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A
Project Report
ONA DETAILED STUDY OF DEPOSITORY SERVICES RENDERED BY
PRIVATE SECTOR BANKS
(A CASE STUDY OF ICICI, AXIS, KOTAK MAHINDRA Bank)
Submitted To
Kurukshetra University, Kurukshetra in partial fulfillment for the
degree of Master In Business Administration
(Session 2008-2010)
UNDER THE GUIDANCE OF SUBMITTED BY
Mr. RAMESH CHANDER DALAL (Prof.) ANKUSH VERMA
Ms. SUNIDHI JAIN (T.A.) MBA (gen.) FINAL SEM.
FACULTY (USM) ROLL No. - 77
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DECLARATION
I, Ankush Verma the student of university school of management K.U.K, studying inMBA 4th Semester have submitted a Research Project on the title DETAILED STUDY
ON DEPOSITORY SERVICE RENDERED BY PRIVATE SECTOR BANKS for
the partial fulfilment of the degree of Master in Business Administration (MBA) to
Kurukshetra University, Kurukshetra. I solemnly declare that the work done by me is
original and no copy of it has been submitted to any other University/Institution for an
award of any other degree.
(ANKUSH VERMA)
.
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ACKNOWLEDGEMENT
With the great reverence I bow before The Almighty for blessing me with the zeal to
successfully complete the project. It really makes me privileged to be a student of USM,
KUK that has given me a platform to nurture my aptitude and competency required fordoing this project successfully and capably. I express my deepest gratitude and reverence
to, Mr. RAMESH CHANDER DALAL, MBA Department for there kind consideration,
painstaking efforts, constant encouragement and valuable advice throughout the study of
the present research problem as well as preparation of the project report. I would like to
thank for giving his precious time from her busy schedule to answer my queries and
solving my problems.
I would be failing in my duty if I do not express my thanks to my respondents whom Ivisited and who spared their valuable time to answer my questions. Last but not the least,
my thanks to all the people who helped me in making my efforts fruitful
(ANKUSH VERMA)
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CONTENTS
Page No.
1. Introduction
Profile of the study
Significance of the study
2. Objective of the study
3. Literature Review
4. Research Methodology
Sampling & Sample Design
Analytical Tools
Data Collection
Hypothesis Testing
Limitations of the study
5. Result & Discussions/Findings6. Recommendation
7. Bibliography
8. Annexure
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CHAPTER1ST
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EXECUTIVE SUMMARY
The erstwhile settlement system on Indian Stock Exchange was also inefficient and
increased risk, due to the time that elapsed before trades were settled. The transfer was
by physical movement of papers. There had to be a physical delivery of securities a
process fraught with delays and resultant risks.
The second aspect of the settlement relates to transfer of shares in favour of thepurchaser by the company. The system of transfer of ownership was glossy inefficient
as every transfer involves physical movement of paper securities to the issuer for
registration, with the change of ownership being evidenced by an endorsement on
security certificate. In many cases the process of transfer would take much longer than
two months. Hence cases like theft, forgery, mAXISlation of certificates and other
irregularities were rampant.
To obviate these problems, the Depository Act ,1996 was passed, it provides for the
establishment of depositories in securities in securities with the objective of ensuring
free transferability with speed, accuracy and security.
In earlier days shares are being traded in physical form .In line with the global
phemomenan , Indian capital markets have also moved to rolling settlements on a T+2
basis where trades are settled on the second day after trading. Now share prices are
available on real time basis and there is no rigging in prices of shares due to transporttrading. Due to increase in use of internet and net banking invertors are now trading.
Online thereby saving on time as well as cost coupled with trust of leading names in
financial / banking sector.
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CHAPTER 2ND
CONCEPTUAL
FRAMEWORK
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2.1 INRODUCTION
DEPOSITORY SYSTEM
It is a system whereby the transfer and settlement of scripts take place not through the
traditional method of transfer deeds and physical delivery of scripts but through modern
system of effecting transfer of ownership of securities by means of book entry on the
ledgers or the depository without physical movement of scripts.
The new system thus eliminates paper work, facilitates automatic and transparenttrading in scripts, shortens the settlement period and ultimately contributes to the
liquidity of investment in securities. This system is also known as Scriples trading
system
CONSTITUENTS OF DEPOSITORY SYSTEM:
There are essentially four players in the depository system: -
1. The Depository Participant
2. The Beneficial Owner/Investor
3. The issuer
4. The Depository
FACILITIES OFFERED BY DEPOSITORY SYSTEM :
The following are some of important facilities offered by depository system:-
1. Dematerialization
2. Rematerialisation
3. Electronic settlement of trade
4. Electronic credit of securities allotted in public, rights and bonus issue.
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5. Pledging or hypothecation of dematerialized securities.
6. Freezing of demat account.
ADVANTAGES OF DEPOSITORY SYSTEM :
The system is expected to offer the much-awaited custodial services to Indian and Foreign
investors together. It is likely to bring about the following benefits to various investors,
issuing companies as well as nation:
(A) Advantages to the Investors:
Quick transfer of funds and securities.
Elimination of all risks associated with physical certificates.
Minimized chances of fraud, theft of securities.
Statement of accounts.
(B) Advantages to the issuer :
Costs of registration & transfer of shares get reduced which the issuer
company earlier incurred.
Saving in cost involved at the time of public issues.
Easy to attract foreign investors without any cost of issuance in overseas
market.
(C) Advantages to Intermediaries:
Faster settlement
Less risk of Bad Delivery
Reduced chances of forgery, counterfeit certificates, loss in transit, theft etc.
What is a Depository?
A depository is an organization, which holds securities of investors in electronic form at
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the request of the investors through a registered Depository Participant. It also provides
services related to transactions in securities.
In India, Depository Act defines a depository to mean a company formed and
registered under Companies Act, 1956 and which has been granted a certificate ofregistration under sub section (IA) of section 12 of Securities and Exchange Board of
India Act, 1992
How is a depository similar to a bank?
It can be compared with a bank, which holds the funds for depositors. A Bank
Depository Analogy is given in the following table:
BANK DEPOSITORY
Holds funds in an account Hold securities in an account
Facilitates transfer without having
to handle money
Facilitates transfer of ownership without having
to handle securities
Facilitates safekeeping of money Facilitates safekeeping of securities
How many Depositories are registered with SEBI ?
At present two Depositories viz.
1. National Securities Depository Limited (NSDL) and
2. Central Depository Services (I) Limited (CDSL) are registered with SEBI.
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2.2 SOME IMPORTANT POINTS:
Who is a Depository Participant ?A Depository Participant (DP) is an agent of the depository through which it
interfaces with the investor. A DP can offer depository services only after it gets
proper registration from SEBI. Banking services can be availed through a branch
whereas depository services can be availed through a DP.
What is the minimum net worth required for a depository ?
The minimum net worth stipulated by SEBI for a depository is Rs.100 crore.
How many Depository Participants are registered with SEBI?
As on 31/03/2006, total of 538 DPs are registered with SEBI.
What is required to be done if one has physical certificates with
the same combination of names, but the sequence of names is different
i.e. some certificates with A as first holder and B as second holder
and other set of certificates with B as first holder and A as thesecond holder?
In this case the investor may open only one account with A & B as the account
holders and lodge the security certificates with different order of names for
dematerialization in the same account. An additional form called Transposition
cum Demat form will have to be filled in. This would help you to effect change in
the order of names as well as dematerialise the securities.
Can an investor operate a joint account on either or survivor
basis just like a bank account?
No. The demat account cannot be operated on either or survivor basis like the
bank account.
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Can an investor close his demat account with one DP and
transfer all securities to another account with another DP?
Yes. The investor can submit account closure request to his DP in the prescribed
form. The DP will transfer all the securities lying in the account, as per theinstruction, and close the demat account.
What would be the charges for account closure and securities
transfer due to account closing?
SEBI vide Circular No. MRD/DoP/Dep/Cir-22 /05 dated November 09, 2005
advised that with effect from January 09, 2006, no charges shall be levied by a
depository on DP and consequently, by a DP on a Beneficiary Owner (BO) when a
BO transfers all the securities lying in his account to another branch of the same DP
or to another DP of the same depository or another depository, provided the BO
Account/s at transferee DP and at transferor DP are one and the same, i.e. identical
in all respects.
In case the BO Account at transferor DP is a joint account, the BO Account at transferee
DP should also be a joint account in the same sequence of ownership.
All other transfer of securities consequent to closure of account, not fulfilling the above-
stated criteria, would be treated like any other transaction and charged as per the schedule
of charges agreed upon between the BO and the DP.
Whether investors can freeze or lock their accounts?
Investors can freeze or lock their accounts for any given period of time, if so
desired. Accounts can be frozen for debits (preventing transfer of securities out of
accounts) or for credits (preventing any movements of hindrances into accounts) or
for both.
What is an ISIN?
ISIN (International Securities Identification Number) is a unique identification
number for a security.
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Do dematerialized shares have distinctive numbers?
Dematerialized shares do not have any distinctive numbers. These shares are
fungible, which means that all the holdings of a particular security will be identical
and interchangeable.
What is Standing Instruction given in the account opening form?
In a bank account, credit to the account is given only when a pay in slip is
submitted together with cash/cheque. Similarly, in a depository account Receipt in
form has to be submitted to receive securities in the account. However, for the
convenience of investors, facility of standing instruction is given. If you say Yes
for standing instruction, you need not submit Receipt in slip every time you buy
securities. If you are particular that securities can be credited to your account onlywith your consent, then do not say yes [or tick ] to standing instruction in the
application form.
Is it possible to give delivery instructions to the DP over Internet and if
yes, how?
Yes. Both NSDL and CDSL have launched this facility for delivering instructions
to your DP over Internet, called SPEED-e and EASI respectively. All registered
users can use the facility after paying the applicable charges.
Is it possible to get securities allotted in public offering directly in the
electronic form?
Yes, it is possible to get securities allotted to in Public Offerings directly in the
electronic form. In the public issue application form there is a provision to indicate
the manner in which an investor wants the securities allotted. He has to mention theBO ID and the name and ID of the DP on the application form. Any allotment made
will be credited into the BO account.
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How are cash corporate benefit such as dividend / interest
received?
The concerned company obtains the details of beneficiary holders and their
holdings as on the date of the book closure / record date from Depositories. Thepayment to the investors will be made by the company through the ECS (Electronic
Clearing Service) facility, wherever available. Thus the dividend / interest will be
credited to your bank account directly. Where ECS facility is not available dividend
/ interest will be given by issuing warrants on which your bank account details are
printed. The bank account details will be those, which you would have mentioned
in your account opening, form or changed thereafter.
How would one receive non-cash corporate benefit such as bonusetc.?
The concerned company obtains the details of beneficiary holders and their
holdings as on the date of the book closure / record date from depositories. The
company directly into the BO account will credit the entitlement.
Who should be contacted in case of discrepancies in corporate
benefits?
In case of discrepancies in corporate benefits, one can approach the company / its
R&T Agent.
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2.3 PROFILE
ICICI Bank
ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its specialised
subsidiaries and affiliates in the areas of investment banking, life and non-life insurance,
venture capital and asset management. ICICI Bank set up its international banking
group in fiscal 2002 to cater to the cross border needs of clients and leverage on its
domestic banking strengths to offer products internationally. ICICI Bank currently has
subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore,
Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and
representative offices in the United States, United Arab Emirates, China, South Africa
and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is
the most valuable bank in India in terms of market capitalisation.
ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bank
was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000.
DEMAT SERVICES:
ICICI Bank Demat Services boasts of an ever growing customer base of over 11.5 lacs
account holders ICICI Bank claims to offer best class services to customers. Services
offered by ICICI Bank to its customer are:-
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e-instructions:-
You can transfer securities 24 hour a day, 7 days a week through internet andinteractive Voice response at a lower cost. Now with speak to transfer you can also
transfer or pledge instructions through our customer care services.
Consolidation Demat Account:-
Dematerialise your physical shares in various holding patterns and consolidate all such
scattered holdings into your primary demat account at reduced cost.
Digitally signed Statement:-
Receive your Account statements and bill by e-mail.
Corporate Benefit Tracking:-
Track your dividend, interest and bonus through your account statements.
Mobile Requests:-.
Access your demat account by sending SMS to enquire about holdings, transactions,
bills and ISIN details.
Mobile Alerts:-
Receive SMS alerts for all debit/ credit as well as for any request, which cannot be
processed. Dedicated customer care executives at call centre to handle all queries.
Countrywide network of branches.
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SCHEDULE OF CHARGES:
Charge Head Standard Charges Frequent/sub
brokerage chargesA/c Opening Nil NilAnnual service charges Rs.500/-(Rs. 450/- For
customers receiving
statements by e-mail)
Rs.1250/-(Rs.1200/- for
customer receiving
statements by e-mail)Agreement Stamp Paper Rs.100/- Rs.100/-Buy-Market & Off
market
Nil Nil
Sell-Market & Off
Market(% of transactionvalue of each ISIN) Max.
Rs.500/- for debt
instrument-For trade done on
www.icicidirect.com
Nil Nil
-For instructions
submitted through
internet(e-instructions)
0.04%
(Min Rs.10/-)
0.02%
(Min Rs.5/-)
-For instructions
submitted through call
centre(e-inst)
0.04%
(Min Rs.15/-)
0.02%
(Min. Rs 10/-)
-For instructions
submitted through
Branches
0.04%
(Min Rs. 30/-)
0.02%
(Min Rs.15/-)
Rejection / Fails Rs. 30/- Rs.15/-Extra charges for
processing of inst.
Submitted on the
execution date late
(accepted at clients risk)
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-For inst submitted
through internet (e- inst.)
Nil Nil
-For inst submitted
through call centre (e-
inst.)
Nil Nil
-For inst submitted
through branches
Rs.10/- per ISIN Rs.10/- per ISIN
Dematerialisation-For each request form Rs.35/- Rs.35/--Extra for each certificate Rs.2/- Rs.2/-Rematerialisation
(for each Request form)
Rs.20/- Rs.20/-
Closure of account Nil Nil-If ICICI Bank is counter
party
0.02%
(Min Rs.15/-)
0.02%
(Min Rs.15/-)-If ICICI Bank is not
counter party
0.04%
(Min Rs.30/-)
0.04%
(Min Rs.30/-)Additional A/c Statement Rs.20/- Rs.20/-
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2.4 AXIS BANK
AXIS Bank was the first of the new private banks to have begun operations in 1994,
after the Government of India allowed new private banks to be established. The Bankwas promoted jointly by the Administrator of the specified undertaking of the Unit Trust
of India (AXIS - I), Life Insurance Corporation of India (LIC) and General Insurance
Corporation Ltd. and other four PSU companies, i.e. National Insurance Company Ltd.,
The New India Assurance Company, The Oriental Insurance Corporation and United
Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 281.46
Crores with the public holding (other than promoters) at 56.86 %.
The Bank's Registered Office is at Ahmedabad and its Central Office is located at
Mumbai. Presently the Bank has a very wide network of more than 510 branch offices
and Extension Counters. The Bank has a network of over 2200 ATMs providing 24hrs a
day banking convenience to its customers. This is one of the largest ATM networks in
the country. The Bank has strengths in both retail and corporate banking and is
committed to adopting the best industry practices internationally in order to achieve
excellence.
Depository Services Provided:-
Transfer of Shares and settlements:-
All that is required is an instrument slip from you. If you are selling securities then
it has to be a delivery instruction slip . If you are purchasing securities it has to be a
receipt instruction slip or standing instruction for credit.
Receipt of Corporate Benefits:-
Even Securities entitlements like bonus and rights can be credited to your demat a/c
electronically. All you have to do is choose aright option in the share application
form.
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Holdings and Transaction Statement on E-mail:-
AXIS provides statement of transactions of holding on the e-mail id for the clients
registered for the service.
Tele Depository services:-
For customer at Mumbai and Ahmedabad this special service allows for getting
balances of securities in voice/ fax.
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SHEDULE OF CHARGES:-
Charges Charges (per instruction) Basis of RecoveryA/c Opening Nil Nil
A/c Closure Nil NilAnnual Maintenance
Charges
Rs. 600/- p.a. for Non AXIS Bank
Customers
Rs. 400/- for AXIS Bank Customer
Rs. 250/- for senior citizens
To be recovered
upfront in the month of
April to financial year
Demat Request Rs.2.50/- per certificate
Min Rs. 50/-
Monthly
Remat Request Rs. 20/- per certificate
Min Rs. 50/-
Monthly
- Credit Nil Nil
- Debit
0.04% for value of transaction and
minimum Rs. 21/-. Flat Rs. 21/- for
transaction entered through speed-e
Monthly
Failed/ Rejected Rs. 10/- Monthly-Creation 0.02% of value Min Rs. 25/- +
NSDL charges (Rs. 25/-)
Monthly
-Closure Rs.50/- Monthly
Invocation Rs.50/- MonthlyBorrowing Rs. 50/- MonthlyLending Nil Nil
Freezing instructions
on speed-e
instructions on speed-
e
Rs. 125/- per instruction Monthly
2.5 KOTAK MAHINDRA BANK
Kotak Mahindra is one of India's leading financial institutions, offering complete
financial solutions that encompass every sphere of life. From commercial banking, to
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stock broking, to mutual funds, to life insurance, to investment banking, the group caters
to the financial needs of individuals and corporates.
The group has a net worth of around Rs. 3,100 crore, employs around 9,600 people in its
various businesses and has a distribution network of branches, franchisees,representative offices and satellite offices across 300 cities and towns in India and
offices in New York, London, Dubai and Mauritius. The Group services around 2.2
million customer accounts.
Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking
and distribution arm of the Kotak Mahindra Group. The company was set up in 1994
Depository ServicesKotak Securities is a depository participant with the National Securities Depository
Limited and Central Depository Services (India) Limited for trading and settlement of
dematerialized shares. Since it is also in the broking business, investors who use its
depository services get a dual benefit. They are able to use its brokerage services to
execute transactions and its depository services to settle these.
SHEDULE OF CHARGES :-
Charges Charges (per
instruction)
Basis of recovery
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A/c Opening Nil NilA/c Closure Nil Nil
Annual Maintenance
charges
Rs. 400/- To be recovered upfront
at the time of opening of
accountDemat Request Rs. 3/- per certificate plus
Rs. 25/- per request
Monthly
Remat Request Rs. 10/- per certificate at
actual as levied by NSDL
Monthly
Transfer of SecuritiesCredit Nil NilDebit 0.04% for value of
transaction
min Rs.20/- per script
Monthly
Failed/ Rejected Not Mention NAPledge Creation 0.02% of transaction
value
min Rs. 50/-
Monthly
Lending Nil Nil
Custody charges Nil Nil
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DEMAT ACCOUNT :
Demat account allows you to buy, sell and transact shares without the endless
paperwork and delays. It is also safe, secure and convenient.
Whats a demat account?
Demat refers to a dematerialized account. Just as you have to open an account with a
bank if you want to save your money, make cheque payments etc, you need to open a
demat account if you want to buy or sell stocks. So it is just like a bank account where
actual money is replaced by shares. You have to approach the DPs (remember, they are
like bank branches), to open your demat account.
Lets say your portfolio of shares looks like this: 40 of Infosys, 25 of Wipro, 45 of HLL
and 100 of ACC. All these will show in your demat account. So you dont have to
possess any physical certificates showing that you own these shares. They are all held
electronically in your account. As you buy and sell the shares, they are adjusted in your
account. Just like a bank passbook or statement, the DP will provide you with periodic
statements of holdings and transactions.
Is a demat account a must?
Nowadays, practically all trades have to be settled in dematerialized form. Although the
market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades
of upto 500 shares to be settled in physical form, nobody wants physical shares any
more. So a demat account is a must for trading and investing.
Why demat?
The demat account reduces brokerage charges, makes pledging/hypothecation of shares
easier, enables quick ownership of securities on settlement resulting in increased
liquidity, avoids confusion in the ownership title of securities, and provides easy receipt
of public issue allotments.It also helps you avoid bad deliveries caused by signature
mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks
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associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat
account holders can also avoid stamp duty (as against 0.5 per cent payable on physical
shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as
stock splits and bonuses.
Buying & Selling
The procedure for buying and selling dematerialised securities is similar to the
procedure for buying and selling physical securities. The difference lies in the process
of delivery (in case of sale) and receipt (in case of purchase) of securities.
In case of purchase:-
The broker will receive the securities in his account on the payout day
The broker will give instruction to its DP to debit his account and credit investors
account
Investor will give Receipt Instruction to DP for receiving credit by filling
appropriate form. However one can give standing instruction
for credit in to ones account that will obviate the need of giving Receipt Instruction
every time.
In case of sale:-
The investor will give delivery instruction to DP to debit his account and credit the
brokers account. Such instruction should reach the DPs office at least 24 hours
before the pay-in as other wise DP will accept the instruction only at the investors
risk.
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Delivery Instruction Slip
To give the delivery one has to fill a form called Delivery Instruction Slip (DIS). DIS
may be compared to chequebook of a bank account. The following precautions are to
be taken in respect of DIS:-
Ensure and insist with DP to issue DIS book.
Ensure that DIS numbers are pre-printed and DP takes acknowledgment for the DIS
booklet issued to investor.
Ensure that your account number [client id] is pre-stamped.
If the account is a joint account, all the joint holders have to sign the instruction
slips. Instruction cannot be executed if all joint holders have not signed.
Avoid using loose slips
Do not leave signed blank DIS with anyone viz., broker/sub-broker.
Keep the DIS book under lock and key when not in use.
If only one entry is made in the DIS book, strike out remaining space to prevent
misuse by any one.
Demat Benefits:
The benefits are enumerated below:-
A safe and convenient way to hold securities;
Immediate transfer of securities;
No stamp duty on transfer of securities;
Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.;
Reduction in paperwork involved in transfer of securities; Reduction in transaction cost;
No odd lot problem, even one share can be sold;
Nomination facility;
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Change in address recorded with DP gets registered with all companies in which
investor holds securities electronically eliminating the need to correspond with each
of them separately;
Transmission of securities is done by DP eliminating correspondence with
companies;
Automatic credit into demat account of shares, arising out of
bonus/split/consolidation/merger etc.
Holding investments in equity and debt instruments in a account.
Demat Conversion:
Converting physical holding into electronic holding (dematerializing securities)
In order to dematerialize physical securities one has to fill in a DRF (Demat Request
Form) which is available with the DP and submit the same along with physical
certificates one wishes to dematerialize. Separate DRF has to be filled for each ISIN
Number.
The complete process of dematerialization is outlined below:
Surrender certificates for dematerialization to your depository participant.
Depository participant intimates Depository of the request through the system.
Depository participant submits the certificates to the registrar of the Issuer
Company.
Registrar confirms the dematerialization request from depository.
After dematerializing the certificates, Registrar updates accounts and informs
depository of the completion of dematerialization.
Depository updates its accounts and informs the depository participant. Depository participant updates the demat account of the investor.
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Demat Options
Banks score over others
Around 200 depository participants (DPs) offer the demat account facility. A
comparison of the fees charged by different DPs is detailed below. But there are three
distinct advantages of having a demat account with a bank quick processing,
accessibility and online transaction. Generally, banks credit your demat account with
shares in case of purchase, or credit your savings accounts with the proceeds of a sale on
the third day.
Banks are also advantageous because of the number of branches they have. Some banks
give the option of opening a demat account in any branch, while others restrict
themselves to a select set of branches. Some private banks also provide online access to
the demat account. So, you can check on your holdings, transactions and status of
requests through the net banking facility. A broker who acts as a DP may not be able to
provide these services.
Fees Involved:
NOW to the crux the cost of opening and holding a demat account. There are fourmajor charges usually levied on a demat account: Account opening fee, annual
maintenance fee, custodian fee and transaction fee. All the charges vary from DP to DP.
Account-opening fee
Depending on the DP, there may or may not be an opening account fee. Private banks,
such as ICICI Bank and AXIS Bank, do not have one. However, players such as Karvy
Consultants and the State Bank of India do so. But most players levy this when you re-open a demat account, though the Stock Holding Corporation offers a lifetime account
opening fee, which allows you to hold on to your demat account over a long period.
This fee is refundable.
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Annual maintenance fee
This is also known as folio maintenance charges, and is generally levied in advance.
Custodian fee
This fee is charged monthly and depends on the number of securities (international
securities identification numbers ISIN) held in the account. It generally ranges
between Rs 0.5 to Rs 1 per ISIN per month. DPs will not charge custody fee for ISIN on
which the companies have paid one-time custody charges to the depository.
Transaction fee
The transaction fee is charged for crediting/debiting securities to and from the account on a
monthly basis. While some DPs, such as SBI, charge a flat fee per transaction, ICICI Bank
peg the fee to the transaction value, subject to a minimum amount. The fee also differsbased on the kind of transaction (buying or selling). Some DPs charge only for debiting the
securities while others charge for both. The DPs also charge if your instruction to buy/sell
fails or is rejected. In addition, service tax is also charged by the DPs. In addition to the
other fees , the DP also charges a fee for converting the shares from the physical to the
electronic form or vice-versa. This fee varies for both demat and remat requests. For demat,
some DPs charge a flat fee per request in addition to the variable fee per certificate, while
others charge only the variable fee. For instance, Stock Holding Corporation charges Rs 25as the request fee and Rs 3 per certificate as the variable fee. However, SBI charges only the
variable fee, which is Rs 3 per certificate. Remat requests also have charges akin to that of
demat. However, variable charges for remat are generally higher than demat. Some of the
additional features (usually offered by banks) are:
Some DPs offer a frequent trader account, where they charge frequent traders at lower
rates than the standard charges.
Demat account holders are generally required to pay the DP an advance fee for each
account which will be adjusted against the various service charges. The account holder
needs to raise the balance when it falls below a certain amount prescribed by the DP.
However, if you also hold a savings account with the DP you can provide a debit
authorisation to the DP for paying this charge.
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Finally, once you choose your DP, it will be prudent to keep all your accounts with
that DP, so that tracking your capital gains liability is easier. This is because, for
calculating capital gains tax, the DP will determine the period of holding and different
DPs follow different methods. For instance, ICICI Bank uses the first in first out (FIFO)
method to compute the period of holding. The proof of the cost of acquisition will be the
contract note. The computation of capital gains is done account-wise.
How many accounts?
If your shares are held in joint names, be sure to open the account in the same order
of names. If X, Y and Z jointly hold 100 shares in a company and have three share
certificates all listing X, Y and Z as the first, second and third holders respectively, one
account will suffice.
For different combinations of names, open separate accounts for each combination.
If the three certificates are held as XYZ, YXZ and ZYX, three accounts are necessary.
There is no limit to the number of accounts you can open.
There is no limit to the number of DPs you can have accounts with.
You can even open a multiple-sign demat account, which can be operated by
multiple holders, like a joint savings bank account.
You can open a demat account even before you acquire your first security.
Opening an account
Steps involved in opening a demat account
First an investor has to approach a DP and fill up an account opening form. The account
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opening form must be supported by copies of any one of the approved documents to
serve as proof of identity (POI) and proof of address (POA) as specified by SEBI.
Besides, production of PAN card in original at the time of opening of account has been
made mandatory effective from April 01, 2006.
All applicants should carry original documents for verification by an authorized official
of the depository participant, under his signature.
Further, the investor has to sign an agreement with DP in a depository prescribed
standard format, which details rights and duties of investor and DP. DP should provide
the investor with a copy of the agreement and schedule of charges for their future
reference. The DP will open the account in the system and give an account number,
which is also called BO ID (Beneficiary Owner Identification number).
The DP may revise the charges by giving 30 days notice in advance. SEBI has
rationalized the cost structure for dematerialisation by removing account opening
charges, transaction charges for credit of securities, and custody charges vide circular
dated January 28, 2005.
Further, SEBI has vide circular dated November 09, 2005 advised that with effect from
January 09, 2006, no charges shall be levied by a depository on DP and consequently,by a DP on a Beneficiary Owner (BO) when a BO transfers all the securities lying in his
account to another branch of the same DP or to another DP of the same depository or
another depository, provided the BO Account/s at transferee DP and at transferor DP are
one and the same, i.e. identical in all respects.
In case the BO Account at transferor DP is a joint account, the BO Account at transferee
DP should also be a joint account in the same sequence of ownership.
Required Documents
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The extent of documentation required to open a demat account may vary according to
your relationship with the institution. If you plan to open a demat account with a bank, a
savings account holder has an edge over the non-account holder. In fact, banks usually
offer additional incentives to customers who open a demat account with them.
Along with the application form, your photographs (with co-applicants) and proof of
identity/residence/date of birth have to be submitted. The DPs also ask for a DP-client
agreement to be executed on non-judicial stamp paper. Here is a broad list (you wont
need all of them though):
PAN card
Voters ID
Passport Ration card
Drivers license
Photo credit card
Employee ID card
Bank attestation
IT returns
Electricity/ Landline phone bill
While they only ask for photocopies of the documents, they will need the originals for
verification. You will have to submit a passport size photograph on which you sign
across.
Investing Online
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While most of us understand the benefits of investing, we often do not give enough
importance to this process because of the hassles involved and the erroneous belief
that it is not my cup of tea.
This article explains how investing online can be a very easy, convenient and aninformed experience.
Say goodbye to hassles of investing offline. . .
When one has very little time on hand and too many options to choose from, investing
can be a very daunting experience. One faces several issues while investing offline like
maintaining bank and demat accounts separately and manually, lack of proper
information, tools and advice, constant struggle with the paperwork that is generated(try filling an IPO initial public offer form manually), lack of time to plan
investments systematically and finally keeping track of your investment portfolio and
net worth.
This either leads to a situation of too much dependency on someone, total inactivity or
sometimes even taking wrong decisions while planning your investments.
Fortunately, help is at hand through the online investing platforms. Today technologyenables you to completely plan your investing needs in the comfort of your home and at
a time you like, all at the click of the mouse.
All you need is a computer with an Internet connection and a subscription to a 3-in-1
online investing account with any such service providers. Online mode of investing
largely eliminates all major hassles of investing:
It provides a wealth of information, analysis and tools that enable you to take moreinformed decisions,
Virtually no paperwork involved as all transaction records are online and
statements available in digital form,
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You can invest anytime and from anywhere at your convenience (yes, even at
night),
Integrated operations between your bank account, de-mat account and trading
accounts, and
You can track your investment portfolio and net-worth online anytime.
Today, the online mode allows you to invest across different asset classes like equity
shares, mutual funds and IPOs amongst others. You can be your own master in planning
your investments. The online mode provides you the benefit of getting up-to-date
information and analysis, which is often sourced and compiled, in an investor friendly
format, from some of the best information providers in their respective fields.
You are, therefore, not only able to take more informed investment decisions but in the
process is also able to reduce the probability of risk and improve the probability of
earning better returns on your investments.
Services to look out for. . .
To start investing online you would need to register as a member for an integrated 3-in-
1 online trading account with any of the service providers. The three accounts are:
Trading account, which enables you to transact online,
An Internet-enabled bank account for online money transfers with any of the banks
with whom the online service provider has a tie-up, and
Your demat account, where your shares will be deposited.
Tips on choosing your online investing account:
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Credibility and credentials of the service provider : While there are several
service providers, for any retail investor like you, the backing of a reputed bank or
financial institution can always provide that additional safety. Some service
providers also have an ISO certification for their online investing portal.
Investments that you can make online: Are you allowed to invest in equity
shares, mutual funds, futures & options and IPOs fully through the online route or
in only one of them? To derive the full power of online investing it is important you
get to invest in all.
Quality of information and content: Ensure you are getting the best information,
research support and tools in an easy and reader-friendly manner. This would play a
key role in taking informed investment decisions.
Speed of order execution : Are you able to place your equity orders and receive
quick order confirmations during peak hours or are you struggling to access the site
just when you need it most.
Are you getting wide array of products to choose from? A few service providers provide a
choice of products starting from the basic (classic) account to more advanced (trading
platforms with live and streaming market information on equity markets).
Safety: Check for the inbuilt security features.
Customer care: Does the service provider have a dedicated customer care cell to
take care of your queries and problems?
Additional features: Besides the above criteria there are a combination of several
additional features whose importance can be determined based on your own
investing needs - ability to sell shares next day before receiving delivery, SMS
alerts, and intra-day trading in equities.
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Rematerialisation
The process of converting electronic holdings (demat shares) back into
Physical Certificates is calledRematerialisation.
If one wish to get back his securities in the physical form one has to fill in the RRF
(Remat Request Form) and request his DP for rematerialisation of the balances in his
securities account. The process of rematerialisation is outlined below:
One makes a request for rematerialisation.
Depository participant intimates depository of the request through the system.
Depository confirms rematerialisation request to the registrar.
Registrar updates accounts and prints certificates.
Depository updates accounts and downloads details to depository participant.
Registrar dispatches certificates to investor.
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PLEDGE AND HYPOTHECATION
The clients may use the securities held with NSDL as collateral to secure loans and other
credits. In manual environment, borrowers are required to deliver pledged securities inphysical form to lender or its custodian. These securities are verified for authensity and
often need to be transferred in the name of lender. Use of depository services for pledging
and hypothecation the securities make the process very simple and cost effective.
Some important points:-
Can one pledge dematerialized securities?Yes. In fact, pledging dematerialized securities is easier and more advantageous as
compared to pledging physical securities.
What should one do to pledge electronic securities?
The procedure to pledge electronic securities is as follows:
Both investor (pledgor) as well as the lender (pledgee) must have depository
accounts with the same depository; Investor has to initiate the pledge by submitting to DP the details of the securities to
be pledged in a standard format ;
The pledgee has to confirm the request through his/her DP;
Once this is done, securities are pledged.
All financial transactions between the pledgor and the pledgee are handled as per
usual practice outside the depository system.
How can one close the pledge after repayment of loan?
After one has repaid the loan, one can request for a closure of pledge by instructing
the DP in a prescribed format. The pledgee on receiving the repayment will instruct
his DP accordingly for the closure of the pledge.
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Can one change the securities offered in a pledge?
Yes, if the pledgee [lender] agrees, one may change the securities offered in a
pledge.
Who would receive the corporate benefits on the pledged
securities?
The securities pledged are only blocked in the account of pledgor in favour of the
pledgee. The pledgor would continue to receive all the corporate benefits.
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TRANSACTION STATEMENTS:
How does one know that the DP has updated the account after each
transaction?
The DP gives a Transaction Statement periodically, which will detail current
balances and various transactions made through the depository account. If so
desired, DP may provide the Transaction Statement at intervals shorter than the
stipulated ones, probably at a cost.
At what frequency will the investor receive his Transaction Statement
from his DP?DPs have to provide transaction statements to their clients once in a month, if there
are transactions and once in a quarter, if there are no transactions.
Moreover, DPs can provide transaction statement in electronic form under digital
signature subject to their entering into a legally enforceable arrangement with the
BOs to this effect.
What is to be done if there are any discrepancies in transaction
statement?In case of any discrepancy in the transaction statement, one can contact his/her DP.
If the discrepancy cannot be resolved at the DP level, one should approach the
Depository.
Whom should one contact in case of any investor complaint / problem /
query?
In case of any investor complaint / problem / query one may first contact his DP. If
DP is unable to solve the complaint / problem / query one should approachconcerned depository. If one is not satisfied one may approach SEBI. One may also
approach SEBI directly.
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LENDING AND BORROWING :
What is Lending and Borrowing of Securities?If any person required to deliver a security in the market does not readily have that
security, he can borrow the same from another person who is willing to lend as per the
Securities Lending and Borrowing Scheme.
Can lending and borrowing be done directly between two
persons?
No. Lending and borrowing has to be done through an Approved Intermediary
registered with SEBI. The approved intermediary would borrow the securities forfurther lending to borrowers. Lenders of the securities and borrowers of the securities
enter into separate agreements with the approved intermediary for lending and
borrowing the securities. Lending and borrowing is effected through the depository
system.
Can I lend the securities lying in my account?
Yes. You can lend your securities through Approved Intermediaries registered with
SEBI.
How would I lend my demat securities?
You may enter into an agreement with the approved intermediary to be a lender under
this scheme. After that, you may lend securities any time by submitting lending
instruction to your DP.
How would I get back the securities lent by me?
Intermediary may return the securities at any time or at the end of the agreed period of
lending. Intermediary has to repay the securities together with any benefits received
during the period of the loan.
How would I receive the corporate benefits, which would accrue
on these securities during the period of lending?
The benefits will be given to the Intermediary/borrower. However, whenever the
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securities are being returned / recalled. Intermediary/borrower will return the securities
together with benefits received.
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NOMINATION:
Who can nominate?
Only individuals holding beneficiary accounts either singly or jointly can makenomination. Non-individuals including society, trust, body corporate, karta of Hindu
Undivided Family, holder of power of attorney cannot nominate.
Who can be a nominee?
Only an individual can be a nominee. A nominee shall not be a society, trust, body
corporate, partnership firm, Karta of Hindu Undivided Family or a power of attorney
holder.
What is transmission of demat securities?
Transmission is the process by which securities of a deceased account holder are
transferred to the account of his legal heirs / nominee. Process of transmission in case of
dematerialized holdings is more convenient as the transmission formalities for all securities
held in a demat account can be completed by submitting documents to the DP, whereas in
case of physical securities the legal heirs/nominee/surviving joint holder has to
independently correspond with each company in which securities are held.
In the event of death of the sole holder, how the successors should claim the
securities lying in the demat account?
The claimant should submit to the concerned DP an application Transmission Request
Form (TRF) along with the following supporting documents
In case of death of sole holder where the sole holder has appointed a nominee:
Notarized copy of the death certificate In case of death of the sole holder, where the sole holder has not appointed a
nominee: Notarized copy of the death certificate
Any one of the below mentioned documents
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Succession certificate
Copy of probated will
Letter of Administration
The DP, after ensuring that the application is genuine, will transfer securities to the accountof the claimant.
The major advantage in case of dematerialized holdings is that the transmission formalities
for all securities held with a DP can be completed by interaction with the DP alone, unlike
in the case of physical share certificates, where the claimant will have to interact with each
Issuing Company or its Registrar separately.
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CHAPTER
3RD
LITERATURE
REVIEW
LITERATURE REVIEW
After the formulation of the problem, a brief summary of it should be written down and the
researcher should have to do its extensive literature survey connected with the problem. For
this purpose, abstracting and indexing journals and published or unpublished bibliographies
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are first place to go Academic Journals, Conference proceedings, reports etc. must be
tapped depending upon nature of the problem. The literature for this project will include
various newspapers, magazines
Economic Survey 1for the information regarding the depository services by
depository participants. In the external sector of the Economic survey the trends
over the period of time are given.
RBI bulletin 2 for the information regarding the demat services of different
banks over the period of last years.
C.R Kothari 3 The information regarding the basics of research and researchmethodology, what are the different types of research designs, what is problem
statement, what are the sources of data collection and what are the methods of data
collection is given in this section.
S.P Gupta 4. The information regarding the statistical tools and their
limitations in different fields the research is given in this section. This section
explains why to use correlation and what are the situations in which correlation canbe used, and what does correlation means.
Hooda R.P.5, Statistics for Business and Economics to have information
regarding various statistical tools applied like time series, correlation, and
hypothesis.
S.R rawat 6, information regarding various statistical tools applied like time
series, correlation, and hypothesis.
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S.P Gupta 7. , To have information regarding depositories in India, for the
information regarding the depository services by depository participants. In the
external sector of the Economic survey the trends over the period of time are given
Hooda R.P 8, statistical tools and their limitations in different fields the
research is given in this section.
C K. Gupta9, Financial Institutions And Markets, Kalyani Publications, New
Delhi To have information regarding depositories in India
Bhole L.M.10, Management of Financial institutions, Tata MC Graw Hill,2000 To have information regarding dematerialization and rematerialisation
process.
Khan M.Y.11 , the information regarding the depository services by
depository participants. In the external sector of the Economic survey the trends
over the period of time are given
Sashi K. Gupta 12, Financial Institutions And Markets, KalyaniPublications, New Delhi (Pg.6.1-6.40)
Sharma L.M 13,the information regarding the depository
services. .Punithawathy Pandian, Security Analysis and Investment
Management.
http://www.icicibank.com/pfsuser/aboutus/overview/overview.htm 15 this site has
been used to get information regarding icici bank.
http://www.dfcb.com/aboutus/general/default.htm 16 it is being used to get
information regarding.
http://www.AXISbank.com/Banking/bank.asp 17 to collect information of AXIS
bank.
http://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://www.dfcb.com/aboutus/general/default.htmhttp://www.utibank.com/Banking/bank.asphttp://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://www.dfcb.com/aboutus/general/default.htmhttp://www.utibank.com/Banking/bank.asp8/2/2019 Depositry Service Tinu
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http://www.turionbop.co.in/site/aboutus.html 18 to collect information regarding the
profile of private companies.
http://www.kotak.com/Kotak_GroupSite/aboutus/default.htm 19to get information
regarding the Kotak Mahindra group this site is being used.
http://www.hdfcsec.com/basics/index.php?section=6 20 To get information
regarding the various dematerialized securities of bank this site is being used.
http://www.nseindia.com/ 21 In order to get information regarding national stock
exchange of India this site is used.
http://content.icicidirect.com/home.asp 22 information regarding the demat
securities of ICICI bank this site is being used.
http://www.icicibank.com/pfsuser/aboutus/overview/overview.htm 23
to collect information of bank
http://wwwaxisbank.com/aboutus/general/default.htm 24 to collect
information of bank .To get information regarding the various dematerialized
securities of bank this site is being used
http://www.nse.com/basics/index.php?section=6 25 to collect information
of stock market
http://content.icicidirect.com/home.asp 26To get information regarding the
various dematerialized securities of bank this site is being used
www.financeindia.com 27 information regarding demat investment.
www.investmentzone.com 28 to get information regarding national stock
exchange of India this site is used.
www.indiansharemarket.com/ 29 To get information regarding the various
dematerialized securities of bank this site is being used
http://www.nseindia.com/ 30 to get information regarding national stock
exchange of India this site is used.
http://www.crisil.com/home.asp 31 this site has been used to get information
regarding ranking
http://www.moneycontrol.com/ 32 gets information regarding icici bank.
http://www.turionbop.co.in/site/aboutus.htmlhttp://www.kotak.com/Kotak_GroupSite/aboutus/default.htmhttp://www.hdfcsec.com/basics/index.php?section=6http://www.nseindia.com/http://content.icicidirect.com/home.asphttp://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://wwwaxisbank.com/aboutus/general/default.htmhttp://www.nse.com/basics/index.php?section=6http://content.icicidirect.com/home.asphttp://www.financeindia.com/http://www.investmentzone.com/http://www.indiansharemarket.com/http://www.nseindia.com/http://www.crisil.com/home.asphttp://www.moneycontrol.com/http://www.turionbop.co.in/site/aboutus.htmlhttp://www.kotak.com/Kotak_GroupSite/aboutus/default.htmhttp://www.hdfcsec.com/basics/index.php?section=6http://www.nseindia.com/http://content.icicidirect.com/home.asphttp://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://wwwaxisbank.com/aboutus/general/default.htmhttp://www.nse.com/basics/index.php?section=6http://content.icicidirect.com/home.asphttp://www.financeindia.com/http://www.investmentzone.com/http://www.indiansharemarket.com/http://www.nseindia.com/http://www.crisil.com/home.asphttp://www.moneycontrol.com/8/2/2019 Depositry Service Tinu
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http://www.marketmaker.com/ 33 this site has been used to get information
regarding icici Kotak, axis bank.
CHAPTER
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4TH
RESEARCH
METHODOLOGY
4.1 SIGNIFICANCE OF STUDY:
This study can be helpful for knowing about the number of depository services which
can help in increase in number of opening of demat accounts with the different
depository participants. After getting the knowledge about the charge structure ofvarious Private Sector Banks, one can easily compare the charges and select one
participant according to their requirement.
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It will help in Comparing of Depository services offered by Private Sector
Banks and thus by comparing the charges one can easily select one according to his/her
needs.
It will be helpful in helping bankers to maintain customer relationship with their
customers as customers are highly attracted by this service. This helps them to gain a
wider share of the customer wallet.
It will also helpful in knowing more about the various depository services
provided by different Depository Participants.
It will also helpful in determining the various benefits of holding DematAccounts.
It will also helpful in increasing the focus on Private Banking, it would be
necessary for the banks to build capabilities in the areas of equity advisory etc.
It will also helpful for the investors to look for a best Depository Participants
offering the various depository services.
The most important part is to look for the hidden cost, as the financial service industry is
really famous for hiding a host of fees and charges under the complex jargons of bulky
terms. So this study helps in clear comparison of various costs such as account opening
cost, a/c maintenance cost, pledging and lending costs and many more.
4.2OBJECTIVE OF STUDY:
The objective of the research means the purpose for which the research is being carried out.
The objectives of this research are as follows:
Primary Objective:-
1. The primary objective of our report is to impart a comparative and analytical study
of the depository and online share trading services of private sector banks in India
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2. Basic understanding of the manner in which they function in this competitive
environment the products and services offered by Private Sector Banks entire
process of share transactions and account openings and brokerage charged and
different software used to facilitate the trading process. To know about the benefits
derived from such system.
Secondary Objective: -
Apart from understanding the stock Exchange terminologies or jargons, we also aimed
about reading of market conditions, the feasibility and growth of depository services of
various depository participants in India. The client servicing offered by the online share
trading sites in real market situations.
4.3RESEARCH METHODOLOGY:-
Research in common parlance refers to a search for knowledge. One can also define
research as a scientific and systematic search for pertinent information on a specifictopic. Infact, research is an art of scientific investigation.
RESEARCH DESIGN
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At the outset may be noted that there are several ways of studying and
tackling a problem. The formidable problem that follows the task of defining the
research problem is the preparation of the design of research project popularly known as
research design.
Decision regarding what, where, when, how much, by what means concerning an
enquiry or a research study constitute a research design. A research design is an
arrangement of conditions for collection and analysis of data in a manner that aims to
combine relevance to research purpose with economy in procedure. More explicitly the
designing decision happened to be in respect of following
What is study about?
Why is study being made? Where will the study be carried out?
What type of data is required
What will be the sample design?
How will the data be collected?
How will the data be analyised?
TYPES OF RESEARCH
DESIGN
EXPLORATORYRESEARCHDESIGN
DESCRIPTIVE&
DIAGNOSTICRESEARCH DESIGN
EXPERIMENTALRESEARCHDESIGN
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EXPLORATORY RESEARCH DESIGN: -
Exploratory research design is termed as formulating researchstudies. The main purpose of study is that of formulating a problem. The major
emphasis in such study is on discovery of new ideas and insights. As such the research
design appropriate for such studies must be flexible enough to provide opportunity for
considering different aspects of problem.
DESCRIPTIVE AND DIAGNOSTIC RESEARCH DESIGN: -
Descriptive research design are those design which are
concerned with describing the characteristics of particular individual or of the group
Whereas diagnostic research studies determine the frequency
with which something occurs or its association with some else. In descriptive and
diagnostic study the researcher must be able to define clearly what he wants to measure
and must find adequate method for measuring it.
EXPERIMENTAL RESEARCH DESIGN: -
These are those studies where the researcher tests the hypothesis
of casual relationship between variables. Such study requires procedure that will not
only reduce biasness and increase reliability but will permit drawing influence about
casuality. Usually experiments meets this requirement, hence these research designs are
prepared for experiment.
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Research design in study: -
In the study I have apply descriptive research design. As descriptive
research designis the description of state of affairs, as ix exists at present. In this type
of research the researcher has no control over the variables; he can only report what ahs
happened or what is happening.
4.4 DATA COLLECTION
After the research problem has been identified and selected the next step is to
gather the requisite data. While deciding about the method of data collection to be used
for the the researcher should keep in mind two types of data VIZ. primary andsecondary
TYPES OF DATA
PRIMARYDATA SECONDRYDATA
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PRIMARY DATA: -The primary data are those, which are collected afresh and
for the first time, and thus happened to be original in character. We can obtain primary
data either through observation or through direct communication with respondent in one
form or another or through personal interview.
SECONDARY DATA: -
The secondary data on the other hand, are those which
have already been collected by someone else and which have already been passed
through the statistical processes. When the researcher utilizes secondary data then he
has to look into various sources from where he can obtain them. For e.g. Books,
magazine, newspaper, Internet, publications and reports.
METHODS USED IN STUDY: -
METHODS OF PRIMARY DATA
OBSERVATIONMETHOD
QUETIONAIREMETHOD
INTERVIEWMETHIOD
SCHEDULEMETHOD
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I will collect the data through the secondary sources such As
Books
Magazines
Newspapers
Internet
CHAPTER
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5TH
DATA ANALYSIS &
INTERPRETATION
STATISTICAL TOOL AND DATA ANALYSIS.
CORRELATION
For analyzing the data I will use correlation and Trend analysis. I will use correlation for
knowing the relationship between the Income levels and numbers of demat account
opened.
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I will use correlation to check whether there is any correlation exists between income levels
and numbers of demat account opened.
In the correlation I will be using Karl Pearsons coefficient of correlation in which
r = xy / x2 y2
for analyzing the data I will be using the software of XLSTAT.
Income
Total No of
Demat Account
(Y)
Mid point
(X) x y x2 y2 xy0-10,000 470 5000 -25000 -568 625 322624 1420010,000-20,000 750 15000 -15000 -288 225 82944 432020,000-30,000 1028 25000 -5000 -10 25 100 5030,000-40,000 1140 35000 5000 102 25 10404 51040,000-50,000 1250 45000 15000 212 225 44944 318050,000 & above 1590 55000 25000 552 625 304704 13800TOTAL 1750 765720 36060
r = xy / x2 y2 r = 36060
1750 765720
r = 0.98
r = 0.98 (approx.)
Where, r = rank coefficient of the correlation
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So, there is a high degree correlation between Income and total no of demat account
opened in private sector banks and conclude that due to increase in income no. of
demat a/c opened also increase.
Since the correlation coefficient calculated lies within the limits I.e. -1 to +1. Hence we can
conclude that the correlation is significant. The variables are positively or directly
correlated.
Correlation between level of income and no. of Demat
A/c . Opened with ICICI Bank
Correlation b/w level of income and no. of Demat Account Opened with ICICI Bank:
Income
No of Demat
Account (Y)
Mid point
(X)
x y x2 y2 xy0-10,000 22 5000 -25000 -32 625 1024 80010,000-20,000 35 15000 -15000 -19 225 361 28520,000-30,000 50 25000 -5000 -4 25 16 2030,000-40,000 62 35000 5000 8 25 64 40
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40,000-50,000 69 45000 15000 15 225 225 22550,000 & above 86 55000 25000 32 625 1024 800TOTAL 1750 2714 2170
r = xy / x2 y2
r = 2170
1750 2714
r = 0.99
Since the correlation coefficient calculated lies within the limits i.e. -1 to +1.Hence we can conclude that there is high degree of correlation b/w the
variables.
Correlation between level of income and no. Of Demat
A/c. Opened with AXIS Bank:
Income
No of Demat
Account (Y)
Mid point
(X)
x y x2 y2 xy0-10,000 15 5000 -25000 -24 625 576 60010,000-20,000 22 15000 -15000 -17 225 289 25520,000-30,000 35 25000 -5000 -4 25 16 2030,000-40,000 44 35000 5000 5 25 25 2540,000-50,000 58 45000 15000 19 225 361 28550,000 & above 60 55000 25000 21 625 441 525
TOTAL 1750 1708 1710
r = xy / x2 y2
r = 1710
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1750 1708
r = 0.989
Thus there is also highly positive correlation b/w income level and no of a/c opened
with AXIS.
HYPOTHESIS TESTING
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TREND ANALYSIS :
Time series :
The set of data collected on the basis of time is called as time series. Under time series
there are two types of variables:
(1) Independent variables (this represents time)
(2) Dependent variables (this represents the changes taken place in the value of data with
the passage of time)
XLSTAT 7.1 - Correlation Tests
Significance level: 0.05
Pearson's correlation coefficient test (parametric test):
Observed value 0.985
Two-tailed p-value 0.000Alpha 0.05
Decision:In other words, the correlation is significant.
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A set of data depending on the time is called time series.
-Kenny & Keeping
Utility of time series:
The study of time series has great importance in economic and business world which
is illustrated by the following points:-
1. To study thepast behavior of data:
2. Toforecast future behavior:
3. Estimation of trade cycle:
4. Universal utility:
5. Study of present variations
Methods of measuring trend::
1. Free hand curve method
2. Semi average method
3. Moving average method
4. Least square method
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Trend Analysis
010,00020 00030,00040,00050,00060,00070,00080,000
2005 2006 2007 2008 2009years
no.
of
de
mata/c
Actual valuesPredicted values
With the help of this trend analysis we can predict future values like for the year2007;
Here X=3, Y= 9932.6 + 2194.5(3)
= 16,516.1
Calculations are shown in Annexure 1
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Comparative Table of Demat A/c Charges of ICICI, AXIS, KOTAK
MAHINDRA Bank
Banks:- ICICI AXIS Kotak Mahindra
Annual
Maintenance
Charges
Rs.500/- Rs.400/-normal
and
Rs.250/- senior
citizens
Rs.400/-
Debit Instruction Rs.10/- per ISIN 0.04% of value
or minimumRs.15/-
0.04% of value
or minimumRs.20/-
Dematerialization Rs.35/-+ Rs.22/-
per certificate
Rs.2.5/- per
certificate Min
Rs.50/-
Rs.25/- +Rs.3/-
per certificate
Rematerialisation Rs. 20/- per
certificate
Rs. 20/- per
certificate Min
Rs.50/-
Rs.10/- per
Certificate
Pledge Creation 0.02% Min
Rs.15/-&
0.04% min.Rs.
30/-
0.02%+
Rs.25/-+Rs.25/-
NSDL Charges
0.02% min
Rs.50
Closure Same as above Rs.100/- Same as aboveFailed Instruction Rs.30/- Rs.10/- Not Mentioned
SERVICES ON OFFER:-
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ICICI AXIS Kotak
MahindraVoice
Instructions
Yes No No
E-Statement Yes Yes YesSMS Alerts Yes No NoMobile
Advice
Yes No No
View
Statement on
net
Yes Yes Yes
Speed-e Yes Yes Yes
ICICI Bank clearly enjoys lead over other banks in terms of the services
they offer to Demat Customers
LIMITATIONS:
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Probably the time and money constraints can affect my research
Lack of knowledge about the topic.
Dependency too much on secondary data for conducting the research that is
insufficient for the research.
Difficulty in collection of the data.
Study is conducted in limited area only.
RESULTS& FINDINGS
1. Annual maintenance charges of all banks are equal except AXIS and Kotak
Mahindra wherein the AMC charges are a bit lower at Rs.400/- as compared to
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Rs.500/- charge by other DPs. Also AXIS Bank is offered special charges to senior
citizens at AMC of Rs. 250/-.
2. Debit Instruction charges are lowest @ Rs. 10/- per ISIN in case of ICICI bank
followed by Kotak, AXIS that is costliest in min charges at Rs.25/-.
3. Demat Charges are more or less same for all the banks but AXIS bank is a bit
costlier and minimum charges are highest at Rs. 50/-
4. AXIS Bank is again costliest at monthly Rs. 50/- And Rs. 20/- per certificate for
demat as compared to Rs 10/- (Actual Charges of NSDL) charged by Kotak
Mahindra
5. For failed instructions ICICI is charging highest followed by AXIS
In the nut shell we can say that all banks are charging more and less same to thecustomers If bank is charging less in selling then they are charging higher amount in
Demat or Remat of Securities thereby bringing a balance in tariff structure as compared
with other banks.
I have also find the comparison among three banks.
After analyzing all the parameters I find the results that the services offer by the
icici bank is better then axis and the Kotak bank.
RECOMMENDATIONS: -
To attract the more capital from the country, the govt. procedure regarding setting
of new projects should be simplified. However the Govt. announced several policy
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measures in order to remove the constraints. It is hoped that this will benefit the
Investors.
Technology should be upgraded. There should be programmes for depository
services improvement and programmes for error control. So that the cost ofproduction of the services can be reduced. Reduction in cost will in turn make the
Indian economy competitive in the international market
Dematerialization & Rematerialisation facilities should be proper established by the
all banks.
Annual maintenance charges should be in that manner so that the customer cannot
skip from first service provider to second.
Now with the advent of new and easy technology more and more market players
are moving into the area of depository and online trading. Majority of big brokers,
online trading portals and technologically superior banks are offering demat
services to their clients. Some of them are also moving up in the value chain by
offering online trading services. So the policy of the services provider should be
according to the market conditions
BIBLIOGRAPHY :
BOOKS: -
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C.R Kothari, Research Methodology, Wishwa Parkashan, 2nd
Edition (Pg. 39-67 & 117-157).
S.P Gupta. Statistical Methods, 30th edition, Sultan Chand &sons
Hooda R.P,Indian Financial System, Tata MC Graw Hill, 2000 Bhole L.M., Management of Financial institutions, Tata MC Graw Hill, 2000
Khan M.Y., , Indian Financial System, Tata MC Graw Hill, 2000
Sashi K. Gupta, Financial Institutions And Markets, Kalyani
Publications, New Delhi (Pg.6.1-6.40)
Bhole L.M., Management of Financial institutions, Tata MC Graw
Hill, 2000
Punithawathy . Security Analysis and Investment Management.
JOURNALS & NEWSPAPERS
Economic Survey 2005-06, EXTERNAL SECTOR (page no.-131,160)
RBI bulletin, INDIAN TRADE (page no.-887)
M Narasimhulu And Irfana Samdani Southern Economist July 2006, TrendsAnd Pattern Of Fdi In India (page no. 24-28)
SANJEEV KUMAR, Icfai Reader JULY 2006 FDI AND FII(Page no.-35-40)
Ms sidhu & lavleen kaur, southern economist dec 2005, market India someissues (page no.27-30)
M.Narasimhulu And Irfana Samdani, INDIAN JOURNAL Of Finance, AStudy Of banks (Page No.51-60)
S.narashima chary and v. Gangadhar, INDIAN JOURNAL OF FINANCE,D Mat services in India (page no.51-60)
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http://www.dfcb.com/aboutus/general/default.htm
http://www.utibank.com/Banking/bank.asp. http://www.turionbop.co.in/site/aboutus.html
http://www.kotak.com/Kotak_GroupSite/aboutus/default.htm
http://www.hdfcsec.com/basics/index.php?section=6
http://www.nseindia.com/.
http://content.icicidirect.com/home.asp
http://www.icicibank.com/pfsuser/aboutus/overview/overview.htm
http://wwwaxisbank.com/aboutus/general/default.htm
http://www.nse.com/basics/index.php?section=6
http://content.icicidirect.com/home.asp
www.financeindia.com.
www.investmentzone.com
www.indiansharemarket.com
http://www.nseindia.com/ http://www.crisil.com/home.asp
http://www.moneycontrol.com/
http://www.marketmaker.com/.
ANNEXURE-1
Year
Total no of Demat A/c
Opened (Y) X XY X2
http://www.dfcb.com/aboutus/general/default.htmhttp://www.utibank.com/Banking/bank.asphttp://www.turionbop.co.in/site/aboutus.htmlhttp://www.kotak.com/Kotak_GroupSite/aboutus/default.htmhttp://www.hdfcsec.com/basics/index.php?section=6http://www.nseindia.com/http://content.icicidirect.com/home.asphttp://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://wwwaxisbank.com/aboutus/general/default.htmhttp://www.nse.com/basics/index.php?section=6http://content.icicidirect.com/home.asphttp://www.financeindia.com/http://www.investmentzone.com/http://www.indiansharemarket.com/http://www.nseindia.com/http://www.crisil.com/home.asphttp://www.moneycontrol.com/http://www.marketmaker.com/http://www.dfcb.com/aboutus/general/default.htmhttp://www.utibank.com/Banking/bank.asphttp://www.turionbop.co.in/site/aboutus.htmlhttp://www.kotak.com/Kotak_GroupSite/aboutus/default.htmhttp://www.hdfcsec.com/basics/index.php?section=6http://www.nseindia.com/http://content.icicidirect.com/home.asphttp://www.icicibank.com/pfsuser/aboutus/overview/overview.htmhttp://wwwaxisbank.com/aboutus/general/default.htmhttp://www.nse.com/basics/index.php?section=6http://content.icicidirect.com/home.asphttp://www.financeindia.com/http://www.investmentzone.com/http://www.indiansharemarket.com/http://www.nseindia.com/http://www.crisil.com/home.asphttp://www.moneycontrol.com/http://www.marketmaker.com/8/2/2019 Depositry Service Tinu
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2003 5,294 -2 10,588 42004 7,775 -1 -7,775 12005 10,310 0 0 02006 12,260 1 12,260 12007 14,024 2 28,048 4
Total 49,663 0 21,945 10The equation of the straight line is Y= a+bX
Since, X= 0,a = Y/ N ,b = XY/X2
Putting values we get,
a= 49,663/5 = 9932.6
b= 21,945/10 = 2194.5
Hence the equation of straight line trend is Y= 9932.6 + 2194.5X
Origin=2004; X units one year.
For X=-2, Y= 9932.6 + 2194.5 (-2) = 5543.6
X=-1, Y= 9932.6 + 2194.5 (-1) = 7738.1
X= 0, Y= 9932.6 + 2194.5(0) = 9932.6
X=1, Y = 9932.6 + 2194.5(1) = 12127.1
X =2, Y = 9932.6 + 2194.5(2) = 14321.6
REGRESSION
yearTotal three banksd.mat acc(lackh)
Total three banksTrading(crore)
2003 42 90
2004 48 112
2005 65 145
2006 87 183
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2007 118 220
XLSTAT 7.1 - Nonlinear Regression - 6/1/2005 at 10:16:46 PM
Dependent variable: workbook = Book1 / sheet = Sheet1 / range = $E$9:$E$13 / 5 rows and 1 column
Explanatory variables: workbook = Book1 / sheet = Sheet1 / range = $D$9:$D$13 / 5 rows and 1 columnUniform weighting (default)
No missing values
Goodness of fit coefficients:
R (coefficient of correlation) 0.999
R (coefficient of determination) 0.998
SSR 17.117
Model parameters:
Parameters Value Standard deviation
pr1 1322.393 62985.935
pr2 0.169 11.513
pr3 2.984 1320.848
pr4 -1830.416 183394.883
ObservationsWeights d.mat trading trading (Model) Residuals Standardized residuals
Obs1 1 42.000 90.000 91.908 -1.908 -0.461Obs2 1 48.000 112.000 108.766 3.234 0.782
Obs3 1 65.000 145.000 146.713 -1.713 -0.414
Obs4 1 87.000 183.000 182.738 0.262 0.063
Obs5 1 118.000 220.000 219.880 0.120 0.029
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Observations and fitted model
0
50
100
150
200
250
40 50 60 70 80 90 100 110 120
d.mat
trading / Standardized residuals
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
0 50 100 150 200 250
trading
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d.mat / Standardized residuals
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
40 50 60 70 80 90 100 110 120
d.mat
Standardized residuals
-1 -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1
Obs1
Obs2
Obs3
Obs4
Obs5
Standardized residuals
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