Financial Matters - CSDL

Benefits of opening an account with CDSL system

1) The unique centralized database of CDSL enables DPs to debit / credit securities instantaneously to the Beneficial Owner’s account thereby avoiding any transit position.

2) CDSL’s unique client ID number ensures debit / credit of securities only to the intended account, as the system does not accept a transaction, where account number is keyed in incorrectly.

3) CDSL offers a facility to the clearing House / Clearing Corporation under which securities sold purchased by any BO on BSE can be directly delivered from / received in the BO account without routing them through the broker’s pool account.

4) CDSL does not collect any custody fees from its DPs. Thus BOs can except a lower charge in respect of securities held in CDSL accounts. The transaction cost of settlement of securities through CDSL is lower in most cases.

ACCOUNT TYPES WITHIN CDSL

The account structure in CDSL is designed to meet the following objectives.

ü To maintain proper records.

ü To Segregate accounts of Beneficial Owners from each other and form the depository participants.

ü To enable RTA / Issuers to access an index of all accounts, this represents the balances of all holdings in a particular ISIN (International Security Identification Number).

ü To enable Depository Participants to enquire about only those Beneficial Owner accounts that do they service. The Beneficial Owner master file account details and the current and historic details of transactions and balances will be available to DPs.

ü To provide a flexible accounting structure to support the settlement requirements of the market.

ü To account for dematerialized securities at BO level.

FEATURES:-

1) All beneficial Owner accounts are operated at Depository Participant level, however data is maintained at CDSL Level.

2) BOs do not have direct access to CDSL system, except through “ Smartcards “ for enquiry purpose, as and when provided.

PROCEDURE FOR OPENING DEMATS ACCOUNT:-

The process of opening a demat account through a DP of CDSL is very easy and simple. It is similar to the opening of a bank account.

1. Investor as choose a DP from the list of CDSL DPs published in CDSL Infoline or accessible through the CDSL website www.cdslindia.com

2. The investor should submit an application form to the DP.

3. Before demat account is opened, the investor will have to execute an agreement on a stamp paper to be provided by the DP, which defines the rights and obligations of both, the investors and the DP.

4. On opening an account, a unique BO ID (Beneficial Owner Identification) Number is allotted, which should be quoted in all future transactions.

5. Under the Depository system, there is no restriction on opening more than one BO account in the same or identical names with the same or other DPs subject to the condition that all requirements are compiled with.

6. There is also no compulsion on any investor to open this demat account with the same DP as that of his broker, Investor can open account with the DP of his choice and carry on his trading activity through a broker of his choice. Where any DP offers special charge with the brokers DP may have some advantages.

However a BO belonging to any one of the categories specified under the CDSL Bye laws need not enter into an agreement with the DP, if the DP has entered into an agreement with the BO pursuant to securities & Exchange Board of India (Custodian of securities) Regulations 1996. The BO Categories are as under:

Ø Public Financial Institutions as defined in section 4A of the Companies Act, 1956.

Ø A Bank included for the time being in the second schedule to the Reserve Bank of India Act, 1951.

Ø Foreign Bank operating in India with the approval of RBI.

Ø State Financial Corporation established under the provisions of section 3 of the State Financials Corporations Act, 1951.

Ø An Institution engaged in providing financial services, promoted by any of the Institutions mentioned herein above, jointly and severally.

Ø A Custodian of securities who has been granted a certificates of Registration by the Board under sub-section (1A) of section 12 of the SEBI Act, 1992.

Ø Foreign Institutional Investor as defined under section 2(f) of the SEBI (Foreign Institutional Investors) Regulations, 1995.

Ø A Mutual Funds as defined under Section 2(q) of the SEBI (Mutual Funds) Regulations, 1992 and Registered with SEBI under regulation 9 thereof.