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CONSUMER PERCEPTION ABOUT DEPOSITORY SYSTEM IN CHANDIGARH

Final Project Report


Su !itte" to Punja i Uni#er$it% Sc&ool o' Bu$ine$$ Stu"ie$ in partial Ful'ill!ent o' t&e re(uire!ent 'or t&e "e)ree o'

Ma$ter o' Bu$ine$$ A"!ini$tration

Su !itte" % Har in"er Sin)& Te!po * B&oon" * Glu+ * C&ora Roll No, -./0 1223

Punja i Uni#er$it% Sc&ool o' Bu$ine$$ Stu"ie$ Guru 4a$&i Ca!pu$5 Tal6an"i Sa o,

PREFACE The tremendous advance in technology and the aggressive infusion of information technology has brought in a paradigm shift in banking operation. Internet banking that has revolutionized the banking industry world wide has turned out to be the nucleus issue of various studies of all over the world. However there has constantly been a literature gap on the issue of India. The purpose of the paper is to help fill significant gaps in knowledge about the Internet Banking landscape in India. The paper presents data, drawn from a survey of private, foreign and public banks that offer Internet banking and on the products and services they offer, investigates the profile of banks that offer Internet banking using various statistical analyses, relative to above mentioned banks with respect to competitive analysis.

AC4NO78EDGEMENT

Words often fail to e press one!s inner feeling of indebtedness. Infact words are not proper media for this purpose. It is my proud privilege to e press my profound indebtedness and deep sense of gratitude to "iss #hashi $ggarwal who had been kind enough to impart his inspiring advice and valuable guidance to me during my research work. He provided his untiring efforts and encouragement throughout my research period inspite of his busy schedule.

CERTIFICATE This is to certify that the pro%ect entitled &'onsumer (erception $bout )epository #ystem in 'handigarh* #ubmitted by Harbinder #ingh is a bonafide piece of work conducted under my supervision and guidance. +o part of this pro%ect has been submitted per any other degree of any other degree of any other university. The data services have been duly acknowledged. It may be considered for evaluation in partial fulfillment of the degree of "aster of Business $dministration.

(ro%ect ,uide -"iss #hashi $ggarwal.

INDE9

CHAPTER CHAPTER 1 CHAPTER ; CHAPTER / CHAPTER <

INTRODUCTION RE:IE7 OF 8ITERATURE RESEARCH MEHTODO8OGY ANA8YSIS AND INTERPRETATION CONC8USION

INTRODUCTION

INTRODUCTION TO DEPOSITORY SYSTEM IN INDIA /ne of the biggest problems faced by the Indian 'apital "arket has been the manual and paper based settlement system. 0nder this system, the clearing and settlement of transactions take place only with the use of paper work. The system of physical delivery of scrips poses many problems for purchaser as well as the seller in the form of delayed settlements. Thus, to eliminate paper work, facilitate scrip less trading and electronic book entry of the transfer of securities, it was found necessary to replace the old system of transfer and settlement with the new and modern system of depositories. $ccordingly the ,overnment of India enacted the )epositories $ct in 1223 for the orderly growth and the development of the Indian 'apital "arket. The governing body of #4BI approved the draft of #4BI -depositories and participants. regulation act 1223. The government of India on 5uly 16,1227 introduced the depository bill to usher scrip less trading. +ational securities depository ltd. (romoted by Industrial )evelopment Bank of India, 0nit Trust of India and the +ational #tock 4 change emerged as the first depository to be registered in India. $ )epository #ystem is a facility for holding securities which enables securities transactions to be processed by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialize them -so that they e ist only as electronic records.. India has chosen the dematerialize route. In India, a depository is an organization, which hold the beneficial owner!s securities in electronic form, through a )epository (articipant -)(.. $ depository functions some what similar a commercial Bank. To avail of the services offered by a depository the investor has to open an account with it through a registered )(.

Bene'it$ o' Depo$itor% S%$te! In the depository system, the ownership and transfer of securities takes place by means of electronic book entries. $t the outset, this system rids the capital market of the dangers related to handling of paper. +#)8 provides numerous direct and indirect benefits like9 Eli!ination o' a" "eli#erie$ = In the depository environment, once holdings of an investor are dematerialized, the :uestion of bad delivery does not arise i.e. they cannot be held &under ob%ection*. In the physical environment, buyer was re:uired to take the risk of transfer and face uncertainty of the :uality of assets purchased. In a depository environment good money certainty begets good :uality of assets. Eli!ination o' all ri$+$ a$$ociate" 6it& p&%$ical certi'icate = )ealing in physical securities have associated security risks of theft of stocks, mutilation of certificates, loss of certificates during movements through and from the registrars, thus e posing the investor to the cost of obtaining duplicate certificates etc. This problem does not arise in the depository environment. No $ta!p "ut%= ;or transfer of any kind of securities in the depository. This waiver e tends to e:uity shares, debt instruments and units of mutual fund. I!!e"iate tran$'er an" re)i$tration o' $ecuritie$ = In the depository environment, once the #ecurities are credited to the investors account on pay out, he becomes the legal owner of the securities. There is no further need to sent it to the company!s registrar for registration. Having purchased securities in the physical environment, the investor has to send it to the company!s registrar so that the change of ownership can be registered. This process usually takes around three to four months and is rarely completed within the statutory framework of two months thus e posing the investor to opportunity cost of delay in transfer and to risk of loss in transit. To overcome this, the normally accepted practice is to hold the securities in street names i.e not to register the change of ownership. However, if the investors miss a book closure the securities are not good for delivery and the investor would also stand to loose his corporate entitlements.

Fa$ter $ettle!ent c%cle = The settlement cycle follow rolling settlement on T<= basis i.e. the settlement of trades will be on the =nd working day from the trade day. This will enable faster turnover of stock and more li:uidity with the investor. Fa$ter "i$ ur$e!ent o' non ca$& corporate ene'it$ li+e ri)&t$5 onu$5 etc, = +#)8 provides for direct credit of non cash corporate entitlements to an investor account, thereby ensuring faster disbursement and avoiding risk of loss of certificates in transit. Re"uction in ro+era)e % !an% ro+er$ 'or tra"in) in "e!ateriali>e" $ecuritie$= Brokers provide this benefit to investors as dealing in dematerialized securities reduce their back office cost of handling paper and also eliminations the risk of being the introducing broker. Eli!ination o' pro le!$ relate" to c&an)e o' a""re$$ o' in#e$tor = In case of change of address, investors are saved from undergoing the entire change procedure with each company or registrar. Investors have to only inform their )( with all relevant documents and the re:uired changes are effected in the database of all the companies, where the investor is a registered holder of securities. Eli!ination o' pro le!$ relate" to tran$!i$$ion o' "e!at $&are$ = In case of dematerialized holdings, the process of transmission is more convenient as the transmission formalities for all securities held in a demat account can be completed by submitting documents to the )( whereas, in case of physical securities the surviving %oint holder -s.>legal heirs> nominee has to correspond independently with each company in which shares are held. Eli!ination o' pro le!$ relate" to $ellin) $ecuritie$ on e&al' o' a !inor = $ natural guardian is not re:uired to take court approval for selling demat securities on behalf of a minor.

Sa'et% There are various checks and measures in the depository system to ensure safety of the investor holdings. These include9 $ )( can be operational only after registration by #4BI, Which is based on the recommendation from +#)8 and their own independent evaluation. #4BI has prescribed criteria for becoming a )( in the regulations. )(s are allowed to effect any debit and credit to an account only on the basis of valid instruction from the client. 4very day, there is a system driven mandatory reconciliation between )( and +#)8. $ll transactions are recorded as +#)8 'entral #ystem and in the databases maintained by business partners. There are periodic inspections into the activities of both )( and ?@T agent by +#)8. This also includes records based on which the debit>credit are effected. $ll investors have a right to receive their statement of accounts periodically from the )(. 4very month +#)8 forwards statement of account to a random sample of investors as a counter check. In the depository, the depository holds the investor accounts on trust. Therefore, if the )( goes bankrupt the creditors of the )( will have no access to the holdings in the name of the clients of the )(. These investors can transfer their holdings to an account held with another )(. The data interchange between +#)8 and its business partners is protected by protection measures of international standards such as encryption hardware lock. The protection measures adopted by +#)8 are more than what is prescribed in the #4BI.

DEMATERIA8I?ATION @DEMATA In the advanced countries, depository systems have played a significant role in not facilitating smooth trading and settlement but also attracting foreign investment in the capital market. The depository system evolved by the +ational securities depository limited -+#)8. enables investors to overcome all problems related to handling physical certificates. +#)8 is an organization formed to provide electronic depository facilities for securities traded. The securities of investors are held in electronic from through the medium of depository system. De!ateriali>ation /ne of the methods for preventing all the problems that occur with physical securities is through dematerialization -demat.. India has adopted the demat route in which the book entry is made electronically against securities that are cancelled. The share certificates are shredded. -i.e., its paper from is destroyed. and a corresponding credit entry of the number of securities -written on the certificates. is made in the account opened with the )epository (articipant -)(.. T&e $ecuritie$ &el" in "e!ateriali>e" 'ro! are 'un)i le, They do not bear any distinguishable features like distinctive number, folio number or certificate number. /nce the shares are dematerialized, they lose their identification features in terms of share certificate distinctive number and folio number. Title to the securities owned is in terms of number of securities and not in terms of distinctive number, certificates numbers etc. 4ach security is identified in the depository system by I#I+ and short name.

T&e De!ateriali>ation proce$$= Investors surrender certificates for dematerialization to depository participant. )epository participant intimates +#)8 of the re:uest. )epository submits the certificate to the register. ?egistrar confirms the dematerialization re:uest from +#)8. +#)8 updates its accounts and informs the depository participant. )epository participant updates its account and inform the investor. Note = The entire process of dematerialization may take about 1A days. Fact A out De!ateriali>ation /nly those kind of certificates can be dematerialized which are already listed in ones name and are in the list if securities admitted for dematerialized at +#)8. This list has more than BC66 companies and is still growing. /ne can get an updated list of these companies from your )( or from +#)8!s office or from +#)8 website at www.nsdl.co.in Before defacing the share certificate, ensure that it is available for dematerialization, one must therefore check with )epository (articipant whether the I#I+ -'ode number for the security in a depository system. has been activated and made available for dematerialization by the depository. If yes, then deface the share certificate. The certificate are defaced by marking. &#urrendered for dematerialization* on the face of the certificate. )ematerialization generally takes about C6 days. If it is not done in C6 days then, then contact )epository (articipant, otherwise send the grievance to the officer in charge, investor grievance cell, +ational securities depository limited. /ne can also dematerialize his debt instrument, mutual fund units and government securities in a single demat account.

DEPOSITORY $ depository can be defined as an &institution which transfers the ownership of securities in electronic mode on behalf of the investor*. $ depository can be compared to a bank. 5ust as the bank holds cash in the account and provide all the services related to transaction of the cash, a depository also holds securities in electronic form and provides all services related to transaction of shares. $ depository interacts with client through a )epository (articipant -)(.. With whom the client has to maintain a demat account.

T&ere are t6o "epo$itorie$ in In"ia BCDS8 an" NSD8, 'entral depository service -India. limited -')#8. is promoted by the stock e change, "umbai -B#4., Bank of Baroda, Bank of India, #tate Bank of India and H);' Bank. +ational #ecurities depository limited -+#)8. is promoted by 0nit Trust of India, Industrial development Bank of India, and national #tock 4 change.

National Securitie$ Depo$itor% 8i!ite" @NDS8A= Intro"uction = +#)8, the first depository in India, established in $ugust 1223 and promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standard that handles most of the settlement of securities of securities in dematerialized form in Indian capital market. A out NDS8 $lthough India had a vibrant capital market which is more than a century old, the paperD based settlement of traders caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of )epository $ct in $ugust 1223 paved the way for establishment of +)#8, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standard that handles most of the settlement of securities in dematerialized form in Indian capital market. In the depository system, securities are held in depository accounts which is more or less similar to holding funds in bank accounts, transfer of ownership of securities is done through simple account transfer. This method does away with all the risks and hassles normally associated with paperwork. 'onse:uently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates.

NDS8 Fact$ C Fi)ure A$ on Marc& ;-5 122D +umber of certificates eliminated -$ppo .. CB2 'rore +umber of companies in which more than 7AE 1AC2 shares are dematted $verage number of accounts opened per day since C1A7 +ovember 1223 (resence of demat account holders in the country 7CE of all pin codes in the country

C&ar)e$= +)#8, provides depository services to investors and clearing members through market intermediaries called depository participants -)(s.. +)#8 does not charge the investors and clearing members directly but charges its )(s, who are free to have their own charge structure for their clients. +#)8 charges to )(s are uniform for all )(s. #ome klcharges are payable by issuers also. Central Depo$itor% Ser#ice$ o' In"ia @CDS8A ')#8 is the second depository to be granted the commencement certificate by #4BI on F ;ebruary 1222. The Bombay #tock 4 change in association with Bank of India, H);', #tate Bank /f India promotes it. These depositories are interconnected. It is possible to transfer shares from one depository to another. $n investor can open an account with any of the depository participant but transfer arising out of trades on the stock e change can take place only amongst accounts in the two e isting depositories in the country.

Securitie$ an" EEc&an)e Boar" O' In"ia @SEBIA i$ t&e re)ulatin) aut&orit% an" it )o#ern$ t&e 'unctionin) o' ot& t&e "epo$itorie$, $ depository interfaces with the investors through its $gents called )epository participant -)(s.. $ )( is authorized to offer depository services to investors. $ccordingly to #4BI ,uidelines, financial institutions, Banks, custodians, and stock brokers etc, can become depository participant in a depository. /ne can select his )( to open a demat account %ust like selecting a bank for opening a savings account convenience, comfort and cost can be the three '!s to consider. $ll the )(s are appointed to fulfillment of uniform re:uirements of #4BI regulations, 1223 and re:uirements of +)#8. However, the type of services offered and the service standards may differ among various )(s.

DEPOSITORY PARTICIPANT @DPA $ )( ins investor!s representative in the depository system. It is also the agent of the depository. It functions as the link between the depository and the beneficial owner of the securities. The relationship between depository and the )( will be that of the principal and agent and their relations will be governed by the byeDlaws of the depository and the agreement between them. $ )( is the first point of contact will investor and serves as a link between the investor and the company through depository in the dematerialization of shares and other electronic transactions. The main depository players are issuer companies. )epository participant Brokers Ser#ice Pro#i"e" % a Depo$itor% Participant$ ;ollowing services can be availed through a )(. )ematerialization, i.e. converting physical securities into electronic form. To maintain record of holdings in the electronic form. #ettlement of offDmarket traders. (roviding electronic credit in respect of securities allotted by issuers under I(/ or otherwise. ?eceiving on behalf of )4"$T account holders +on G cash corporate benefits, such as, allotment of bonus and right shares in electronic form or securities ensuring upon consolidation, stock split or merger>amalgamation of companies. (ledging of dematerialized securities. ;acilitating securities lending and borrowing, if the )( is registered as an &approved intermediary* for the purpose.

Fee pa%a le % "epo$itor% participant$ Entr% 'ee$= 4ach participants shall pay, to the depository, a non refundable entry fee of ?s.=A666> D Tran$action relate" 'ee$= The following transaction related fees shall be payable by the participants to the depository. Settle!ent 'ee= $ settlement fee at the rate of ?s.16 per debit instruction in a clients account shall be charged to the participant of the client. $ settlement fee at the rate of ?s.1 per instruction in respect of securities received from the clearing corporation into the receipt G in account of each clearing member maintained with the participant sub%ect to a minimum of ?s.1666 and a ma imum of ?s.=6666>D per :uarter per 'm account shall be charged to participant. Ple")e Fee= $ fee at the rate of ?s.=A per instruction for creation of pledge>hypothecation shall be charged to the participant of the (edgor>hypothecator. +o fee shall be charged when a pledge>hypothecation is closer or invoked. 8en"in) an" orro6in) 'ee$= $ fee at the rate of ?s.=A per institution shall be charged to the participant of the borrower in respect of credit of securities to the account of the borrower. +o fee shall be charged at the time of repayor recall of securities. Fee 'or "e!ateriali>ation C re!ateriali$ation= +o fees shall be charged by the depository on dematerialization re:uests. However, in case of rematerialisation re:uest, a flat fee of ?s.166 per certificate shall be charged to the participant.

Securit% "epo$it= 4very participant shall pay to the depository ?s.16 lakh by way of interest free refundable security deposit. However, a clearing corporation or a clearing house of a stock e change will be e empt from payment of security deposit. C&ar)e$ C&ar)e$ 'or Account Openin) an" ot&er "epo$itor% relate" tran$action$= +#)8 charges the )(s and not the investors. +#)8!s charges to its )(s are fi ed and are based on the usage of +#)8 system. The charges that the )( will be charging you for various services are mentioned in the schedule of charges which forms a part of the account opening agreement. Hou can get the details of the charges from the )(s. Hou can also get a comparative list of )( charges from +#)8!s office or from the +#)8 website. Hour )( may revise charges by giving you C6 days notice in advance. So!e Fact$ a out t&e Account= /ne can open more than one amount with the same diphtheria is no restriction on the number of account. )( may levy nominal charges for opening an account and also for every transaction in the account. ')#8 and )(s will publish their charges from time to time. #imilarly, there is no restriction with the number of )(s you can open accounts with. +o minimum balance is re:uired to be maintained with the )(. The demat account must be opened in the same ownership pattern in which the securities are held in the physical from e ample, if one share certificate is in your individual name and another certificate is %ointly held in your and your wife* name, two different account would have to be opened.

$nyone can operate demat account on ones behalf if authorized by e ecuting a power of attorney and submitted it to )(. The charges for closing the account and transferring securities would be as per the schedule of charges of ones )(, agreed by at the time of account opening or any subse:uent charges therein. No!ination +omination can be made only by individuals holding beneficiary account either singly or %ointly, nonDindividuals including society, Trust, Body corporate, partnership firm, karta or Hindu 0ndivided family, holder of power of attorney cannot nominate. +omination is permitted for account with %oint holders. But in case of death of any of the %oint holder -#., the securities will be transmitted to the surviving holder -#.. only in the event of )eath of all the 5oint Holders, the securities will be transmitted to the nominee. Proce"ure o' No!ination= The nomination form duly filled in should be submitted to the )( either at the time of account opening or later. The account holder, nominee and two witnesses must sign this form and the name, address and photograph of the nominee must be submitted. If nomination was not made at the time of account opening it can be made subse:uently by submitting the nomination form.

So!e Fact$ A out No!ination= $n +?I can also nominee directly. But the power of attorney holder cannot nominee on behalf of +?I. $ minor can be a nominee only when the guardian will sign on his behalf and documents of guardians are also submitted. But a minor cannot nominate either directly or through its guardian. /nly an individual can be a nominee. $ nominee shall not be a society, trust, body corporate, partnership firm, karta of Hindu undivided family or a power of attorney holder. /nly one nominee can be made for one depository account. +omination can be made account wise not security wise. +omination can be charged anytime by the account holder># by simply filling up the nomination form once again and submitting it to the )(. Tran$!i$$ion Transmission is the process by which securities of a deceased account holder are transferred to the account of the surviving %oint holder -#.>nominee>legal heirs of the decreased account holder. (rocess of transmission in case of dematerialized holding is more convenient as the transmission formalities for all securities held in $ demat account can be completed by submitting documents to all )( whereas in case of physical securities the surviving %oint holder -#.>nominee>8egal heirs has to correspond independently with each company in which shares are held.

Proce"ure o' Tran$!i$$ion= In ca$e o' Deat& o' t&e $ole account &ol"er=F In case of death of the sole holder, for the purpose of transmission of securities, the nominee has to submit a duly filled in transmission form, notarized copy of death certificate and an affidavit in the prescribed format to the )(. $fter verifying these documents and if found in order, the )( will transmit the securities to the account of the nominee. In ca$e No No!inee i$ !a"e=F In case the sole account holder does not make nomination, the securities would be transmitted to the account of legal heir -#.. $s may be determined by an order of the competent court. However in cases where the value of securities to be transmitted is less than ?s.1,66,666>D the )( may process the re:uest based on submission of necessary letter of indemnity surety, affidavits and +oc documents. In ca$e o' Goint Hol"er$=F In the event of )eath of one of the %oint holders, the securities will be transmitted of the surviving holder -#. on submission form and notarized copy of the death certificate of the deceased %oint holder to the )(. ;or transmission of securities, the account of the surviving holder -#. must be in the same se:uence in which the names appear in the %oint account to be closed.

REMATIA8ISATION To get back the securities in physical form, all we have to do is to re:uest our )( or ?ematerialization of the same. I?ematerialization! is the term used for converting electronic holdings back into certificates. The process is carried through )( and the process has to be completed with a period of C6 days. The investor has to submit a re:uest for remat. The re:uest is forwarded +#)8 by )(, after verifying that the necessary balance, +#)8 in turn will intimate the registrar who will print the certificates and dispatch the same to investor. Investor may or may not be allotted certificates with the same distinctive and certificate numbers. However, it does not matter really. He will usually be allotted a new folio number. However, if he already have an e isting folio number, he may be allotted the same. THE REMATERIA8ISATION PROCESS Investor re:uests the )( for rematerialisation The )( informs to the +#)8. +#)8 intimate the registrar. The registrar of the company prints certificate with new number and informs +#)8. +#)8 ad%usts its accounts and passes on the details to the )(. The certificated are dispatched to the investor.

Tra"in)H Settle!ent Proce"ure 'or $ellin) "e!ateriali>e" $ecuritie$= This procedure is very simple. $fter we have sold securities, we would instruct our )( to debit our account with the number of securities sold by us and credit our broker!s clearing account. This delivery instruction has to be given out to )( using the delivery instruction slips given to us by our )( at the same of opening the account. (rocedure for selling securities is given here below9D We sell securities in any of the stock e change linked to +#)8 through a broker. We give instruction to our )( to debit our account and credit the BrokerJs accountJ Before the payDin day, our Broker given instructions to its )( for delivery to clearing corporationJ /ur broker receives payment from the stock e change -clearing corporation.J We receive payment from the broker for the sale of securities. Proce"ure o' Purc&a$in) De!ateriali>e" Securitie$ ;or receiving demat securities we may give a oneDtime standing instruction to our )(. This standing instruction can be given at the time of account opening or later. $lternatively, we may choose to give separate receipt instruction every time some securities are to be received.

T&e tran$action$ relatin) to purc&a$e o' $ecuritie$ are $u!!ari>e" elo6= We purchase securities through a BrokerJ We make payment to out broker who arranges payment to clearing corporation on the payDin dayJ /ut broker receive credit of securities it is clearing account -clearing member pool account. on the payDout dayJ /ut broker given instructions to its )( to debit clearing account and credit out accountJ We receive shares into our account. However, if standing instructions are not given at time of opening the account. We will have to give Ireceipt instructions! to our )( for receiving credit. We should ensure that our broker transfer the securities from its clearing account to depository account, before the book closure. If the securities remain in the clearing account of the broker, the company will give corporate benefits -divided or bonus. to the broker. In that case, we will have to collect the benefits from our broker. 8enders of the securities and the borrowers of the securities enter into separate agreements with the approved intermediary for lending and borrowing the securities. 8ending and borrowing is effected through the depository system. So!e Fact$ To Con$i"er= /ne can lend his securities through intermediaries approved by #4BI. We may enter into an agreement with the approved intermediary to be a lender under this scheme. $fter a we may lend securities an time B submitting lending instruction to our )(. 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. 'orporate benefits accruing on these securities during the period of lending will be given to the intermediary>recalled, intermediary > borrower will return the securities together with benefits received.

?4KI4W /; 8IT4?$T0?4

RE:IE7 OF 8ITERATURE To provide more light on the topic, various research articles and surveys conducted by various authors are included9 M,S,Arun5 8a+$&!i an" Rajla+$&!i @122DAF ITa+in) t&e $%$te! 'or a ri"eJ 'apital "arket. In this article, authors have studied the multiple I(/ application scandal that highlights the carelessness and collusion of banks, investment bankers, and )(!s with market manipulators. Suc&eta Dalal @122/AF IDe!ateriali$ationJ = 'osts, insurance and other issues. #he has founded that although high dematerialization costs may have retarded through growth of India!s government investor population, things are beginning to change. $ccording to her opinion, it is now up to the to encourage the investors to become active players by making the depository charges affordable. Ra#i S&a& @1221AF IE!er)ence o' $ecuritie$ "epo$itorie$ in In"iaJ= $ccording to Him, &)ematerialization of securities has ended the days of bad deliveries, payment delays, paper movement and slower settlement. Giten"ra 4u!ar Gupta @122DAF IS%$te! 'ailure or Care'ul !anipulationKJ= $ccording to him, &I(/ scam has become a big issue for investors and regulators. "ost consider it to be a manipulation of the system. #4BI and +#)8, the company!s two depositories, are taking immediate steps to identify the accused people.

D, Murali @122/AF IDi$enc&ante" 6it& t&e !ar+etJ The allD India survey was conducted on household investors to e plore their preferences and strategies and to find out why retail investors remained disenchanted with the market &despite tremendous visible progress* such as demat system. D, Ti!e$ Ne6$ Net6or+ @122DAF IDetect !ultiple account$J = In this +ews, ;inance "inister (. 'hidambaram has promised stringent action to ensure that the demat system is not abused through multiple accounts and also he has taken up the issue with the regulators to close such loopholes. 3, EP7 E"itorial @122DAF ISpectre o' Bena!i Account$J It is about the further investigation into the )emat racket first unearthed by the #4BI on )ecember 1A last year has yielded some startling revelations about the e tent to which market infrastructure is being abused for illicit gains in the primary share market. Trinat& Ta"a+!alla @122DAF IDe!ateriali$ation Securitie$J= $ccording to author a ma%or weakness in the Indian stock market has been the lack of depository services on modern lines. www.yahing.com &The relevance of the depository services in India to +onDresident Indians* It throws the light on depository services to +?I!s which removes the inconveniences due to geographical distances.

-2, 8,C, Gupta @122<AF I8i'tin) t&e #eil o'' t&e )reat "e!at ru$&J $ccording to "r. ,upta!s survey,* the overall effect of demat system has not been to attract a greater number of domestic retail investors into shareDownership but it has been attractive to speculators and fre:uent traders. www.rediff.com -=66A.D ISEBI uneart&$ "e!at rac+etJ= The #4BI has unearthed a demat racket involving entities that opened thousands of demat accounts and applied for through H4# Bank public issue through multiple applications to ensure higher allotments in the retail portion of the offering.

Depo$itor% Ser#ice$ Pro#i"e" % Ban+in) Sector

C&apter B II

ICICI BAN4
O:ER:IE7 I'I'I Bank is India!s secondDlargest bank with total assets of about ?s.1373.A2 bn -0#L CF.A bn. at "arch C1,=66A and profit after ta of ?s.=6.6A bn -0#L B31 mn. for the year ended "arch C1,=66A -?s.13.C7 bn -0#L C73 mn. in fiscal =66B.. I'I'I Bank has a network of about A7C branches and e tension counters and over =666 $T"s. I'I'I 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 specialized subsidiaries and affiliates in the areas of investment banking, life and nonDlife insurance, venture capital and asset management. I'I'I Bank was originally promoted in 122B by I'I'I 8imited, an Indian financial institution, and was its whollyDowned subsidiary. I'I'I!s shareholding in I'I'I Bank was reduced to B3E through a public offering of shares in India in fiscal 122F, an e:uity offering in the form of $)?s listed on the +H#4 in fiscal =666. In the 1226s, I'I'I transformed its business from a development financial institution offering only pro%ect finance to a diversified financial services group offering a wide variety of products and services, both delivery and through a number subsidiaries and affiliates like I'I'I Bank. In 1222, I'I'I become the first Indian company and the first bank or financial institution from nonD5apan $sia to be listed on the +H#4. DEMAT SER:ICES I'I'I Bank )emat #ervices boasts of an everDgrowing customer base of over 11.A lacs account holders. In our continuous endeavor to offer best of the class services to our customers we offer the following features. EFIn$truction$= Hou can transfer securities =B hours a day, 7 days a week through Internet @ Interactive Koice ?esponse -IK?. at a lower cost. +ow with &#peak to transfer*, you can also transfer or pledge instruction through our customer care officer.

Con$oli"ation De!at Account = )ematerialise your physical shares in various holding patterns and consolidate all such scattered holdings into your primary demat account at reduced cost. Di)itall% Si)ne" State!ent= ?eceive your account statement and bill by email. Corporate Bene'it Trac+in) = Track your dividend, interest, bonus through your account statement. Mo ile Re(ue$t = $ccess your demat accout by sending #"# to en:uire about holding, transactions, Bills @ I#I+ details. Mo ile Alert$= ?eceive #"# alerts for al debits>credits as well as for any re:uest which cannot be processed. )edicated customer care e ecutives specially trained at our call centre, to handle all your :ueries. 'ountrywide network of over =CA branches, you are never far from an I'I'I Bank )emat #ervices outlet. Cu$to"ian 'ee This fee is charged monthly and depends on the number of securities -international securities identification number DDI#I+. held in the account. It generally ranges between ?s6.A to ?s.1 per I#I+ per month. )(s will not charge custody fee for I#I+ on which the companies have paid oneDtime 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 )(s, such as #BI, charge a flat fee per transaction, H);' Bank and I'I'I Bank peg the fee to the transaction value, sub%ect to a minimum amount. The fee also differs based on the kind of transaction -buying or selling.. #ome )(s charge only for debiting the securities while others charge for both. The )(s also charge if your instruction to buy>sell fails or is re%ected.

In addition, service ta is also charged by the )(s. To give an idea, an investor having a daily average trading volume of ?s.3A666>D will be paying an effective brokerage of 6.A6E only, and that too inclusive of all charges. )emat account charges9 for all trades done through I'I'I direct.com, there are +/ separate charges. However, for all others traders and services like demat, pledge etc, the charges shall be as per the e iting rate card of I'I'I demat. $n annual maintenance fee of ?s.A66>D -?s.BA6>D for customers receiving statement by eDmail. per account is charged. However, the first year annual maintenance charges are waived for on all accounts opened through I'I'I.direct.com. ;or bank account, a minimum :uarterly average balance of ?s.A666>D needs to be maintained. 7&% to open an account 6it& ICICI "irect,co!K 4ven though they charge 6.FAE, while the broker may claim only say 6.AE. ;irstly, the brokerage rates of I'I'I direct.com are inclusive of demat transaction charges, service ta es and counter charges for contracted notes. #econdly, brokerage rates on I'I'I direct.com is dependent on the volume of transactions done and also the type of trade put in by you. $s mentioned earlier, investors with reasonable trading volumes anyways get less than 6.AE brokerages -all inclusive.. 4ven if we assume very low volumes of trading and that too only on )elivery based trading, our brokerage rates are still economical. 8et us take an e ample. I'I'I direct +ormal brokerage 6.FAE ma Transaction value 16666 Brokerage -?s.. FA.66 #ervices Ta -AE of B. +I8 /ther 'harges -6.6CE of $. +I8 )emat 'harges +I8 Total 'harges -?s.. FA.66 B<'<)<4 /ther broker 8ets say 6.A6E 16666 A6.66 =.A6 C.66 =A.66 F6.A6

$ B ' ) 4 ;

HDFC BAN4
T&e Hou$in) De#elop!ent Finance Corporation 8i!ite" @HDFCA was amongst the first to receive an Iin principle! approval from the ?eserve Bank of India -?BI. to set up a bank in the private sector, as part of the ?BI!s liberalization of the Indian Banking Industry in 122B. The bank was incorporated in $ugust 122B in the name of IH);' Bank 8imited!, with its registered office in "umbai, India. H);' Bank commenced operations as a #cheduled 'ommercial Bank in 5anuary 122A. With practically all trading being conducted electronically, most settlements happen through )emat -)ematerialisation of securities.. The H);' Bank )emat $ccount offers you a secure and convenient way to keep track of your shares and investments, how much you!ve bought and sold over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit. FEATURES C BENEFITS $s opposed to the earlier form of dealing in physical certificates with delays in transaction, trading through )emat has the following benefits. (ledging and Hypothecation of )ematerialised #ecurities. 4lectronic credit in public issue. ?eceipt of nonDcash benefits in electronic form +o stamp duty on transfer of securities held in demats form. 'hange 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 )(.

You can open t6o t%pe$ o' "epo$itor% account$ Individual $ccount 'orporate $ccount De!ateriali>in) Your Securitie$= If you wish to dematerialize -convert them into electronic form. your securities you need to 9D C&ec+ 6&et&er t&e $crip i$ a#aila le 'or "e!aterili>ation= If the scrip is available for dematerialization, then submit the share of certificates along with a )ematerialisation ?e:uest ;orm -&)?;*. duly signed by all the )emat account holders. The certificates should be duly cancelled by writing &#urrendered for )ematerialisation* on them. HDFC Ban+ 6ill= Dverify the signature of all the account holders. Dverify the names in the )emat account and the certificates Dforward the certificates to the ?egistrar>'ompany for further processing>credit in your account. /nce you get a credit in the account, the scrip will be reflected as free balance in your demat account statement.

T%pe o' cu$to!er$ 6&o can open $ecuritie$ tra"in) account$=F $ny Indian resident>+on resident individual -not 0# based. or Indian corporate can register with H);' #ecurities. 'urrently, /'Bs cannot open an account with H);' #ecurities. To become a registered user of H);' #ec, you will have to first open a savings>current and demat account with H);' Bank. Re)i$trationHaccount openin) c&ar)e$=F $ccount /pening charges $ccount opening charges w.e.f. $pril =66A are as follows9 ?s.7B2>D if the customer has an e isting relationship with H);'. -for e ample, a car loan, home loan, credit card, etc. +ecessary proof to be submitted.. ?s.722>D if the customer does not have an e isting relationship with H);'. This is inclusive of legal and documentation charges. This amount will be debited from the customer!s savings account in the absence of a che:ue. In addition to opening a trading account with H);' #ecurities 8td. Hou will also be re:uired to open a savings bank account and a )( -depository participant. account with H);' Bank. If you are already availing of these two services from H);' Bank, you need not open any other savings or demat accounts. While completing the trading account opening form, you will be prompted to provide your e isting H);' savings and H);' demat account details -if available. to complete the necessary linkage among these accounts.

BAN4 CHARGES In the event that the customer does not have an H);' Bank saving account, he>she will be obliged to open one with a minimum deposit of ?s.=A66>D. $ :uarterly minimum balance of ?s.=A66>D will have to be maintained with H);' Bank, as per the H);' Bank re:uirements. DP CHARGES There are no account opening charges. However, the depository participant -)(. will levy an annual maintenance charge as well as transaction charges for each trade. Proce"ure to eco!e an HDFC $ec cu$to!er=F ;irst the customer needs to register with H);'. He can also mail his registration re:uest. /r the registration can be made on H);'!s site at www.hdfcsec.com. 'ustomer can also register with the bank through their partner web site9 www.hdfcbank.com If the customer do not already have a savings account or demat account with H);' Bank, then he will need to open these accounts. They can be opened when he opens his account with H);' sec. /nce the documentation is over and the account opening procedure has been successful, the customer will be intimated by regular mail stating the same along with his account number, user name and password.

IDBI BAN4
PROFI8E Gul% -.D/ = #et up under an $ct of (arliament as a wholly G owned subsidiary of ?eserve Bank of India. Fe ruar% -.3D = /wnership transferred to ,overnment of India. )esignated (rincipal ;inancial Institution for coDordinating the working of institutions at national and #tate levels engaged in financing, promoting and developing industry. April -..2 = #et up #mall Industries )evelopment Bank of India -#I)BI. under #I)BI $ct as a whollyDowned subsidiary to cater to specific needs of smallDscale sector. In terms of an amendment to #I)BI $ct in #eptember =666, I)BI divested A1E of its shareholding in #I)BI in favour of banks and other institutions in the first phase. I)BI has subse:uently divested 72.1CE of its stake in its erstwhile subsidiary to date. Dece! er -..; = #et up I)BI 'apital "arket #ervices 8td. as a whollyDowned subsidiary to offer a broad range of financial services, including Bond Trading, 4:uity Broking, 'lient $sset "anagement and )epository #ervices. I)BI 'apital is currently a leading (rimary )ealer in the country. Septe! er -../ = #et up I)BI Bank 8td. in association with #I)BI as a private sector commercial bank subsidiary, a se:uel to ?BI!s policy of opening up domestic banking sector to private participation as part of overall financial sector reforms. Au)u$t 1222 = Became the first $llDIndia ;inancial Institution to obtain I#/ 266=9122B 'ertification for its treasury operations. $lso became the first organization in Indian financial sector to obtain I#/ 26619=666 'ertification for its fore services.

Dece! er 122; = /n )ecember 13,=66C the parliament approved The Industrial )evelopment Bank -Transfer of 0ndertaking and ?epeal Bill. =66= to repeal I)BI $ct 123B. The (resident!s assent for the same was obtained on )ecember C6, =66C. The ?epeal $ct is aimed at bringing I)BI under the 'ompanies $ct for investing it with the re:uisite operational fle ibility to undertake commercial banking business under the Banking ?egulation $ct 12B2 in addition to the business carried on and transacted by it under the I)BI $ct, 123B. Gul% 122/ = The Industrial )evelopment Bank -Transfer of 0ndertaking and ?epeal. $ct =66C came into force from 5uly =, =66B. Septe! er 122/ = +otification for appointed day as /ctober 1, =66B, issued by "inistry of ;inance on #eptember =2, =66B. Octo er 122/ = $ppointed day G /ctober 1, =66BD Transfer of undertaking of I)BI to I)BI 8td. commences operations as a banking company I)BI $ct, 123B stands repealed. Ganuar% 122< = The Board of )irectors of I)BI 8td. at its meeting held on 5anuary =6,=66A approved the #cheme of $malgamation, envisaging merging of I)BI Bank 8td. with I)BI 8td. (ursuant to the scheme approved by the Boards of both the banks, I)BI 8td. will issue 166 e:uity shares for 1B= e:uity shares held by shareholders in I)BI Bank 8td. 4," has been convened on ;ebruary =C, =66A for seeking shareholders approval for the scheme. DEMAT ACCOUNT Electronic Securitie$ Ban+in) = (aper securities are passM. 4nter the world of dematerialized shares, bonds and other securities. 'onvert your securities to dematerialized from with I)BI )emat $ccount. It!s as simple as opening a #aving $ccount.

7&% De!at 6it& IDBI 8owest fees #tatement by emails )emat access through internet, cell and phone (ortfolio valuation on the account statements /nline e ecution of transactions at branches #pecial rates for stock market intermediaries and sub brokers Transactions update from back Goffice four times a day

BENEFITS OF A DEMAT ACCOUNT With I)BI!s )emat $ccount you can en%oy host of benefits. De!at Account Ser#ice$ (ortfolio value on $ccount #tatement )emat #ervices over phone #tatement on eDmail /nline 4 ecution of instruction #ervice at all the branches Kiew of statement on the net De!at Account$ 'or NRI$ If you are a +onD?esident Indian -+?I. who has invested in shares, bonds, debentures of Indian companies or would like to do so now, open a )emat $ccount with I)BI bank either under +?I ?epatriable or +?I +onD?epatriable 'ategory. Through bank!s Internet Banking, you can view your )emat $ccount balances and print statement of transactions and holdings from anywhere in the world. IDBI Hes In BF locations Hes Hes Hes Hes Ot&er Ban+ DP$ +o +o +o +o +o +o

UTI BAN4

0TI Bank was the first of the new private banks to have begun operations in 122B, after the ,overnment of India allowed new private banks to be established. The Bank was promoted %ointly by the $dministrator of the specified undertaking of the 0nit Trust of India -0TID1., 8ife Insurance 'orporation of India -8I'. and ,eneral Insurance 'orporation 8td. and its associates viz. +ational Insurance 'ompany 8td., The +ew India $ssurance 'ompany, The /riental Insurance 'orporation and 0nited Insurance 'ompany 8td. The Bank today is capitalized to the e tent of ?s. =7F.3= 'rores with the public holding -other than promoters. at 7=.=7E. The Bank!s ?egistered /ffice is at $hmedabad and its 'entral /ffice is located at "umbai. (resently the Bank has a very wide network of more than B=6 branch offices and 4 tension 'ounters. The Bank has a network of over 1FB1 $T"s providing =B hrs a day banking convenience to its customers. This is one of the largest $T" 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 e cellence. PROMOTERS 0TI Bank 8td. has been promoted by the largest and the best financial institution of the country, 0TI. The Bank was set up with a capital of ?s.11A crore, with 0TI contributing ?s.166crore, 8I' G?s.7.A crore and ,I' and its four subsidiaries contributing ?s.1.A crore each. UTI BSHAREHO8DING 13,3;L 0TI is the largest mutual fund in India. 0TI presently occupies a special position in Indian capital market. With a servicing and distribution network of more than AC branch offices, C=6 'hief ?epresentatives and about 26666 agents, 0TI provides the complete range of services to its investors.

The account opening charges and the transaction charges of 0TI bank9D

The table below provides a breakDup of the charges by 0TI Bank )epository. UTI Depo$itor% ?s =66 -0pfront (ayment. to +o Hes F3

)epository $ccount /pening Transfer>Block #tocks /+8I+4 4:uitymaster Balances Kiewable Through Internet +o. of Branches

UTI Ban+ De!at Account 'ustomer must enclose one of the following documents -(hotocopies only. with the application form for each $pplicant. (assport ?ation 'ard ($+ 'ard Koter!s I) 'ard Bank $ttestation 0TI Bank charges ?s.=66 towards demat account opening and ?s.=66 towards annual account maintenance charges. This charge will be debited directly from the customer!s account.

4OTA4 MAHINDRA BAN4

O:ER:IE7 4stablished in 12FB, The Notak "ahindra group has long been one of India!s most reputed financial organizations. In ;ebruary =66C, Notak "ahindra ;inance 8td, the group!s flagship company was given the license to carry on banking business by the ?eserve Bank of India -?BI.. This approval creates banking history since Notak "ahindra ;inance 8td. is the first company in India to convert to a bank. THE COMP8ETE BAN4 $t Notak "ahindra Bank, we address the entire spectrum of financial needs for individuals and corporates. ;rom ?etail ;inance to 4:uities, "utual ;unds to 8ife Insurance and Investment Banking, we have the products, the e perience, the infrastructure and most importantly the commitment to deliver pragmatic, endDtoDend solutions that really work. IN:ESTMENT SER:ICES = O:ER:IE7 $t Notak "ohindra Bank, we recognize that financial needs vary, not %ust amongst individuals, but across the different stages of your life. We have years of e perience in helping people put together an investment portfolio that works best for them. ;rom fi ed deposits to insurance, mutual funds to demat accountsDwe cover it all. What differentiates us, however, is our emphasis on building enduring relationships. Hou!ll find that at Notak "ahindra Bank, it!s not about selling you many different productsO it!s about working out a holistic, pragmatic solution that addresses your financial needs.

DEMAT = FEATURES

They offer streamlined, efficient depository services that allow you to hold your shares in convenient, &demat* formats and leverage opportunities in the stockDmarket when you spot them. T&eir $er#ice inclu"e = )edicated and trained 'ustomer 'are /fficer to handle and answer all your :ueries. Highly competitive service charges. They also cater to the debt re:uirements of companies, including the issue of 'ommercial (aper, 'ertificate of )eposits, etc. They also provide a composite )emat account that can hold 4:uity shares as well as ,overnment #ecurities, Bonds etc. DEMAT = DOCUMENTATION In order to open a )emat $ccount, you will need to provide>produce the following documents )uly filled 'lient ?elationship ;orm -Individual or 'orporate., )emat $ccount /pening ;orm. )uly e ecuted and stamped )epository (articipant 'lient $greement supplied by the Bank. $ photograph of each holder>signatory to be pasted on the form and signed across. $ copy of (assport>?ation 'ard> Koter!s I) 'ard>Bank attestation for identification. +omination form -if re:uired. A""itional "ocu!ent$ re(uire" 'or openin) a corporate account$, 'opy of 'ertificate of incorporation. 'opy of certificate of 'ommencement of Business. "emorandum and $rticles of $ssociation. Board ?esolution for opening of the )emat $ccount and authorizing the authorized signatories to operate the )emat account. A""itional "ocu!ent$ re(uire" 'or HUF accunt$ The H0; accounts can be opened in the name of and operated by the Narta only. H0; stamp should be affi ed on all )emat $ccount related documents.

?4#4$?'H "4TH/)/8/,H

$+$8H#I# $+) I+T4?(?4T$TI/+

RESEARCH OBGECTI:ES To determine various depository services being administrated by banking )(!s in 'handigarh. To determine new trends in administration of )( services. To determine investors and )( perception towards )( services. To check the growth trends, increasing popularity and awareness of )( #ervices. RESEARCH METHODO8OGY ?esearch methodology is a way to systematically solve the research problem. The methodology of study is usually related to the sub%ect or the issue that is being investigated. In this, we study the various steps that are generally adopted by a researcher in studying research problem. )etermine>define the problem. #pecify what information is needed. Identify the sources of information. ,ather and process the information. $nalysis and interpret the information. (resent the findings. RESEARCH DESIGN OPTED In the present research study 4 ploratory ?esearch has been undertaken. Hereby, it has been tried to have a view of &)epository #ervices* given by various banks at 'handigarh. In a field research personal interviews with the use of the structured :uestionnaire are conducted to collect the relevant data.

SOURCES OF DATA Pri!ar% "ata= The data was collected from primary sources, for this purpose, a :uestionnaire was drafted involving various statistical techni:ues in order to increase the accuracy and efficiency of the research process. Secon"ar% "ata= The secondary data is divided into two parts9 Internal data 4 ternal data Internal Secon"ar% Data Internal data is procured or compiled through depository participants such as depository accounts, records of investors, record of )emat, record of delivery instructions and account maintenance etc. also the information about the organizations history etc. have been taken. EEternal Secon"ar% Data 4 ternal secondary data is generated and collected from events and sources outside the firms premises such as 'atalogues, )irectories, ;iles and Books etc. In this pro%ect, among internal sources the organization reports, records were used to find about depository service administration and among e ternal data are collected from magazines and reports of various surveys in order to have about the depository services being provided by various Banks, also through Internet #urfing.

SAMP8ING DESIGN Sa!plin) Plan = In the present study convenience sampling plan is used. Sa!plin) Uni#er$e = $ll the residents of 'handigarh city. Sa!ple Unit = Individuals using depository services of various Banks. Sa!ple Si>e = In the present study the sample of A6 people holding demat account.

Data Collection Met&o" )ata about organization profiles of the various Banking )epository (articipants of 'handigarh @ +#)8 and ')#8 is available through the secondary sources. ;or the survey structured :uestionnaires has been used. Puestionnaire is a list of :uestions given to a number of persons for them to answer. It secures standardized results that can be tabulated and treated statistically. The :uestionnaire can be structured or unstructured. 8IMITATION OF STUDY The result of this research cannot be termed as making a fair representation of the pro%ect. It was sometimes difficult to obtain data and sometimesDwrong information was provided by source, which had to be, crosschecked and verified. )ata collected may be sub%ective due to personal perception of different interviewed. The )ynamic 4nvironment (revalent in the banks may render the findings to be untrue and obsolete over a period of time. ,athering information from various banks was not easy task as in certain concerns, as the persons in change were unable to provide much information as they themselves were overburdened.

COMPARATI:E ANA8YSIS OF IN:ESTORS

-, 7it& 7&ic& Concern "o %ou &a#e a "e!at AccountK Ta le No, D,Option ICICI HDFC IDBI UTI 4OTA4 MAHINDRA MU8TIPU8E ACCOUNT ANY OTHER TOTA8 No, o' Re$pon"ent 7 F = 1= C 13 = A6 Percenta)e @LA 1AE 13E BE =CE 3E C=E BE

4%

16% HDFC IDBI 4% UTI KOTAK MAHINDRA MULTIPLE ACCOUNT ANY OTHER 23%

32%

6%

Grap& No, D,Interpretation= The ma%or portion in the above pie chart is covered with blue, that consists of &investors having multiple accounts with multiple banks*, which contributes to C=E of the total area, followed by 0TI Bank, where about ==E of the investor have opened their demat account. $fter 0TI bank, H);' bank is on second position, with which 13E of the investors have opened their demat account, followed by I'I'I bank, which contributes to

13E of the total area. $bout 3E investors have opened their demat account with Notak "ahindra bank, followed by I)BI bank, which is BE. $lso, about BE of the investors have opened their demat account with other banks and companies.

The above analysis clearly shows that among various )(!s, 0TI is in ;irst position as compared to that of other )(!s as large number of investors has opened their demat accounts with this bank. 1, Rea$on$ 'or openin) De!at Account 6it& Speci'ic Ban+ Ta le No, D,1 Option$ Pa$t Dealin) 6it& Ban+ 8o6 Maintenance C&ar)e$ Frien"$ Reco!!en"ation Better Ser#ice$ Ea$% Acce$$i ilit% Multiple Rea$on$ No, o' Re$pon"ent 11 = 1 3 C =7 Percenta)e @LA ==E BE =E 1=E 3E ABE

Past Deal !" # t$ Ba!% 22% 4% 54% 2% 12% 6% M/lt 0le Reas&! L&# Ma !te!a!'e F( e!)s Re'&**e!)at &! Bette( +e(, 'es Eas- A''ess . l t-

Grap& No, D,1 Interpretation= The ma%or portion of the pie chart with blue, &multiple reasons* which contributes to the ABE of the total area, it shows that ABE of the investors consider multiple reasons out of above, while making decision regarding opening of )emat $ccount with the specific bank. The above analysis clearly shows that ==E of the investors open their demat account with the specific bank because of past dealing with that bank, followed by those investors who prefer better services of specific bank, which is 1=E, rather than any other reason. It also shows that very small number of investors prefer to open their demat account with the specific bank because of easy accessibility, low maintenance charges as well as friends recommendations, which is 3E, BE and =E respectively.

Fre(uenc% o' Tran$action$ Ta le No, D,; Option$ 2F< ti!e$ in a !ont& <F-2 ti!e$ in a !ont& -2F-< ti!e$ in a !ont& More t&an -< ti!e$ in a !ont&
125 t * es ! a * &!t$ 5211 t *es ! a * &!t$

No, o' Re$pon"ent =1 1A 3 F

Percenta)e @LA B=E C6E 1=E 13E

16% 42%

12%

11215 t *es ! a *&!t$ M&(e t$a! 15 t * es ! a * &!t$

31%

Grap& No, D,; Interpretation= In the above table, the respondents were asked about the fre:uency of their transactions. The above graph indicates that about B=E of the respondents have their transactions fre:uency. 6DA times in a month, followed by those respondents, who have their fre:uency of transactions AD16 times in a month, which contributes to the C6E of the total area. It also shows that 13E of the respondents have their transactions fre:uency more than 1A times in a month. The above analysis clearly shows that only a few number of investors, who have their transactions fre:uency more than 1A times in a month.

Da%$ Ta+en in Openin) De!at Account

Ta le No, D,/ Option$ 8e$$ t&an - "a% -F1 "a%$ 1F< "a%$ More t&an < "a%$ No, o' Re$pon"ent 6 12 =F C
6% 33% 122 )a-s 225 )a-s M&(e t$a! 5 )a-s 56%

Percenta)e @LA 6E CFE A3E 3E

Grap& No, D,/ Interpretation= In the above table, the respondents were asked about the number of days taken by their depository participants in opening of an account, the responses in the above pie chart shows that ma%or portion of the chart is covered with A3E, which is =DA days taken in opening of an account, followed by 1D= days, which CFE. #ome depository participants take more than A days in opening of an account, which contributes to 3E. The above analysis clearly indicates that no depository participant opens an account on the same day. It shows that generally, )(!s take =DA days, which needs to be improved. There is need for )(!s to make fast processing in opening of an account to avoid a huge difference between the number of more and less days taken in opening of an account.

Pro le! 6&ile openin) a "e!at Account

Ta le No, D,< Option$ Ye$ No No, o' Re$pon"ent B B3


3%

Percenta)e @LA FE 2=E

Yes N&

42%

Grap& No, D,< Interpretation= The ma%or portion of the pie chart is covered with ?ed &those investors having no problem while opening an account*, which contributes to 2=E of the total area, followed by &investors having problem in opening account* which is F E only. This shows that ma%ority of the investors faced no problems in opening an account as compared to other investors. The analysis shows that the depository services are providing better services to investors but still there is need for little improvement and personalized attention in the structure of their services so as to satisfy the investors and solving their problems while opening an account.

Ti!e Ta+en in$truction$, Ta le No, D,D

% Ban+in) Depo$itor% Participant$ in EEecutin) "eli#er%

Option$ 7it& in 'e6 &our$ Sa!e "a% 7it& in - "a% 7it& in 1 "a%$

No, o' Re$pon"ent B =6 1A 11


3%

Percenta)e @LA FE B6E C6E ==E

22%

5 t$ ! 6e# $&/(s +a*e )a41% 31% 5 t$ ! 1 )a5 t$ ! 2 )a-

Grap& No, D,D Interpretation= The above analysis shows that the ma%or portion of the investors, which is B6E of the total area, have said that their banking depository participants e ecute their delivery instructions on the same day, when the account is opened. Its is followed by investors, which is C6E, having the e ecution of their delivery instructions within 1 day after the account is opened. The analysis clearly shows that only FE investors out of the total, are getting their delivery instructions with in few hours and the rest investors, which contributes to ==E of the total area, their )(!s take at least two days to e ecute the delivery instructions. It shows that depository participants of minor portion of the investors are e ecuting their delivery instructions in a very short period and there is a need for )(!s to put in lot of effort to make fast their services. Ha#e %ou a#aile" t&e 'ollo6in) $er#ice$ Ta le No, D,3 Option$ Re!ateriali>ation Free>eHDe'ree>e Tran$po$ition TeleF"e!at No, o' Re$pon"ent C = 6 7 Percenta)e @LA 3E BE 6E 1BE

Spee"FE Multiple Ser#ice$ No Ser#ice$

= =C 1C
6%

BE B3E =3E

4% 14% 4%

26%

Re*ate( al 7at &! F(ee7e8De6(ee7e T(a!s0&s t &! Tele2)e*at +0ee)2E M/t 0le +e(, 'e N& +e(, 'e

46%

Grap& No, D,3 Interpretation= $s in above, the ma%or portion of the pie chart is covered with brown, &multiple services*, which contributes to B3E of the total area, followed by &no service*, which is =3E. This shows that ma%ority of the investors are availing the above services more than one, and then, it is followed by the investors who have not availed any of the above service. The above analysis shows that only 3E of the investors are getting the ?ematerialisation facility from their )(!s which is followed by &investors having

;reeze>)efreeze and #peedD4 facility*, which is BE. It also shows that no investor is availing the facility of Transposition from their )(!s. A6arene$$ A out Cu$to"% C&ar)e$ Ta le No, D,0 Option$ Ye$ No No, o' Re$pon"ent == =F Percenta)e @LA BBE A3E

44% 56%

Yes N&

Grap& No, D,0 Interpretation= In the above table, respondents were asked about their awareness regarding custody charges by their depository participants. The pie chart indicates that ma%or portion of the investors, which contributes to A3E of the total area, is not aware about the custody charges. /nly BBE of the investors are aware about such charges. The above analysis shows that there is no huge difference between the aware and nonDaware investors as there is very little difference between their percentages, but still there is a need for more information disclosure of such services to the investors.

., To 7&ic& attri ute5 %ou pre'er t&e !o$t5 6&ile $electin) DPM$K aA Sa'et% Ta le No, D,. Option$ Sa'et% Acce$$i ilit% I!a)e Co$t Structure Nuic+ Settle!ent Per$onali>e" attention No, o' Re$pon"ent 11 1A 2 1 F 3 Percenta)e @LA ==E C6E 1FE =E 13E 1=E A Acce$$i ilit% cA I!a)e 'A Per$onali>e" Attention, "A Co$t Structure eA Nuic+ Settle!ent

12%

22%

+a6etA''ess . l tI*a"e C&st +t(/'t/(e 9/ '% +ettle*e!t

16% 2% 13% 31%

Pe(s&!l 7e) atte!t &!

Interpretation= In the above analysis, the respondents were asked about the most preferred attribute, they prefer while selecting )(. The above analysis clearly shows that about C6E of the investors of the total area, prefers the &accessibility* to be the most important attribute in making decision regarding the choice of )(, followed by &safety* attribute, which is ==E. ;or some investors, image of )( is more important than any other attribute, which contributes to 1FE of the total area whereas 13E investors prefer &Puick settlement* to be the most important attribute. The analysis indicates that only 1=E investors prefer &personalized attention* and rest =E prefer &cost structure* attribute to be the most important.

The analysis shows that investors want convenience and therefore, large number of investors prefer &easy accessibility* to be the most preferred attribute amongst all. Factor Con$i"ere" in Ma+in) In#e$t!ent Deci$ion Ta le No, D,-2 Option$ Ma"e % $el' Gui"e" % No, o' Re$pon"ent 13 Fa!il% C Percenta)e @LA C=E 3E 1BE FE

Me! er$ Gui"e" % Pro'e$$ional 7 In#e$t!ent Con$ultant Gui"e" % Ban+er$ B

Multiple Factor$
1%

=6

B6E
Ma)e .- +el6 32% :/ )e) .- Fa* l- Me*.e(s :/ )e) .- P(&6ess &!al I!,est*e!t C&!s/lta!t 6% :/ )e) .- Ba!%e(s M/lt 0le Fa't&(s

41%

3%

14%

Grap& No, D,-2 Interpretation= In the above table, respondents were asked about various factors that they consider while making investment decision. The above graph shows that about B6E of the investors, that covers the ma%or portion of the total area, consider multiple factors out of above, rather than taking only one. It is followed by &those persons*, who take investment decision made by self, which is C=E, and then, &those persons*, who take decision under the guidance of professional investment consultants, which is then, followed by FE and 3E of guidance from bankers and family members respectively.

This analysis shows that ma%or portion of investors consider the guidance of all, i.e. family members, professional investment consultants and their bankers as well as made decision on their own. -2, Opinion a out Ser#ice pro#i"e" % Depo$itor% Participant$ Ta le No, D,-Option$ Sati$'ie" So!e 6&at $ati$'ie" Not Sati$'ie" No, o' Re$pon"ent CC 1= A Percenta)e @LA 33E =BE 16E

11% 24%

1% +at s6 e) +&* e # $at sat s6 e) N&t sat s6 e) 66% +l 'e 4

Grap& No, D,-Interpretation= The ma%or portion of the pie chart is covered with blue, &satisfied respondents* which contributes to 33E of the total area, followed by &somewhat satisfied respondents*, which is =BE, and &notDsatisfied respondents*, which is 16E of the total area, with the depository services provided by their )(!s. This shows that ma%ority of the people is satisfied with the depository services. This :uestion was meant to know the perception of various investors towards the depository services provided by their )(!s.

4EY FINDINGS ;rom my research study I have found out that9D "a%or portion of investors have multiple accounts and 0TI bank is in first position as compared to other depository participant. "ultiple reasons are given for opening demat account with specific bank9D (ast dealing with bank, low maintenance charges, friends recommendations and better services. "ost of the investors get into the transactions mostly fives times in a month.

Two to five days are taken by the depository participants to open an demat account. The investors avail multiple services of depository participants9D ?ematerialization, freeze of deDfreeze, tele demat. "a%or portion of the investors have awareness regarding custody charges charged by depository participants. "ultiple factors are considered by investors in making investment decision9D "ade by self, guided by family members or by professional investment consultant.

'/+'80#I/+

CONC8USION The Indian 'apital "arket has been the manual and paper based settlement system but under the depository system, the clearing and settlement of transactions take place only with the use of paper work. The system of physical delivery of scripts poses many problems for purchaser as well as the seller in the form of delayed settlements.

Thus, to eliminate paper work, facilitate scrip less trading and electronic book entry of the transfer of securities, it was found necessary to replace the old system of transfer and settlement with the new and modern system of depositories. In the advance countries, depository systems have played a significant role in not only facilitating smooth trading and settlement but also attracting foreign investment in the capital market.

SUGGESTIONS FOR THE STUDY )epository services should be more transparent, systematic, and fast. )epository (articipants should provide more personalized attention to their clients to attract as well as to e pand customer base and satisfaction level. There is a need to disclose more information regarding )epository services in India so that people become more aware about such services and it helps in facilitating holding of

securities in nonDphysical manner for which +#)8 started functioning through various business partners who include depository participants -)(s.. #4BI should also set up a more Working ,roups comprising +ational #ecurities )epository 8td. -+#)8., and various market participants like 'ustodians, Brokers, #tock 4 changes and "utual ;unds to assess the progress in dematerialized trading and suggest further steps. )epository participants act as a two way link, firstly between the customer and the company, and secondly as between the customer and the stock e change. #o every )( should take into consideration that his customers are best taken care off. 4very )( should act as a consultant along with providing e pert knowledge to his customers. To cater to the convenience of its customers, Bank should continue e ploring ways to e pand its reach through strategic arrangements with other institutions. /ne of the key areas to work is, by upgrading different additional attributes like that of safety, accessibility, image, cost @ settlement. 4very )( should try to emphasize on personal attention to each customer and also should try to minimize the time of e ecuting delivery of transactions. 4very )( should initiate steps to improve its e isting support systems for retail products and alternate delivery channels through continued use of technology. ?egular and up to date information is also critical for these competing )epository (articipants.

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