1 1 2 1 1 2 1 1 2 2 5 4 7 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 1 3 5 1 8 4 1 1 1 1 1 1 1 2 1 3 3 1 1 1 1 1 3 6 4 9 1 1 1 2 2 1 2 3 2 2 3 3 2 1 1 1 1 3 5 1 10 1 1 2 3 1 2 3 2 2 3 2 3 2 3 2 2 2 3 4 2 4 3 11 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 2 12 2 1 2 1 2 1 3 2 2 2 2 2 2 2 2 2 2 3 5 1 13 2 1 2 2 2 1 2 2 2 1 1 3 1 1 1 3 1 1 3 4 3 14 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 1 5 1 15 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 1 2 3 5 4 16 1 1 1 1 1 1 1 1 2 2 2 2 1 1 1 1 2 3 4 1 17 2 1 1 1 1 1 1 3 1 2 3 3 2 2 1 1 1 3 5 1 18 1 1 2 1 2 1 1 2 2 1 2 1 1 1 1 1 1 3 5 4 19 1 1 1 1 1 1 2 2 1 1 2 2 1 1 1 2 1 3 5 1 20 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1 21 1 1 2 2 3 1 2 1 1 2 2 2 1 1 2 1 1 2 5 4 22 4 1 2 1 1 1 2 3 1 2 3 3 1 2 1 1 3 2 5 4 23 1 1 1 1 1 1 2 1 1 1 2 3 1 1 1 1 1 3 5 4 24 1 1 1 1 1 1 2 3 1 1 3 3 2 1 1 2 1 3 5 4
115
A Study of Customer Satisfaction towards Depository Participants
25 1 1 1 1 1 1 1 1 3 2 2 3 1 1 2 1 2 3 5 1 26 4 2 3 2 3 2 2 2 3 2 3 3 2 2 2 2 2 2 4 3 27 1 1 1 1 1 1 2 1 1 1 2 3 2 1 2 1 1 3 4 1 28 1 1 2 2 3 1 1 1 2 2 2 3 2 2 1 1 1 3 5 1 29 1 1 2 1 3 2 1 2 1 2 3 3 1 1 1 1 1 1 5 4 30 2 1 1 1 1 1 1 1 2 1 3 3 1 2 1 1 1 3 5 1 31 2 1 1 1 1 1 1 1 2 2 2 3 2 2 2 2 2 3 5 4 32 1 1 2 1 1 1 1 1 2 2 2 3 2 2 2 2 2 1 3 3 1 33 1 1 1 1 1 1 2 2 2 2 2 3 2 2 1 1 2 3 4 1 34 2 1 2 2 1 2 2 2 2 2 2 3 2 2 2 2 2 3 5 1 35 1 1 1 1 1 1 1 1 2 2 2 3 1 1 2 2 2 1 3 5 4 36 5 1 2 1 2 2 2 5 2 2 2 3 2 3 2 2 5 1 3 6 2 4 3 37 1 1 1 2 2 1 2 2 2 3 3 2 2 1 2 1 1 3 3 1 38 1 1 1 1 1 1 1 2 2 1 2 1 1 1 1 1 1 5 2 5 4 39 1 2 3 3 4 2 4 4 2 2 3 3 2 2 3 2 4 3 6 3 3 3 40 1 1 1 1 1 2 2 2 2 2 3 3 2 2 2 2 2 2 4 4 41 1 1 2 1 2 2 1 3 2 2 3 3 2 2 1 1 2 3 5 1 42 2 1 1 1 2 1 1 1 1 2 2 3 1 1 2 1 1 2 5 4 43 4 1 2 1 1 1 1 2 1 2 3 3 1 1 1 1 1 3 5 1 44 1 1 3 2 1 2 2 3 2 2 3 3 2 2 1 1 2 3 1 3 2 45 1 1 1 1 2 1 1 2 2 1 2 3 1 1 2 1 2 3 4 2 46 2 1 3 3 2 1 1 1 1 1 2 2 1 1 1 1 1 3 5 1 47 1 2 2 1 2 1 1 1 3 2 1 2 1 2 3 1 1 3 4 1 48 2 1 2 2 1 1 3 2 2 3 3 1 2 2 3 2 3 2 4 2 49 1 1 1 1 2 1 1 1 3 2 2 3 1 2 3 1 1 3 3 3 50 5 1 2 1 1 1 1 2 1 3 1 2 2 3 2 1 1 2 5 1 51 1 1 2 2 2 1 1 1 3 1 3 3 1 3 2 2 1 3 4 2 52 2 1 1 1 1 1 3 2 2 3 2 1 3 2 3 1 1 3 5 3 53 1 1 2 1 2 1 1 1 1 2 1 2 1 3 2 1 1 2 4 2 54 1 2 2 2 1 1 3 3 3 1 3 2 2 1 3 1 1 3 3 1 55 3 1 1 1 2 1 1 1 2 3 2 3 1 2 2 1 1 2 5 3 56 1 1 2 2 1 1 1 2 3 2 2 2 2 1 2 1 1 3 4 2 57 2 1 1 1 2 2 1 1 1 1 3 1 1 2 3 2 1 3 3 2 58 4 1 2 1 1 1 3 2 2 3 1 3 2 1 2 1 1 1 4 1 59 1 2 2 2 2 1 1 1 3 2 3 2 1 2 3 1 1 3 5 2 60 3 1 1 1 1 1 2 2 2 3 2 1 2 1 2 2 1 3 3 4 61 1 1 2 1 2 1 1 1 3 1 3 2 1 2 3 1 1 3 4 2 62 3 1 2 1 1 1 2 3 1 3 2 3 2 1 2 2 1 1 5 1 63 1 1 1 1 2 1 1 1 3 2 2 2 1 2 3 1 1 3 4 4
116
A Study of Customer Satisfaction towards Depository Participants
64 4 1 1 1 1 2 1 2 2 3 1 1 2 1 2 2 1 3 3 2 65 1 1 2 1 2 1 1 1 1 1 3 2 3 1 3 1 1 3 4 1 66 1 1 2 2 3 1 2 3 3 3 2 1 2 2 2 2 1 3 3 2 67 1 2 1 1 2 1 1 1 2 2 3 2 3 1 1 1 1 3 4 4 68 3 1 2 1 3 1 2 2 3 3 2 3 2 1 2 1 1 3 5 1 69 3 1 1 1 2 1 1 2 3 3 3 1 1 2 1 2 1 2 5 1 70 4 1 2 1 2 1 2 3 2 2 3 1 2 1 1 2 1 2 5 4 71 5 1 2 4 1 1 1 2 1 3 3 3 1 2 1 2 1 2 4 1 72 5 1 1 1 2 1 2 3 3 1 2 1 2 1 1 1 1 1 5 4 73 5 1 2 2 3 1 1 1 1 3 3 3 1 2 1 2 1 2 4 4 74 5 1 2 2 1 1 2 3 2 2 3 1 2 1 1 2 1 2 5 1 75 5 1 3 1 2 1 1 2 3 3 3 2 1 3 2 1 1 1 4 4 76 4 1 2 2 1 1 2 1 1 1 3 1 2 1 2 2 1 2 5 1 77 2 1 2 1 2 1 1 3 1 3 2 3 3 2 1 1 1 1 4 4 78 5 1 1 3 1 1 2 2 3 2 3 2 1 2 2 3 2 2 5 2 79 3 1 2 1 2 1 1 1 2 3 2 1 2 1 2 1 2 1 4 1 80 1 1 1 1 3 1 2 2 1 2 3 3 1 2 2 2 2 1 5 4 81 4 1 1 1 2 1 1 3 1 3 2 2 2 1 2 1 2 3 4 2 82 5 1 2 2 1 1 2 1 1 2 3 1 1 2 1 2 2 1 5 4 83 3 1 3 1 2 1 1 2 1 2 2 2 2 1 2 1 2 3 4 4 84 2 1 2 1 2 1 2 3 2 3 3 2 1 3 2 2 2 3 5 1 85 4 1 1 3 1 1 1 1 2 1 2 1 2 1 1 1 2 1 4 4 86 3 1 3 1 2 1 2 2 1 3 2 3 1 2 2 2 2 3 5 4 87 1 1 2 2 2 2 1 3 1 2 3 2 2 1 2 1 2 3 4 4 88 5 1 1 1 2 1 2 3 2 2 3 1 1 3 2 3 3 1 5 589 2 1 3 1 1 1 1 1 2 3 2 2 2 1 1 1 3 3 4 4 90 4 1 2 1 2 1 2 2 1 2 3 2 1 2 2 2 3 3 6 1 91 3 1 1 1 2 1 1 3 2 1 3 3 2 1 1 1 3 2 5 4 92 2 1 2 1 1 1 2 2 2 3 2 2 1 2 2 3 3 3 6 4 93 5 1 1 1 2 1 1 1 2 2 3 1 2 1 1 2 3 3 5 4 94 4 1 2 1 2 1 2 3 1 2 3 2 1 2 2 3 3 3 5 4 95 2 1 1 2 2 1 1 2 2 3 2 2 2 1 1 2 3 2 5 4 96 4 1 2 1 1 1 2 1 1 2 3 1 1 2 2 1 3 3 6 4 97 3 1 1 2 2 1 1 3 2 3 2 3 2 1 2 1 3 3 5 4 98 2 1 2 2 1 1 2 2 1 2 3 1 1 2 2 1 3 2 5 4 99 4 1 1 2 2 1 1 2 2 3 3 3 2 1 2 1 3 3 5 4 1002 1 2 3 1 1 2 1 1 1 3 1 1 2 2 1 3 3 5 4
117
A Study of Customer Satisfaction towards Depository Participants
GLOSSARY
Account Freezing: The Depository Participant may freeze the account of
a client maintained with him on written instructions received by the
Participant in that regard from the client concerned in the form specified
under the Business Rules.
Account Opening: Any person willing to avail the services offered by a
Depository shall open an account with a Depository Participant.
Beneficiary: A person who benefits from a trust set up on his / her behalf
& anyone who benefits from the proceeds of a will
A person who benefits from a contractual or fiduciary relationship
Beneficiary ID No: Each beneficiary is allotted an ID No. generated by
DP by which a beneficiary is identified. This is similar to your Bank A/c
No. Or the Folio No.
BSE: Bombay Stock exchange is one of the oldest stock exchanges in
Asia with over 6,000 stocks listed.
Beneficiary Account: An investor or a broker who wants to hold shares in
dematerialised (demat) form and undertake scrip less trading must have a
118
A Study of Customer Satisfaction towards Depository Participants
depository account called beneficiary account with Depository Participant
of his choice.
CDSL: Central Depository Securities Ltd is an organization promoted by
the stock exchange Mumbai, (BSE) in association with Bank of
India, Bank of Baroda, State Bank of India and HDFC Bank to provide
electronic depository facilities for securities traded in the equity and the
debt market. CDSL is the second depository in India. Karvy is one of the
Depository Participants of CDSL.
Client Id: Whenever any client opens an account with a Depository
Participant he /she is provided with an account number which is known as
the beneficiary account number or the Client Id. The combination of the
Client Id and the Depository Participant Id is unique.
Deface: The client (registered owner) shall submit a request to the DP in
the DRF for dematerialisation along with the certificates of securities to
be dematerialised. Before submission, the client has to deface or cancel
the certificates by writing "SURRENDERED FOR
DEMATERIALISATION”.
Defreezing of an account: The client can request his depository
participant to release the suspension order and defreeze the account for
regular operations. The Depository participant shall defreeze the account
119
A Study of Customer Satisfaction towards Depository Participants
only after receipt of the application for defreezing signed by all the
account holders
Delivery Instructions by client: In order to transfer securities from his
account to another a beneficial account owner must give an instruction to
his / her Depository Participant. A beneficial account owner must give
instruction to his / her DP to transfer
DRN: When the securities are found in order with the details of the
request as mentioned in the form, the depository participant enters the
details in the DPM (Depository participant Module, provided by NSDL to
the DP) a Dematerialization Request Number (DRN) is generated by the
system. The DRN so generated is entered in the space provided for the
purpose in the Dematerialization Request Form. The request is then
released to DM (Depository Module – Depository’s software system).
The DM forwards the requests to the Issuer / R & T agent electronically.
Once the DRN is confirmed or accepted by the Issuer / R & T agent the
DM electronically authorize the creation of appropriate credit balances in
the client’s account. The DPM shall credit the client’s account
automatically.
120
A Study of Customer Satisfaction towards Depository Participants
Electronic Public Offering (EPO): An initial public offering, or new issue
of shares, in which the process of applying for shares is handled
electronically (via websites).
Freezing of an account: Any client can give instructions, in the prescribed
form, to his Depository Participant to freeze his account either for debit
or for all operations. Only after receipt of the application for freezing the
account signed by all the account holders the Depository Participant shall
freeze the account till further notice received from the client in this
regard.
Fungible: Dematerialized shares do not have any distinctive numbers or
certificate numbers. These shares are fungible – which means that 100
shares of a security are the same as any other 100 shares of that security.
Hypothecation: The pledging of securities as collateral. A client having a
beneficiary account with a DP can hypothecate securities in electronic
form against loan / credit facilities extended by a pledge, who has a
beneficiary account with a DP. The creation of pledge / hypothecation
will be initiated by the pledgor through its DP and the pledgee will
instruct its DP to confirm the creation of the pledge. The pledge /
hypothecation so created can either be closed on repayment of loan or
invoked on default. After the pledgor repays the loan to the pledgee the
121
A Study of Customer Satisfaction towards Depository Participants
pledgor will initiate the closure of pledge / hypothecation. In case of
default by the pledgor in repaying the loan to the pledgee, the pledgee
may initiate invocation of pledge / hypothecation, after taking such steps
as may be necessary as per the terms of the underlying agreement with
the pledgor and the Bye Laws and Business Rules of NSDL and SEBI
Regulations. In case of hypothecation, the pledgor will instruct its DP to
confirm the invocation of the hypothecation.
Initial Public Offering (IPO) : The first offering of a company’s shares to
the public. The shares offered may be existing ones held privately, or the
company may issue new shares to the public.
Inter Depository Instructions: Inter-Depository Transfer means transfer of
securities which are admitted for dematerialisation on both the
depositories from an account held in one depository to an account held in
the other depository
ISIN: International Securities Identification Number (ISIN) is a code that
uniquely identifies a specific securities issue.
Market Trade: Trades which are settled through the Clearing
Corporation / Clearing House of an exchange are classified as " Market
Trades ".
122
A Study of Customer Satisfaction towards Depository Participants
NSDL: The National Securities Depository Limited is an organisation
promoted by the Industrial Development Bank of India, the Unit Trust of
India and the National Stock Exchange of India Limited to provide
electronic depository facilities for securities traded in the equity and the
debt market. NSDL commenced its operations in the year 1996 and is the
first depository in India.
NSE: National Stock Exchange is one of the leading stock exchanges in
India. The NSE has been set up by leading institutions to provide a
modern, fully automated screen – based trading system with national
reach.
Off Market Trade: Trades which are not settled through the Clearing
Corporation / Clearing House of an exchange are classified as " Off
Market Trades ". Negotiated trades which are not cleared and settled
through the Clearing Corporation / Clearing House are off-market trades.
Pledge: To deposit personal property as security for a personal loan of
money. If the loan is not repaid when due, the personal property pledged
shall be forfeit to the lender. A client (pledgor) having a beneficiary
account with a Depository Participant can pledge securities in electronic
form against loan / credit facilities extended by a pledgee, who too has a
beneficiary account with a Depository Participant.
123
A Study of Customer Satisfaction towards Depository Participants
Rematerialisation: It is the process by which a client can get his electronic
holdings converted into physical certificates. The client has to submit the
rematerialisation request to the DP with whom he has an account. The DP
enters the request in its system, which blocks the client’s holdings to that
extent automatically. The Issuer / R& T agent then prints the certificates,
dispatches the same to the client and simultaneously electronically
confirms the acceptance of the request to NSDL. Thereafter, the client’s
blocked balances are debited.
Registrar and Transfer Agent (RTA) : A transfer agent and registrar for a
publicly held company keeps record of every outstanding share certificate
and the name of the person to whom it is registered. When the share
changes hands, the transfer agent transfers the ownership of the stock
from the seller’s name to the buyer’s name. The registrar reconciles all
transfer records and makes sure that the number of shares debited is equal
to the number of shares credited.
Settlement: It is the process by which investors pay for shares they have
bought and receive payment for shares they have sold. It is also the
process by which the investor delivers the shares he has sold to the
clearing house and receives the shares which he has purchased from the
clearing house of a recognized stock exchange.
124
A Study of Customer Satisfaction towards Depository Participants
Settlement Day: The day on which purchased securities are due for
delivery to the buyer and payment is due to be made to the seller.
Statement of Holding: A statement of holding details out the current
balance in a depository account. At least once every fortnight the
Depository participant sends a statement of Holdings to its clients.
Statement of transaction: A statement of transaction details out the
various transactions done through that depository account. At least once
in every fortnight the Depository Participant sends a statement of
transaction to its clients. Karvy’s Online Demat services enable its clients
to view their statement of transactions on the net.
Transferability of Shares: Shares in a company are freely
transferable, subject to certain conditions, such that no shareholder is
permanently or necessarily wedded to a company. When a member
transfers his shares to another person, the transferee steps into the shoes
of the transferor and acquires all rights of the transferor in respect of
those shares. For dematerialised shares the depository participant debits
and credits the account of the client with an authorisation from such
client.
Transmission: Transmission of shares denotes a process by which
ownership of share is transferred on legal heir or to some other person by
125
A Study of Customer Satisfaction towards Depository Participants
operation of law. In case of transmission no transfer deed and no stamp
duty is required. Transmission of shares generally takes place in case of
death, insolvency or mental illness or purchase in case of shares by court
or in case of amalgamation, where the amalgamating company holds
shares in various companies.
126
A Study of Customer Satisfaction towards Depository Participants
BIBLIOGRAPHY
Web sites www.karvy.com
www.indiainfoline.com
www.sharekhan.com
Books
Company books & Brochures
NSDL Books
127
A Study of Customer Satisfaction towards Depository Participants
128