A PROJECT REPORT ON UNDERSTANDING DEPOSITORY SYSTEM (With
Fullerton securities and wealth advisors ltd) SUBMITTED BY TANIA
SHARMA
In partial fulfillment for the award of the degree of MASTER IN
BUSINESS ADMINISTRATION
RIMT- INSTITUTE OF MANAGEMENT AND COMPUTER TECHNOLOGY
PUNJAB TECHNICAL UNIVERSITY, JALANDHAR 2010
ACKNOWLEDGEMENT
Any report or analysis cannot be completed without the guidance,
assistance, inspiration and co-operation from various quarters.
This report also bears the inspiration of many persons. I take this
opportunity to express my deep gratitude to all who helped me in
the compilation of this report.I would like to express my gratitude
to all those who gave me the possibility to complete this project.
I want to thank Mr. Mohit Singla (Relationship Manager, Fullerton
Securities & Wealth Advisors Ltd.), whose help, stimulating
suggestions and encouragement helped me in all the time of writing
my project and providing me with an opportunity to work with
Fullerton Securities & Wealth Advisors Ltd.I also thank Miss.
RAVNEET BHANGU (Faculty, Regional institute of management and
technology) who has sincerely supported me with the valuable
insights into the completion of this project and encouraged me to
go ahead with my project.I want to thank all those who directly and
indirectly helped me and have given me their insights and
suggestions.
(TANIA SHARMA)
EXECUTIVE SUMMARY
For preparing the project report, I have visited the Fullerton
securities and wealth advisors for 42 days during the suggested
duration from 29-06-2010 to 10-08-2010, to avail the necessary
information. I have filled up the questionnaire with the customers
and employees of Fullerton securities and wealth advisors. The
blend of learning and knowledge acquired during my practical
studies at the company is presented in this project report. The
project report starts with the research objectives, basic
information regarding the research approach, the sample size for my
research is 50 and I have used simple random sampling method for my
research and the sources for data collection are both primary
sources and secondary sources. I have written findings and some of
the limitations which I have faced during my research work.I hope
that the information incorporated in this project report would be
appreciated as I have put in my efforts in leaving no stone
unturned as I consider it to be true, fair and relevant in its
content and context to the best of my knowledge and ability.
TABLE OF CONTENT
CHAPTER NO. TITLE PAGE NO.
EXECUTIVE SUMMARY3
1.INTRODUCTION1.1 Introduction to company-Fullerton securities
and wealth advisors.1.2 Introduction to project Depository
system5-8
9-39
2.RESEARCH METHODOLOGY2.1 Objectives of the study2.2 Research
Design40-42
3.DATA ANALYSIS AND INTERPRETATION43-52
4.FINDINGS AND SUGGESTIONS &LIMITATIONS53-56
5.CONCLUSION57
6.BIBLIOGRAPHY58
7.ANNEXURE59-60
COMPANY INTRODUCTION
FULLERTON SECURITIES AND WEALTH ADVISORS LTD
Fullerton Securities & Wealth Advisors Limited is a company
registered under Indian Company Law, incorporated on 8th February
2008 and was launched on 6th April, 2009 with 10 Financial Centre
across 9 cities in India.. Fullerton Securities & Wealth
Advisors Limited provides a complete range of financial products
and services that include equity broking (internet based online
trading as well as offline trading), financial planning, insurance,
investment products, equity research and more. Recently it has
acquired 5% stake in NSE.Fullerton Financial Holdings Pte. Ltd.
already has a presence in India through Fullerton India Credit
Company Limited, targeting the mass market segment. Fullerton
Securities & Wealth Advisors Limited will target different
segments i.e. mass affluent customers across cities in
India.Fullerton Securities & Wealth Advisors ltd is a wholly
owned subsidiary of Temasek Holdings, an Asia investment firm,
headquartered in Singapore, focused on creating and maximizing
long-term shareholder value as an active investor and shareholder
of successful enterprises.Temasek Holdings is an Asia investment
house, managing a portfolio of over S$185billion or US$134 billion.
Guided by an independent board, they operate autonomously on
commercial principles to maximize long term shareholder
returns.
Rated AAA / Aaa by Standard & Poors and Moodys, respectively
Diversified portfolio in a wide range of industries
Telecommunications & Media : SingTel, Bharti Airtel, Global
Crossing Financial Services : DBS, Standard Chartered Bank, Merrill
Lynch, Barclays Real Estate : Capital Land, Mapletree
Transportation & Logistics Singapore Airlines, Neptune Orient
Lines, PSA Energy & Resources Singapore Power, Senoko Power,
Powerseraya Infrastructure, Industrial & Engineering Keppel
Corporation, Sembcorp Technology Chartered Seminconductor,
StatsChipPAC Respectable returns to shareholder over last 34 years
Total shareholder returns of more than 18% per annum since
inception 34yrs ago 100% owned by the Minister of Finance of
Singapore.Fullerton Securities Board of directors Francis Rozario,
ChairmanFrancis Rozario is currently the Executive Director and CEO
of Fullerton Financial Holdings Pte Ltd. Prior to his current
appointment, Mr Rozario was the President Director of Bank
Danamon... Rajeev Kakar, DirectorRajeev Kakar is the Executive Vice
President & Regional CEO, for the Central Europe, Middle East
& Africa (CEEMEA) region for Fullerton Financial Holding,
Executive Director & CEO, for Dunia Finance LLC and Global
Management Board Member, for Fullerton Financial Holdings Pallav
Sinha, MD & Chief Executive OfficerPallav Sinha is currently
the Managing Director and Chief Executive for Fullerton Securities
& Wealth Advisors Limited, India. He has over 20 years of
professional working experience in the banking... Tej Pal Singh
Hora, DirectorTejpal Singh Hora is currently the group head for
Risk Management in Fullerton Financial Holdings and has more than
41 years of banking experience, having worked with Citibank for 35
years before joining Fullerton... Sng Seow Wah, DirectorMr Sng is
currently Executive Vice President and Head of Human Resources,
Special Projects & Corporate Communications at Fullerton
Financial Holdings. Mr Sng is a seasoned banker with more than 24
years...Our philosophy: Baat faayde kiIt is one thing to ask them
what they need out of their wealth and get them talking. It is
quite another to really listen to them, to create new possibilities
and truly unfold and expand their horizons. At Fullerton
Securities, this very act of listening actively is at the root of
who we are and the seed of the outstanding broking services we
offer them.The Fullerton Securities Broking Advantage Tired of
being on the listening side with your financial advisor at all
times? Not getting your broker to listen to you your side of the
story, your needs and financial requirements? Take a look at
Fullerton Securities. Whether you need a little support from your
broker or a lot, we at Fullerton Securities listen to you and help
you gain by delivering an extensive array of state-of-the-art
tools, straightforward pricing and outstanding personal
service.With us, you can enjoy a personal relationship with
investment professionals. We see investing from your perspective
and make recommendations based on actually listening to you and
understanding your needs.It's not just about the lowest-priced
trade or the latest hot stock tip. It's about getting more for your
money in terms of a long-term, consistent performance.Fullerton
offers you quality personal service, remarkable investing and
trading insights at a great price. Fullerton has solutions for the
full spectrum of investors for those just starting out to
sophisticated active investors to clients seeking investment
advice.While other brokerage houses offer you a plain vanilla, one
size fits all, 'trading' or 'broking' account, we offer you
Fullerton Financial Broking Advantage tailored to your
requirements. Fullerton Securities plans to offer maximum value and
an integrated offering through: A need based & relationship
centric approach Online view of entire relationship through
performance measurement tools Dedicated touch points Call Centre,
Website & Financial Centers Support team of RM's and Product
Sales Specialists Superior advisory and execution capability
Offering a full range of 3rd party & proprietary financial
products Certified and trained RMs, to offer competent, problem
free and timely service with empathy & care, while ensuring
suitability to customer needs at all times. The product range
includes: Financial Planning Equity Account F&O Investment
Products - Mutual Funds, GOI Bonds & Company Fixed Deposits
Life Insurance Health Insurance Vehicle Insurance Home Insurance
Travel Insurance Equity Research
INTRODUCTION TO DEPOSITORY SYSTEM
INTRODUCTIONOne of the biggest problems faced by the Indian
capital market has been the manual and paper based settlement
system. Under this system, the clearing and settlement of
transaction take place only with the use of paper work. The system
of physical delivery of scrips poses many problems for the
purchaser as well as the seller in the form of delayed settlements,
long Settlement periods, high level of failed trade, high cost of
transaction, bad deliveries etc. In many Cases transfer process
takes much longer time then two month as stipulated in section 113
of Companies Act, 1956 or section 22 A of the securities Contracts
(Regulations) Act, 1956. Moreover, a large number of transactions
end up as bad deliveries due to faulty compliance of paper work,
mismatch of signatures on transfer deeds with specimen record of
the issuer or other Procedural reasons. Besides, theft, forgery,
multination of certificates and other irregularities have also
become rampant. However, as a consequence of implementation of
reforms measures, the Indian capital market has shown rapid growth
in the recent past with foreign investors, more stock exchanges and
increased market intermediaries. The old manual system of
settlement and transfer has almost failed to handle the growing
volume of paper that has loaded the market. Thus, to eliminate
paperwork, facilitate scrip less trading and electronic book entry
of the transfer of securities, shorten settlement periods, and to
improve liquidity in the stock market, it was found necessary to
replace the old system of transfer and settlement with the new and
modern system of depositories. Accordingly the government of India
enacted the depositories Act in 1996 for the orderly growth and
development of the Indian capital market. It is a system whereby
the transfer and settlement of scrips take place not through the
traditional method of transfer deeds and physical delivery of
scrips but through the modern system of effecting transfer of
ownership of securities by means of book entry on the ledgers or
the depositary without the physical movement of scrips. The new
system, thus, eliminates paper Work; facilities automatic and
transparent trading in scrips, shortens the settlement period and
ultimately contributes to the liquidity of investment in
securities. The system is also known as scriples trading
system.There are essentially four players in the depository system:
The Depositary participant The Beneficial owner/investor The issuer
The depositaryThe depository: The depository holds the securities
of the investors in the form of electronic book entries
(dematerialized form). It maintains ownership records of securities
and effects transfer ownership through book entry.
The depository participant: The depository cannot deal with
millions of investors directly. It appoints agents called
depository participants who open and maintain accounts. It is
similar to the branch of a bank. You can open account in any branch
of a bank.
Beneficial owner: By fiction of law, the depository is
registered owner of the securities held with it with the limited
purpose of effecting transfer of ownership at the behest of the
owner. The name of the depository appears in the records of the
issuer as registered owner of securities. The name of actual owner
appears in the records of the depository as beneficial owner. The
beneficial owner has all the rights and liabilities associated with
the securities. The owner of securities intending to avail of
depository services opens an account with a depository through a
depository participant (DP). The securities are transferred from
one account to another through book entry only on the instructions
of the beneficial owner.
The issuer: It is the company which issues the security.
WHAT IS DEPOSITORY Electronic revolution has brought about a
number of changes in the functioning of Indian capital market. The
most revolutionary change that was brought in the entire history of
the Indian market is the introduction of depository. The century
old Indian market has been vibrant all along but its paper- based
settlement of trades caused problems like bad delivery, delayed
transfers etc., until the enhancement of depository act in 1996.
The depository model in India is a competitive multi depository
system in India the system of dematerialization is followed,
wherein the securities will be cancelled as against the system of
immobilization in which the securities are kept in custody. A
depository is an organization where the securities of an investor
are held in electronic form and carries out the securities
transaction by book entry. A depository is a file or set of files
in which data is stored for the purpose of safekeeping or identity
authentication. A common example is the set of personal data files
at a credit reporting agency such as Equifax. Another example is
the data contained at a state motor vehicle department. In a
biometric security system, a depository contains data about
people's physical characteristics such as iris prints and finger
images. Additional information may be added, including facial
characteristics, voice prints, and hand prints. When a person's
identity must be verified, one or more biometric samples are taken
in real time, and this data is compared with the data in the
depository. In general information storage applications, a
depository are a physical site where data is kept in the form of
hard copies, magnetic disks, magnetic tapes, compact disks (CDs),
and similar media. A good example is the safe deposit vault in a
financial institution. An ideal depository is secure, in the sense
that only authorized persons or institutions can gain access to the
data it contains. However, experience has shown that many
depositories, no matter how secure they claim to be, can be
compromised by a determined hacker or thief. Number of Depositories
in India National securities depositary Ltd. (NSDL) Central
depositary services (India) Ltd. (CDSL)
NSDL was formed and registered under the companies act 1956
during December 1995 and commenced operations during november1996.
NSDL was promoted by Industrial Development Bank of India
(IDBI)-the largest development bank in India, Unit trust of India
(UTI)-the largest mutual fund in India and National stock exchange
(NSE)-the largest stock exchange in India. Some of the prominent
banks in the country also have a stake in NSDL. Central Depository
services (India) limited which commenced operations during February
1999.CSDL was promoted by stock exchange, Mumbai in association
with Bank of Baroda, Bank of India, State Bank of India and HDFC
Bank.
Although India had a vibrant capital market which is more than a
century old, the paper-based settlement of trades caused
substantial problems like bad delivery and delayed transfer of
title till recently. The enactment of Depositories Act in August
1996 paved the way for establishment of NSDL, 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
standards that handles most of the securities held and settled in
dematerialized form in the Indian capital market.
Promoters/ShareholdersNSDL is promoted by Industrial Development
Bank of India Limited (IDBI) - the largest development bank of
India, Unit Trust of India (UTI) - the largest mutual fund in India
and National Stock Exchange of India Limited (NSE) - the largest
stock exchange in India. Some of the prominent banks in the country
have taken a stake in NSDL.Promoters Industrial Development Bank of
India Limited Unit Trust of India National Stock Exchange of India
LimitedOther Shareholders State Bank of India Oriental Bank of
Commerce Citibank NA Standard Chartered Bank HDFC Bank Limited The
Hong Kong and Shanghai Banking Corporation Limited Deutsche Bank
Dena Bank Canara Bank Union Bank of IndiaLEGALFRAMEWORK
As a part of its on-going market reforms, the Government of
India promulgated the Depositories Ordinance in September 1995.
Based on this ordinance, Securities and Exchange Board of India
(SEBI) notified its Depositories and Participants Regulations in
May 1996. The enactment of the Depositories Act the following
August paved the way for the launch of National Securities
Depository Ltd. (NSDL) in November 1996. The Depositories Act has
provided dematerialization route to book entry based transfer of
securities and settlement of securities trade.SERVICES PROVIDED BY
NSDL Account Maintenance To avail of the various services offered
by NSDL an investor/ a broker/ an approved intermediary (for
lending & borrowing) has to open a NSDL depository account with
any of its DPs
DEPOSITORY ACCOUNTS ARE OF THREE TYPES:
a. Beneficiary account: An investor who wants to hold securities
in dematerialized (Demat) form and receive or deliver securities by
inter-account transfers must have a depository account called
beneficiary account with a DP of his choice. b. Clearing member
account: Member brokers of those stock exchanges which have
established electronic connectivity with NSDL need to open a
clearing member account, with a DP of his choice, to clear and
settle trades in the Demat form. This account is popularly known as
Settlement account or "Pool account". This account is meant only to
transfer securities to and receive securities from the clearing
corporation/ house and hence, the member broker does not have any
ownership (beneficiary) rights over the shares held in such an
account.
c. Intermediary account: Any person choosing to act as an
approved 'intermediary' for stock lending and borrowing needs to
open an intermediary account with any DP of his choice. An
intermediary account may be opened with the DP only after the
intermediary has obtained registration from the Securities &
Exchange Board of India and with the prior approval of NSDL. This
account is meant only to deposit the securities received from the
lender and lend them to the borrower under stock lending and
borrowing scheme. The intermediary does not have any ownership
(beneficiary) rights over the shares held in such an account.
CORPORATEACTIONS
Corporate actions are benefits given by a company to its
investors. These may be either monetary benefits like dividend,
interest or non-monetary benefits like bonus, rights, etc. NSDL
facilitates distribution of corporate benefits.
a) Monetary benefits (dividends etc): NSDL will give the
beneficiary ownership details to the Issuer/R & T Agent. The
Issuer/R & T Agent will carry out the necessary processing and
the distribution of such benefits will be outside the system.
b) Non-monetary benefits (rights bonus etc): NSDL will give the
beneficiary ownership details to the Issuer/ R & T Agent. The
Issuer/R & T Agent will carry out the necessary processing and
upload the beneficiary ownership details to NSDL. NSDL will then
credit the beneficiary owners' accounts by downloading the data to
the DPs.
INTERNET BASED FACILITIES
a. SPEED-e NSDL launched SPEED-e (pronounced as speedy) in
September, 2001. Any Participant of NSDL can subscribe to SPEED-e,
the common infrastructure of NSDL. SPEED-e enables Demat account
holders (including Clearing Members) to submit delivery
instructions directly on the Internet through SPEED-e. SPEED-e is
available only to those Participants who have subscribed to it and
the Users sign an agreement with the Participant. A Demat account
holder will have the option of accessing SPEED-e either as a
Password User or as a Smart Card User. A Clearing Member must be a
Smart Card User to be able to access SPEED-e. Password Users can
debit their Demat accounts only in favor of specified Pre-Notified
Clearing Member accounts (up to three), while Smart Card Users can
submit instructions in favor of any number of accounts.b.
IDEASIDEAS (Internet-based Demat Account Statement) is the facility
for viewing balances and transactions in the Demat account updated
on an online basis with a delay of maximum 30 minutes. This
facility is available to the Users of SPEED-e, Clearing Members who
have subscribed to IDEAS and to those clients whos Participants are
registered for IDEAS. A Demat account holder or a Clearing Member
will have the option to access IDEAS either as a Password or a
Smart Card User.
INTER-DEPOSITORY TRANSFERS
Transfer of securities from an account in one depository to an
account in another depository is termed as an inter-depository
transfer. This facility is quite similar to the account transfers
within NSDL. 1. It can be done only for securities that are
available for dematerialization on both the depositories. 2. The
account in NSDL can be either a clearing account or a beneficiary
account. 3. For debiting the clearing account or the beneficial
account with NSDL, the form for "Inter-depository delivery
instruction" is required to be submitted by the clearing
member/beneficial owner to its DP. 4. For crediting the clearing
account or the beneficial account, the standing instruction given
for automatically crediting the account is applicable. In case the
standing instructions are not given, then the form for
"Inter-Depository Receipt Instruction" is required to be submitted
by the clearing member/beneficial owner to its DP. 5. As both the
depositories are connected to each another, the batches to effect
inter - depository transfers are presently exchanged on each
working day. 6. Online transfer of inter depository instructions
has commenced w.e.f December 14, 2002. In the online inter
depository transfer (OLIDT) module, Inter Depository Transfer
instructions for the day will be exchanged online between the two
depositories. Thus, the instructions executed by DPs may get
settled at shorter intervals. 7. The deadline time for DPs to
verify & release Inter Depository Transfer delivery/ receipt
instructions is 6 p.m. on weekdays and 2.30 p.m. on Saturdays. 8.
The Issuer/Registrar & Transfer Agent is informed about the
transfer by both the depositories and it amends its records
accordingly. 9. Government securities cannot be transferred from
one depository to another using this facility.
Central Depository Services (India) LimitedThe Central
Depository Services India Limited (CDSL) was established in 1999
and is second securities depository in India. Its objectives to
provide convenient, dependable and secure depository services and
facilitates holdings of Demat (securities in electronic form).Its
networks covers 100 cities and offers always on connectivity to
around 500 centres nationwide. The company has handled Demat for
over 8000 million securities settlements. The number is still
growing and will continue since the government plans to phase out
physical trading of shares. Some of the important milestones of
CDSL system are: CDSL received the certificate of commencement of
business from SEBI in February, 1999 Honorable Union Finance
Minister, Shri Yashwant Sinha flagged off the operations of CDSL on
July 15, 1999. Settlement of trades in the Demat mode through BOI
Shareholding Limited, the clearing house of BSE, started in July
1999. All leading stock exchanges like the National Stock Exchange,
Calcutta Stock Exchange, Delhi stock Exchange; The Stock Exchange,
Ahmadabad, etc have established connectivity with CDSL. As at the
end of Dec 2007, over 5000 issuers have admitted their securities
(equities, bonds, debentures, and commercial papers), units of
mutual funds, certificate of deposits etc. into the CDSL
system.
NUMBER AND NEED
CDSL connects to 372 depository participants (DPs) nationwide
through its network. Every branch has access to companys online
database.A minutes downtime will severally affect the daily
operations of the capital market. To ensure efficient operations
that is reliable and able to support the growing number of users.
CDSL has to strengthen its network elements like connectivity
applications and hardware.Shareholders of CDSLCDSL was promoted by
Bombay Stock Exchange Limited (BSE) in association with Bank of
India, Bank of Baroda, and State Bank of India and HDFC Bank. BSE
has been involved with this venture right from the inception and
has contributed overwhelmingly to the fruition of the project. The
initial capital of the company is Rs.104.50 crores. The list of
shareholders with effect from 11th December, 2008 is as under
LIST OF SHAREHOLDERSSr.No.Name of shareholdersValue of holding
(in Rupees Lacs)% terms to total equity
1Bombay Stock Exchange Limited3,825.4636.61
2Bank of India1,000.009.57
3Bank of Baroda1,000.009.57
4State Bank of India1,000.009.57
5HDFC Bank Limited1,500.0014.36
6Standard Chartered Bank750.007.18
7Canara Bank674.466.45
8Union Bank of India200.001.91
9Bank of Maharashtra200.001.91
10The Jammu and Kashmir Bank Limited200.001.91
11The Calcutta Stock Exchange Association Limited100.000.96
12Others0.08--
TOTAL10,450.00100.00
BENEFITS PROVIDED BY CDSLConvenience: Wide DP Network: CDSL has
a wide network of DPs, operating from over 6000 sites, across the
country, offering convenience for an investor to select a DP based
on his location.
On-line DP Services: The DPs are directly connected to CDSL
thereby providing on-line and efficient depository service to
investors. Competitive Fees Structure: CDSL has kept its tariffs
very competitive to provide affordable depository services to
investors.
Internet Access: A DP, which registers itself with CDSL for
Internet access, can in turn provide Demat account holders with
access to their account on the Internet.
Dependability: On-line Information to Users: CDSL's system is
built on centralized database architecture and thus enables DPs to
provide on-line depository services with the latest status of the
investor's account.
Convenient to DPs: The entire database of investors is stored
centrally at CDSL. If there is any system-related issues at DPs
end, the investor is not affected, as the entire data is available
at CDSL. Audit and Inspection: CDSL conducts regular audit of its
DPs to ensure compliance of operational and regulatory
requirements.
Security: Computer Systems: All data held at CDSL and is
automatically mirrored at the Disaster Recovery site and is also
backed up and stored in fireproof cabinets at the main and disaster
recovery site.
Unique BO Account Number: Every BO in CDSL is allotted a unique
account number, which prevents any erroneous entry or transfer of
securities. If the transferor's account number is wrongly entered,
the transaction will not go through the CDSL system, unless
corrected.
Data Security: All data and communications between CDSL and its
users is encrypted to ensure its security and integrity.COMPARISON
BETWEEN NSDL AND CDSL NSDL CDSL
NSDL refers to National Securities Depository Limited.
CDSL refers to Central Depository Services Limited.
The number of accounts operated by NSDL per day is about
400.
The number of accounts operated by CDSL per day is about
200.
NSDL provides internet facility by charging the requisite
charges from clients.
CDSL provides internet facility free of cost at request of
customer.
Number of depositories registered in NSDL is about 500.
Number of depositories registered in CDSL is about 330.
Number of certificates generated by NSDL per day is about 1,
05,000.
Number of certificates generated by CDSL per day is about
50000.
The DP-ID by NSDL is alpha-numeric.
The DP-ID by CDSL is numerical only.
WHAT IS DEPOSTORY SYSTEM The erstwhile settlement system on
Indian stock exchanges 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 favor of the purchaser by the company. The system of
transfer of ownership was grossly 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 the security certificate. In many cases the process
of transfer would take much longer than the two months stipulated
in the Companies Act, and a significant proportion of transactions
would end up as bad delivery due to faulty compliance of paper
work. Theft, forgery, mutilation of certificates and other
irregularities were rampant. In addition, the issuer has the right
to refuse the transfer of a security. All this added to costs and
delays in settlement, restricted liquidity and made investor
grievance redressed time consuming and, at times, intractable. To
obviate these problems, the Depositories Act, 1996 was passed. It
provides for the establishment of depositories in securities with
the objective of ensuring free transferability of securities with
speed, accuracy and security. It does so by (a) making securities
of public limited companies freely transferable, subject to certain
exceptions; (b) Dematerializing the securities in the depository
mode; and (c) providing for maintenance of ownership records in a
book entry form. In order to streamline both the stages of
settlement process, the Act envisages transfer ownership of
securities electronically by book entry without making the
securities move from person to person. The Act has made the
securities of all public limited companies freely transferable,
restricting the company's right to use discretion in effecting the
transfer of securities, and the transfer deed and other procedural
requirements under the Companies Act have been dispensed with. Two
depositories, viz., NSDL and CDSL, have come up to provide
instantaneous electronic transfer of securities. In any stock
exchange, trades or transactions have to be settled by either
squaring up the carrying forward positions or settling by payment
of net cash or net delivery of securities. This account settlement
period, if it is long, leads to several price distortions and
allows for market manipulation. It increases the chances of
speculation resulting in volatility, which hurts the small
investors. With the application of IT in the securities market -
screen-based trading and trading through the Internet - it has been
possible to reduce this settlement period.
Legal Framework of depositary system The operations of the
depositories are primarily governed by the Depositories Act, 1996,
Securities and Exchange Board of India (Depositories &
Participants) Regulations, 1996, Bye- Laws approved by SEBI, and
Business Rules framed in accordance with the Regulations and
Bye-Laws. The Depositories Act passed by Parliament received the
President's assent on August 10, 1996. It was notified in a Gazette
on August 12 of the same year. The Act enables the setting up of
multiple depositories in the country. This was to see that there is
competition in the service and there is more than one depository in
operation. At present, two depositories are registered with SEBI -
The National Securities Depository Limited (NSDL) and Central
Depository Services (India) Limited (CDSL). Only a company
registered under the Companies Act, 1956 and sponsored by the
specified category of institutions can set up a depository in
India. Before commencing operations, depositories should obtain a
certificate of registration and a certificate of commencement of
business from SEBI. The rights and obligations of depositories,
depository participants, issuers and beneficial owners are spelt
out clearly in the Depositories Act 1996.As per the Act:
Section 4: DP is an agent of the Depository: A DP is an agent of
the depository, who provides various services of the depository to
investors. The DP has to enter into an agreement with the
depository to this effect. Any investor who would like to avail the
services of a depository has to enter into an agreement with any DP
of his choice. The DP will then make the depository services
available to the investor. Section 7: Free Transferability: The
securities held by an investor in the depository are freely
transferable from one beneficial owner to another. Section 8:
Option to hold securities in Demat form: In the depository system,
every investor subscribing to securities offered by an issuer has
an option to receive the same in physical form or dematerialized
form. If an investor opts for receiving the securities in
dematerialized form, the issuer intimates the depository the
details of allotment of security. On receipt of this information,
the depository enters the name of the allot tee as the beneficial
owner of that security in its record. Section 9: Securities held in
a depository are fungible: All securities held by the depository
are in dematerialized and fungible form. Section 10: Registered
Owner and Beneficial Owner: The depository is deemed to be the
registered owner for the purpose of effecting transfer of ownership
of security on behalf of a beneficial owner. But as a registered
owner, it does not have any voting rights or any other rights in
respect of those securities. The beneficial owner is entitled to
all rights and benefits as well as subject to all liabilities in
respect of his securities held in the depository. Section 14:
Option to opt out of depository: A beneficial owner may opt out of
a depository in respect of any security by requisite intimation to
the depository. Section 16: Depository to indemnify losses: A
depository shall indemnify a beneficial owner, any loss caused due
to negligence of the depository or its participant.
Eligibility Criteria for a Depository - Any of the following may
promote a depository:
1. A public financial Institution as defined in section 4A of
the Companies Act, 1956; 2. A bank included in the Second Schedule
to the Reserve Bank of India Act, 1934; 3. A foreign bank operating
in India with the approval of the Reserve Bank of India; 4. A
recognized stock exchange; 5. An institution engaged in providing
financial services where not less than 75% of the equity is 6. held
jointly or severally by these institutions; 7. A custodian of
securities approved by Government of India, and 8. A foreign
financial services institution approved by Government of India.
The promoters of a depository are also known as its sponsors. A
depository company must have a minimum net worth of Rs. 100 crore.
The sponsor(s) of the depository have to hold at least 51% of the
equity capital of the depository company. Participants of that
depository, if any, can hold the balance of the equity capital.
However, no single participant can hold, at any point of time, more
than 5% of the equity capital. No foreign entity, individually or
collectively either as a sponsor or as a DP, or as a sponsor and DP
together, can hold more than 20% of the equity capital of the
depositoryRegistrationAs per the provisions of the SEBI Act, a
depository can deal in securities only after obtaining a
certificate of registration from SEBI. The sponsors of the proposed
depository should apply to SEBI for a certificate of registration
in the prescribed form. On being satisfied with the eligibility
parameters of a company to act as a depository, SEBI may grant a
certificate of registration subject to certain conditions.
Commencement of Business A depository that has obtained
registration as stated above can function only if it obtains a
certificate of commencement of business from SEBI. A depository
must apply for and obtain a certificate of commencement of business
from SEBI within one year from the date of receiving the
certificate of registration from SEBI. SEBI grants a certificate of
commencement of business if it is satisfied that the depository has
adequate systems and safeguards to prevent manipulation of records
and transactions. SEBI takes into account all matters relevant to
the efficient and orderly functioning of the depository. It
particularly examines whether:1. The depository has a net worth of
not less than Rs. 100 crore; 2. The Bye-Laws of the depository have
been approved by SEBI; 3. The automatic data processing systems of
the depository have been protected against unauthorized access,
alteration, destruction, disclosure or dissemination of records and
data; 4. The network, through which continuous electronic means of
communication are established between the depository, participants,
issuers and issuers' agents, is secure against unauthorized entry
or access. 5. The depository has established standard transmission
and encryption formats for electronic communication of data between
the depository, participants, issuers and issuers' agents; 6. The
physical or electronic access to the premises, facilities,
automatic data processing systems, data storage sites and
facilities including back-up sites, and to the electronic data
communication network connecting the DPs, issuers and issuers'
agents is controlled, monitored and recorded;7. The depository has
a detailed operational manual explaining all aspects of its
functioning, including the interface and method of transmission of
information between the depository, issuers, issuers' agents, DPs
and beneficial owners;8. The depository has established adequate
procedures and facilities to ensure that its records are protected
against loss or destruction and arrangements have been made for
maintaining back-up facilities at a location different from that of
the depository;9. The depository has made adequate arrangements
including insurance for indemnifying the beneficial owners for any
loss that may be caused to such beneficial owners by the wrongful
act, negligence or default of the depository or its participants or
of any employee of the depository or participant;10. The granting
of certificate of commencement of business is in the interest of
investors in securities market. Agreement between Depository and
Issuers If either the issuer (a company which has issued
securities) or the investor opts to hold his securities in a Demat
form, the issuer enters into an agreement with the depository to
enable the investors to dematerialize their securities.
No such agreement is necessary where:1. Depository, is the
issuer of securities, or; 2. The State or Central Government is the
issuer of government securities. Where the issuer has appointed a
registrar to the issue or share transfer, the depository enters
into a tripartite agreement with the Issuer and Registrar &
Transfer (R&T) Agent, as the case may be, for the securities
declared eligible for dematerialization. At present, NSDL is
discharging the responsibility of R&T Agent for the securities
issued by State and Central Governments. Rights and Obligations of
Depositories - Depositories have the rights and obligations
conferred upon them under the Depositories Act, the regulations
made under the Depositories Act, Bye-Laws approved by SEBI, and the
agreements made with the participants, issuers and their R&T
agents. Every depository must have adequate mechanisms for
reviewing, monitoring and evaluating the depository's controls,
systems, procedures and safeguards. It should conduct an annual
inspection of these procedures and forward a copy of the inspection
report to SEBI. The depository is also required to ensure that the
integrity of the automatic data processing systems is maintained at
all times and take all precautions necessary to ensure that the
records are not lost, destroyed or tampered with. In the event of
loss or destruction, sufficient back up of records should be
available at a different place. Adequate measures should be taken,
including insurance, to protect the interests of the beneficial
owners against any risks. Every depository is required to extend
all such co-operation to the beneficial owners, issuers, issuers'
agents, custodians of securities, other depositories and clearing
organizations, as is necessary for the effective, prompt and
accurate clearance and settlement of securities transactions and
conduct of business. The depository should indemnify beneficial
owners of securities for any loss caused to them due to the
negligence of the DP. However, where the loss is caused due to the
negligence of a DP, the depository shall have the right to recover
it from such DPs. Bye-LawsA depository is required to make Bye-Laws
governing its operations. The Bye- Laws have to be in conformity
with the Depositories Act and the regulations made there under, and
need to be approved by SEBI before becoming effective.
DepositoryEvery depository is required to maintain the following
records and documents. These have to be preserved for a minimum
period of five years. 1. Records of securities dematerialized and
rematerialized. 2. The names of the transferor, transferee, and the
dates of transfer of securities. 3. A register and an index of
beneficial owners. 4. Details of the holdings of the securities of
beneficial owners as at the end of each day. 5. Records of
instructions received from, and sent to, participants, issuers,
issuers' agents and beneficial owners. 6. Records of approval,
notice, entry and cancellation of pledge or hypothecation. 7.
Details of participants.8. Details of securities declared to be
eligible for dematerialization in the depository. 9. Such other
records as may be specified by SEBI for carrying on the activities
as a depository.Services of DepositoryA depository established
under the Depositories Act can provide any service connected with
recording of allotment of securities or transfer of ownership of
securities in the record of a depository. Any person willing to
avail the services of the depository can do so by entering into an
agreement with the depository through any of its participants. A
depository can provide depository services only through a DP. A
depository cannot directly open accounts and provide services to
clients. Every depository in its Bye-Laws must state which
securities are eligible for Demat holding. Generally, the following
securities are eligible for dematerialization: (a) Shares, scrips,
stocks, bonds, debentures, debenture stock or other marketable
securities of a like nature in or of any incorporated company or
other body corporate. (b) Units of mutual funds, rights under
collective investment schemes and venture capital funds, commercial
paper, certificates of deposit, securitized debt, money market
instruments, government securities, national saving certificates,
kisan vikas patra and unlisted securities. (c) Securities admitted
to NSDL depository are notified to all DPs through circulars sent
by mail. Investors are informed about these securities through
NSDL's Website - www.nsdl.co.in and NEST Update - a monthly
newsletter of NSDL. Functions of DepositoryDematerialization: One
of the primary functions of depository is to eliminate or minimize
the movement of physical securities in the market. This is achieved
through dematerialization of securities. Dematerialization is the
process of converting securities held in physical form into
holdings in book entry form. Account Transfer: The depository gives
effects to all transfers resulting from the settlement of trades
and other transactions between various beneficial owners by
recording entries in the accounts of such beneficial owners.
Transfer and Registration: A transfer is the legal change of
ownership of a security in the records of the issuer. For affecting
a transfer, certain legal steps have to be taken like endorsement,
execution of a transfer instrument and payment of stamp duty. The
depository accelerates the transfer process by registering the
ownership of shares in the name of the depository. Under a
depository system, transfer of security occurs merely by passing
book entries in the records of the depositories, on the
instructions of the beneficial owners.Corporate Actions: A
depository may handle corporate actions in two ways. In the first
case, it merely provides information to the issuer about the
persons entitled to receive corporate benefits. In the other case,
depository itself takes the responsibility of distribution of
corporate benefits. Pledge and Hypothecation: The securities held
with NSDL may be used as collateral to secure loans and other
credits by the clients. In a manual environment, borrowers are
required to deliver pledged securities in physical form to the
lender or its custodian. These securities are verified for
authenticity and often need to be transferred in the name of
lender. This has a time and money cost by way of transfer fees or
stamp duty. If the borrower wants to substitute the pledged
securities, these steps have to be repeated. Use of depository
services for pledging/ hypothecating the securities makes the
process very simple and cost effective. The securities
pledged/hypothecated are transferred to a segregated or collateral
account through book entries in the records of the depository.
Linkages with Clearing System: Whether it is a separate clearing
corporation attached to a stock exchange or a clearing house
(department) of a stock exchange, the clearing system performs the
functions of ascertaining the pay-in (sell) or pay-out (buy) of
brokers who have traded on the stock exchange. Actual delivery of
securities to the clearing system from the selling brokers and
delivery of securities from the clearing system to the buying
broker is done by the depository. To achieve this, depositories and
the clearing system should be electronically linked. Having
understood the depository system, let us now look at the
organization and functions of National Securities Depository
Limited (NSDL).Benefits of depository system No risks associated
with physical certificates such as loss of share certificate, Fake
securities, Etc. No bad delivery. Faster settlement cycles. Low
transaction cost for purchase and sale of securities compared to
physical mode. Increase liquidity of securities Reduction of paper
work Allotment of IPO, Bonus, Rights shares etc. in electronic form
Wavier of stamp duty on transfer of securities Intimation like
change of address, bank mandate, nomination, request of
transmission, required to be given only to Depository Participant
(DP) Irrespective of the number of companies in which shares
held.
Facilities offered by depository system Dematerialization
Rematerialization Electronic settlement of trades in stock
exchanges connected to depositories. Pledging/hypothecation of
dematerialized securities. Electronic credit of securities allotted
in public, rights, bonus issue. Nomination facility. Freezing of
De-mat accounts, so that the debits from the dematerialization are
not permitted. Services related to change of address, nomination,
mandate, transmission, etc. Other services viz. holding debt
instruments in the same Demat account. Availing stock
lending/borrowing facility, etc.
Safety features in the depository systemTo ensure safety to the
investors the following measures exist- Strict norms for becoming
depository participant- Net worth criteria, SEBI approval etc. is
mandatory. DP cannot affect ant debit or credit in the Demat
account of the investor without the valid authorization of the
investor. Regulation reconciliation between DP and the
depositories. Periodic inspection by Depositories of the office of
the DP and Registrar. All investors have a right to receive their
statements of accounts periodically from the DP. In the depository
system, the depository holds the investor accounts on trust.
Therefore if the DP goes bankrupt the creditors of the DP will have
no access to the holdings in the name of the clients of the DP.
Compulsory internal audit of operations of DP by practicing company
secretary of the chartered accountant every quarter. Various
procedures for backup and safe keeping of data at all the
levels.
SEBI has made compulsory trading of shares of all the companies
listed in Stock Exchange in Demat form w.e.f 2 January 2002. Hence,
if the investor wants to trade in respect of the companies, which
have established connectivity with NSDL & CDSL, he may have to
open a beneficiary account.Beneficiary accountA beneficiary account
is an account opened by the investor or a broker with a DP of his
choice, to hold shares in dematerialized form and undertake scrip
less tradingInvestor contacting the depositoryThe investor must
open a Demat account with a Depository Participant. Opening a Demat
account with a DP is similar to opening an account with bank. The
selection of DP is to be done by the investor based on fee payable,
proximity, service levels, etc.DEPOSITORY PARTICIPANTDepository
participant (DP) is the agent of the depository and is the
interface between the depository and the investor. A DP can offer
depository services only after it gets proper registration from
SEBI. According to SEBI guidelines, financial institutions, bank
custodians, stock brokers etc. can become depository participant.
Stock Holding Corporation of India is the first participant in
India registered with NSDL. IN order to avail the services of a
depository an investor has to open an account with a depository
through a DP just like a person maintaining the securities account
of the investor and handling it in accordance with the investors
instructions. Banking services can be availed through branches
whereas depository services can be availed through DP. Both NSDL
and CDSL have launched the facility for delivering instructions to
DP over Internet, called SPEED-e and EASI respectively. The
facility can be used by all registered users after paying the
applicable charges.
FULLERTON SECURITIES AS A DEPOSITARY PARTICIPANT:Success is a
journey, not a destination. If we look for example to prove this
quote then we can find many but there is none like that of
Fullerton securities. Its a one stop, customer centric
organization, offering wealth advisory and broking services and end
to end proprietary and 3rd party financial products from leading
financial institutions.Subsidiary of Fullerton financial holdings,
an Asian financial institution with investments and operations
across 9 countries .Its a wholly owned subsidiary of Temasek
holdings, AN ASIAN INVESTMENT FIRM, and headquarters in SINGAPORE.
Temasek holdings manages a portfolio of more than us dollar 120
billion, focused primarily in Asia and Singapore.
ADVISORY SERVICESIt delivers advisory services to a
cross-section of customers. The service is backed by a team of
dedicated and expert professionals with varied experience and
background in handling investment portfolios. They are continually
engaged in designing the right investment portfolio for each
customer according to individual needs and budget considerations
with a comprehensive support system that focuses on trading
customers' portfolios and providing valuable inputs, monitoring and
managing the portfolio through varied.STOCK BROKING SERVICESIt is
an undisputed fact that the stock market is unpredictable and yet
enjoys a high success rate as a wealth management and wealth
accumulation option. The difference between unpredictability and a
safety anchor in the market is provided by in-depth knowledge of
market functioning and changing trends, planning with foresight and
choosing options with care. This is what Fullerton provides in its
Stock Broking services.It offers services that are beyond just a
medium for buying and selling stocks and shares. Instead it
provides services which are multi dimensional and multi-focusedin
their scope. There are several advantages in utilizing our Stock
Broking services, which are the reasons why it is one of the best
in the country.It offers trading on a vast platform; National Stock
Exchange and Bombay Stock Exchange. More importantly, it makes
trading safe to the maximum possible extent, by accounting for
several risk factors and planning accordingly. It is assisted in
this task by our in-depth research, constant feedback and sound
advisory facilities. Its highly skilled research team, comprising
of technical analysts as well as fundamental specialists, secure
result-oriented information on market trends, market analysis and
market predictions. This crucial information is given as a constant
feedback to its customers. The daily technical report of Fullerton
helps the customers in buying and selling decision related to
shares.Its Stock Broking services are widely networked across
India, with the number of its trading terminals providing retail
stock broking facilities. Its services have increasingly offered
customer oriented convenience, which it provides to a spectrum of
investors, high-net worth or otherwise, with equal dedication and
competence.
OPENING DEMAT ACCOUNT introductionDemat 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.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 up to 500 shares to be settled
in physical form, nobody wants physical shares any more. So a Demat
account is a must for trading and investingBuying & SellingThe
procedure for buying and selling dematerialized 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 otherwise DP will accept the instruction
only at the investors risk. Documents required for opening Demat
account For Demat account opening, the following documents are
required to be given- Demat account opening form duly filled.
Address proof. Photograph Identity proofOther formalities in Demat
account openingOnce a Demat account is opened, the investor must
sign an agreement with the DP. The investor will be allotted an
account no. known as client identity. The client identity number
along with the DP identity number forms a unique combination. Both
these numbers should be quoted in all the future dealing with
Depositories /DP /RTA /Company. However in case of CDSL there is no
DP identity and the 16-digit Client identity itself is a unique
number. The investor must collect forms like dematerialization
request form (DRF), Delivery instruction slips etc.Stock exchanges
connected to the Depositories for Demat tradingAt present the
following 10 stock exchanges are connected to the Depositories-
National Stock Exchange The Stock Exchange Mumbai Calcutta Stock
Exchange Delhi Stock Exchange Ludhiana Stock Exchange Bang lore
Stock Exchange Over the counter stock exchange of India Madras
Stock Exchange Inter connected Stock Exchange Ahmadabad Stock
Exchange.Demat ConversionDematerialisation: It is the process of
conversion of physical scrips into electronic book entry form. It
results in elimination of paper certificates.
In dematerialization process, investor surrenders defaced
certificates along with Dematerialization Request Form to the
depository participant. Depository participant intimates NSDL of
the request through the system. Depository participant submits the
certificates to the registrar. Registrar confirms the
dematerialization request from NSDL. After dematerializing
certificates, registrar updates accounts and informs NSDL of the
completion of dematerialization. NSDL updates its accounts and
informs the depository participant. Depository participant updates
its accounts and informs investor.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.RematerializationThe process of convertingelectronic
holdings (Demat shares) back into Physical Certificates is called
Rematerialization.If one wishes to get back his securities in the
physical form one has to fill in the RRF (Remat Request Form) and
request his DP for Rematerialization of the balances in his
securities account. The process of Rematerialization is outlined
below; One makes a request for Rematerialization. Depository
participant intimates depository of the request through the system.
Depository confirms Rematerialization request to the registrar.
Registrar updates accounts and prints certificates. Depository
updates accounts and downloads details to depository participant.
Registrar dispatches certificates to investor.Beneficial owner or
shareholder submits a request to the DP for Rematerialization of
its holdings in its account. DP is basically known to intimate NSDL
or CDSL of the request electronically through the system. NSDL or
CDSL is basically known to confirm Rematerialization request to the
RTA. RTA is often known to update accounts and prints certificates.
NSDL or CDSL updates accounts and downloads details to DPs. RTA
dispatches certificates to investors. The question that is known to
persist is that what the basic procedure for applying for a
Duplicate Certificate is. The Shareholder has to first and foremost
inform the Company of the loss of Share Certificate and file an FIR
with the Police Station of his area reporting the loss of shares
which describes the process of Rematerialization. Related to the
process of Rematerialization it can well be said that a copy of the
FIR accordingly attested in innovative has to be sent to the
Company along with a letter, signed by the investor to allow us to
send him the process for obtaining Shares which can well be termed
as duplicate. Procedure of closure of Demat accountAn investor can
close a Demat account by giving an application in prescribed form.
In case there is any balance in the Demat account sought to be
closed, the following steps are necessary-1. Rematerialization of
all securities standing to the credit of the Demat account at the
time of making the application for the closure.1. Transferring the
balance to the credit of another Demat account, with the same
participant or with a different participant.
WHY TO CHOOSE FULLERTONTechnology:With their online trading
account one can buy and sell shares in an instant from any PC with
an internet connection. Customers get access to the powerful online
trading tools that will help them to take complete control over
their investment in shares.AccessibilityFullerton provides ADVICE,
EDUCATION, TOOLS AND EXECUTION services for investors. These
services are accessible through many centers across the country
over the Internet (through the website
www.fullertonsecurities.com)KnowledgeIn a business where the right
information at the right time can translate into direct profits,
investors get access to a wide range of information on the
content-rich portal, wwwfullertonsecurities.com. Investors will
also get a useful set of knowledge-based tools that will empower
them to take informed decisions.Customer Service Its customer
service team assists their customer for any help that they need
relating to transactions, billing, Demat and other queries. Their
customer service can be contacted via a toll-free number, email or
live chat on www.fullertonsecurities.com.Investment AdviceFullerton
has dedicated research teams of more than 30 people for fundamental
and technical research. Their analysts constantly track the pulse
of the market and provide timely investment advice to customer in
the form of daily research emails, online chat, printed reports
etc.NEST SOFTWARE:It is the software which is given to customers
for doing the online trading. it is given to the customers free of
cost , when they open Demat account with the Fullerton securities.
this is the software which is set into the computer terminal and
all the information related to each and every shares of the
different companies flash on the screen and help the investors to
get an full fledge idea in which shares they are need to invest
Fullerton Freedom AccountInvestments are no more confusing!
Presenting, Fullerton Freedom. An account that brings a world of
customized investment offerings with a reasonable price tag of Rs.
1,995/-*Privileges Complimentary Broking & Demat account
Maximum Complimentary Turnover :- Rs. 5 Lakhs of delivery turnover
OR Rs. 50 Lakhs of Intraday/Futures/Options Special Reports
(Sector/Economy/Event) every Quarter SMS Alerts Choice of Internet
based online trading terminals Intraday Market View Access to
browser based terminal Well researched investment ideas Java Applet
with streaming quotesOther Product Options
Benefit from Advantage Accounts
Fullerton Advantage Plan for tomorrow! Live for today!What would
you say if there was a way that you could plan for your future,
while enjoying financial and lifestyle benefits worth thousands
today? What if this way also meant that you could receive
complimentary insurance coverage? What if this way also meant that
you could be sure of never missing out on an investment opportunity
again?Introducing, the Fullerton Advantage Account. Were hoping you
too will say, What a great way to plan for tomorrow and live for
today!" At Fullerton, we believe in actively listening to you and
offering you a no obligation Financial Plan to help you meet all
your financial goals. Our unique Fullerton Advantage Account saves
you time, through a one-time documentation process, so you are
ready for any financial opportunity that arises. What's more, your
relationship with us starts on a highly rewarding note.For the
first time ever, you get complimentary insurance coverage up to Rs.
3 lacs, automatically with the Fullerton Advantage Account. This
account also brings you great savings across your favorite brands
in apparel, electronics, health and entertainment! So that while
you plan for the future, youre current desires are not
ignored.What's more, you also get ready-to-use investment,
insurance & broking accounts with great savings on account
opening fees (savings of up to Rs. 1100 per year!). Take a look at
the 4 variants of the Fullerton Advantage Account and simply choose
the one that matches your needs best.
Depository Charges
RESEARCH METHODOLOGY
RESEARCH METHODOLOGYResearch Methodology refers to search of
knowledge .one can also define research methodology as a scientific
and systematic search for required information on a specific
topic.The word research methodology comes from the word advance
learner s dictionary meaning of research as a careful investigation
or inquiry especially through research for new facts in my branch
of knowledge for example some author have define research
methodology as systematized effort to gain new knowledge.
OBJECTIVES OF THE STUDY Primary objective To get information
about, the awareness of depository participant, NSDL, CDSL. To know
about the investment level of different income group. To know the
satisfaction level of customers towards the services provided by
their concerned Companies.
Secondary objective To know about depository system Over viewing
of dematerialization and Rematerialization.
TYPES OF RESEARCHANALYTICAL RESEARCH: It has to used facts or
information already available and analyzes these to make a critical
evaluation of material.SAMPLE SIZE: Considering the constraints it
was decided to conduct the study based on sample size of 50 people
in specific age groups.
METHODS OF DATA COLLECTION
In the project work Primary data secondary data (both) sources
of data has been used:PRIMARY SOURCE: I have gathered information
about our project from the interaction with the customers of our
company i.e. Fullerton securities and wealth advisors. The sampling
method used was basically convenience sampling and most of the
calls made were cold calls made on the generated database of
recipients of other companies.SECONDARY DATA: The secondary data, I
have collected from the websites of Fullerton, various journals,
magazines etc.
TOOL OF ANALYSISIn the project work, quantitative technique
& percentage method has been used.
RESEARCH DESIGN
For the proper analysis of data simple quantitative technique
such as percentage were used. It help in marketing more accurate
generalization From the data available .The data which was
collected from a sample of population was assumed to be
representing entire population was interested .
DATA ANAYSIS ANDINTERPRETATION
1. In which professions are you engaged in?
A. BusinessB. ServiceC. ProfessionalD. EntrepreneurE. Others
A. Business
14
B. Service
10
C. Professional
11
D. Entrepreneur
5
E. Others
10
2. In which income group do you fall?
A. Less than 1 LakhB. 1 3 LakhC. 3 5 LakhD. 5 8 LakhE. More than
8 Lakh
A. Less than 1 Lakh
15
B. 1 3 Lakh
18
C. 3 5 Lakh
7
D. 5 8 Lakh
4
E. More than 8 Lakh
6
3. How much income are you able to invest?A. 0-10%B. 10-20%C.
20-30%D. 30-40%E. >40%
A. 0-10%
7
B. 10-20%
14
C. 20-30%
11
D. 30-40%
8
E. >40%
10
4. You invest in which of the following financial instruments?
A. Securities B. InsuranceC. Mutual fund D. Commodities E. Other
Instruments
A. Securities
18
B. Insurance
15
C. Mutual fund
7
D. Commodities
4
E. Other Instruments
6
5. Do you have a Demat account?A. YesB. No
A. yes32
B. No18
6. Are you aware about Depository system?A. YesB. No
yes47
No03
7. Do have you sufficient knowledge about NSDL or CDSL?A) YesB)
NoC) To Some extend
A) Yes 12
B) NO 15
C) To some extent 23
8. In which depository company you make trading?A) Share khanB)
India bullsC) FullertonD) ICICI direct.comE) Other
A) Share khan 07
B) India bulls 11
C) Fullerton 14
D) ICICI direct.com 08
E) Other 10
9. Are you satisfied with their services?A. YesB. Noyes32
No18
FINDINGS AND OBSERVATIONS To study the above Doughnut, Graph and
pie charts I observe that the most of the people of Ludhiana have
knowledge about depository system but they do not have a proper and
basic knowledge about this vast concept only limited information is
there.According to data analysis result represent below.1. Among
the 50 questionnaires filled, it was clear that among them maximum
people falls in the category of Business i.e. 14 (28%). Thus
Fullerton has the opportunity to capture this segment.
2. The data of second question speaks about the income group in
which the people fall; most of the people fall in category of 1-3
lakh.
3. Among the 50 questionnaires filled, it was clear that among
them maximum people invest in the category of 10-20%. Thus
Fullerton has the opportunity to capture this segment. But people
are not aware of the services so here Fullerton has to work in this
area.
4. The observation speaks about the financial instruments in
which the people invest; most of the people invest in the
securities through DPs and then invest in the insurance. Thus more
focus should be made on securities so that company has the maximum
investment. This would ultimately increase the profits.
5. Among 50 respondents 32 (64%) actually have a Demat account
and are aware of the dealings in stock trading. The rest 18 are
still in the other category. So strategies should be made to
convert these people in to our potential customers.
6. After analysis, it clear that only 03 (6%) respondents are
not introduce with term depository system but majority is goes with
yes option 47 (94%) .
7. Data of this question shows that only 12 respondents have a
sufficient knowledge about CSDL and NSDL it means most of
respondent have a no or only little bit knowledge about these two
terms data says that 15 respondents go with no and 23 go with to
some extent.
8. The observation of this question explain that the share khan
trading company is not popular in Ludhiana area because only 07
respondents are make trading with it, After that ICICI direct.com
comes and get 08 votes, Fullerton get maximum votes 14 and 10
respondents making trading with other companies. In this question
its clear that Fullerton is popular trading company in Ludhiana
area.
9. It can be seen from the observations that there are customers
who are not satisfied by the services given by the brokerage
companies can be converted by providing better services to them.
Sometimes even if the customers have the same or more investment
then also, he is getting fewer services than the other one. So,
Fullerton can convert them by providing better services to
them.
SUGGESTION Awareness of functioning of this system should be
spread to the public through advertisement. Proper feedback should
be taken into consideration. For e.g. calls should be made when the
account is opened. Aggressive efforts should be made by sales team
to tap the potential customers and to increase the customer base.
Customers should be made aware about the services like
dematerialization, net banking, bill pay etc. an instruction manual
telling about how to use their services can also be given to the
customer to make these advanced services more popular
LIMITATION
Whole area is not covered in this project so only 50 respondents
are representative for complete area its not ideal data. Less
awareness about this system in public is very critical block in
this study. Some of the respondents do not give proper answer of
questions.
CONCLUSION
To conclude, it can be said that the research findings clearly
reveal the goodwill and reputation of depository system among the
customers. But there is a need to strengthen this depository system
by spreading awareness about the services offered by NSDL, CSDL and
its trading companies through advertisement and by expanding the
more branches of this system all over the country and also by
tapping the potential customers through innovative means.
BIBLIOGRAPHY http://www.fullertonfinancialholdings.com
http://www.fullertonsecurities.co.in www.cdsl.co.in www.nsdl.co.in
http://www.wikipedia.org/ www.moneycontrol.com www.rediff.com
ANNEXURE1. In which professions are you engaged in?
A. BusinessB. ServiceC. ProfessionalD. EntrepreneurE. Others2.
In which income group do you fall?
A. Less than 1 LakhB. 1 3 LakhC. 3 5 LakhD. 5 8 LakhE. More than
8 Lakh
1. How much income are you able to invest?
A. 0-10%B. 10-20%C. 20-30%D. 30-40%E. >40%4. You invest in
which of the following financial instruments? A. Securities B.
InsuranceC. Mutual fund D. Commodities E. Other Instruments5. Do
you have a Demat account?A. YesB. No6. Are you aware about
Depository system?A. YesB. No7. Do have you sufficient knowledge
about NSDL or CDSL?A. YesB. NoC. To Some extend
8. In which depository company you make trading?A. Share khanB.
India bullsC. FullertonD. ICICI direct.comE. Other
9. Are you satisfied with their services?A. YesB. No
4