Customer satisfaction towards karvy stock exchange project report mba marketing

A Study of Customer Satisfaction towards Depository Participants

EXECUTIVE SUMMARY

Karvy, the FINAPOLIS Ltd. is a stock Broking Company that deals in

shares. Apart from security broking Karvy is in to Demat services, Mutual fund

and Insurance services. It offers a wide range of financial services in order to

meet different individuals financial planning.

The project emphasizes on “Customer satisfaction towards depository

participants”

Objectives of the Study:

• To know the function of DP.

• To know the percentage of have satisfied the service of DP.

• To know how demat account is helping in the trading

• To know the exception of the customer.

• To know the loops and draw backs of DP.

Research Methodology:

Data source:

Primary Data: Through Questionnaire

Secondary Data: Karvy’s Record & Report, Magazine &
Websites.

Sample size: 100 customers of Karvy Stock Broking Ltd.

Area Covered for research: Only Dharwad KARVY customers.

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Sampling Procedure: Random sampling method from available database. In

the present scenario the service industry has given an utmost importance of

doing a particular task at a fastest time in order to satisfy the customer and to

attract new customer. In this project we can find out the customer of Karvy

Consultant have satisfied with demat service and this DP is overcoming the

disadvantages of the physical trading of the securities in the stock exchange.

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FINDINGS:

1) I have carried out this exercise on Dematerlisation. So in my studies I have tried to

see whether the customer have satisfied the service given by depository participants.

2) I have also seen that awareness of KARVY service given by Karvy finical

consultant is from friends.

3) It is also seen that more than 84% of the respondent have satisfied with the service

of demat.

4) It is also seen that more than 55% to 60% of the respondent has satisfied with the

service of Freezing/ Defreezing and loan against share. Also 40% respondents are not

aware about these services.

5) Also found that nearly 2% of the respondents are dissatisfied with bill Acceptance.

6) 5% improper format of Holding/Transaction statement and 4% Frequently

reminders are given to karvy consultant ltd., for update the information Are

Dissatisfied.

7). 38% of respondent feel tariff structure of Karvy Stock Broking Ltd charged is high

and very high.

8) Also found that 53% respondent have satisfied 80% of the service

9). 35% of respondent prefer Karvy Stock Broking Ltd DP to Other Dp because

Of Quality service And, 40% for safety service.

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INTRODUCTION

India has two hundred years old tradition in Securities. Infact that first India

stock exchange established in Bombay is the oldest in Asia. The earliest security

dealings were Transactions in loan securities of East India Company, the dominant

institution of those days. Corporate Shares came into the picture by 1830’s and

assumed significance with the Companies Act of 1956. In 1887 the broker community

gave birth to the “Native share and stock brokers Association” which is now known as

the Bombay Stock Exchange.

The Indian Capital grew at a very moderate rate from 1951 to 1980. However

it registered an impressive growth in 1980s. the process of liberalization and the

transparency in operation has raised the interest of foreign investors in India. Till

1978 there were only 8 recognized exchanges in India. Initially the exchange operated

on an outcry system i.e. manual system of trading Due to increase in the trading

volumes, the number of issuer increased substantially, and the birth of NSES highly

transparent automated system come into existence Even then there was an increase in

paper work causing a gridlock at every stage in the stock market This delays the

clearance and settlement of traders, registration of securities in the shareholder name

and due this it increased the back office paper work intermediaries These outdated

systems have increased settlement risks and have rendered the implementation of a

delivery of a versus payment system impossible. National Stock Exchange of India

Limited to provide electronic depository facilities for securities traded in the equity

and the debt market. NSDL commenced its operations in the year 1996 and is the first

depository in India.

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DESIGN OF THE STUDY

Tile of the project:

“Service Analysis & Customer satisfaction towards Depositary participants”.

Statement of the Problem: KARVY STOCK BROKING Ltd is providing the Demat

service. Hence in this report an attempt is made to know the present customer

satisfaction towards depository participants.

RESEARCH OBJECTIVES:

• To know the function of DP.

• To know the percentage of have satisfied the service of DP.

• To know how demat account is helping in the trading

• To know the exception of the customer.

• To know the loops and draw backs of DP.

.

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METHODS AND METHODOLOGY

Sampling Design:

 Sampling since segment wise investors in KARVY STOCK BROKING Ltd

were available the overall customers were considered for the study. Hundred

Percent coveraged. Hence random sampling survey method was adopted for

the purpose of the study.

 Sampling Size: A sample of 100 was chosen for the purpose of the study.

Sample consisted of small investor, large investors and traders of KARVY

STOCK BROKING Ltd.

 Sampling Procedure: From large number of customer of KARVY STOCK

BROKING Ltd. Were randomly selected from the available customer

database.

 Field Study: Directly approached respondents.

DATA COLLECTION METHOD:
1. PRIMARY DATA: For a study of this nature primary data is collected through

Questionnaire.

2. SECONDARY DATA: This is been is collected through Karvy’s Record &

Report, Magazine & Websites.

MEASUREMENT TECHNIQUE:

For this purpose measurement technique used for survey is

questionnaire to collect information from the respondent

ANALYTICAL TECHNIQUE:

Statistical technique used for measuring the response is in terms of

percentage.

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LIMITATION OF STUDY

• Since Sample size is only 100 all Hundred customers are approached .

• Since segment wise investor is available in KARVY STOCK BROKING Ltd.

Overall concept is taken for the study.

• Information is partly based on secondary data and hence the authenticity of the

study can be visualized and is measurable.

• Level of accuracy of the results of research is restricted to the accuracy level

with which the customers have given their answers and the accuracy level of

the answers cannot be predicted.

BACKGROUND

Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice,

flows freely towards attaining diverse goals of the customer through varied services.

Creating a plethora of opportunities for the customer by opening up investment vistas

backed by research-based advisory services. Here, growth knows no limits and

success recognizes no boundaries. Helping the customer create waves in his portfolio

and empowering the investor completely is the ultimate goal.

KARVY, is a premier integrated financial services provider, and ranked

among the top five in the country in all its business segments, services over 16 million

individual investors in various capacities, and provides investor services to over 300

corporate, comprising the who is who of Corporate India. KARVY covers the entire

spectrum of financial services such as Stock broking, Depository Participants,

Distribution of financial products - mutual funds, bonds, fixed deposit, equities,
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Insurance Broking, Commodities Broking, Personal Finance Advisory Services,

Merchant Banking & Corporate Finance, placement of equity, IPOs, among others.

Karvy has a professional management team and ranks among the best in technology,

operations and research of various industrial segments.

The birth of Karvy was on a modest scale in 1981. It began with the vision

and enterprise of a small group of practicing Chartered Accountants who founded the

flagship company…Karvy Consultants Limited. We started with consulting and

financial accounting automation, and carved inroads into the field of registry and

share accounting by 1985. Since then, we have utilized our experience and superlative

expertise to go from strength to strength…to better our services, to provide new ones,

to innovate, diversify and in the process, evolved Karvy as one of India’s premier

integrated financial service enterprise.

Thus over the last 20 years Karvy has traveled the success route, towards

building a reputation as an integrated financial services provider, offering a wide

spectrum of services. And we have made this journey by taking the route of quality

service, path breaking innovations in service, versatility in service and finally…

totality in service.

Our highly qualified manpower, cutting-edge technology, comprehensive

infrastructure and total customer-focus has secured for us the position of an emerging

financial services giant enjoying the confidence and support of an enviable clientele

across diverse fields in the financial world.

Over the years we have ensured that the trust of our customers is our biggest

returns. Factors such as our success in the Electronic custody business has helped

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build on our tradition of trust even more. Consequentially our retail client base

expanded very fast. Our values and vision of attaining total competence in our

servicing has served as the building block for creating a great financial enterprise,

which stands solid on our fortresses of financial strength - our various companies.

With the experience of years of holistic financial servicing behind us and years

of complete expertise in the industry to look forward to, we have now emerged as a

premier integrated financial services provider.

And today, we can look with pride at the fruits of our mastery and experience

– comprehensive financial services that are competently segregated to service and

manage a diverse range of customer requirements.

GROUP OF COMPANIES

 KARVY SECURITY LTD

• Deals in distribution of various investment products, viz, equities,

Mutual fund, bounds debenture fixed deposits, insurance policies &

other financial products

• Member –Hyderabad stock Exchange (HSF)

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 KARVY STOCK BROKING LTD.

• Deals in buying & selling equity shares & debenture &on the national

stock exchange (NSE), the Hyderabad stock exchange & over the

counter exchange of India (OTCEI)

• Member-national stock exchange (NSE)

 KARVY CONSULTANTS LTD

• Transfer agency services for corporate & mutual funds

• Registrar for IPObook building

• Depositary participant services

• Registered with both NSDL/CDSL

• It enable services –MT/call center /data classification

• Karvy .com comprehensive financial advisory site

 KARVY INVESTER SERVICES LTD.

• Deals in issue management, investor banking & merchant banking of

fixed income & other financial products.

• Trading through BSE

 DEPOSITARY SEVICES

• Registered as DP both with NSDL & CDSL

• Serving over 2 lac investors

• Online connectivity at Hyderabad, Lucknow &Bangalore

• Ranked among the top 5 DPS in the country
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• High synergy with registry & broking activities for higher services

levels to the customer information

• Web based customer information

• Provision of service in over 75 locations

 IT SERVICES GROUP

1. Medical transcription

• First strategic initiative into global processing

• Among the top MT companies in India

2.E-BUSINESS GROUP

• Strategic intent: to develop a comprehensive financial services portal

which includes

• Investor servicing: mutual funds, corporate shareholders &

depository clients.

• Distribution of financial products

• Net trading

• Insurance distribution

1. Call center

2. Started with a 30 agent e-call center

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MISSION

Our mission is to be a leading, preferred service provider to our customers,

and we aim to achieve this leadership position by building an innovative, enterprising

and technology driven organization which will set the highest standards of service and

business ethics.

QUALITY POLICY

To achieve and retain leadership, Karvy shall aim foe complete

customers satisfaction, by combining its human and Technological resources,

to provide superior quality financial Services. In the process, Karvy will strive

to exceed Customer’s expectations.

QUALITY OBJECTIVES

As per the Quality Policy, Karvy will:

1. Build in- house process that will ensure transparent and harmonious

relationship with its clients and investors to provide high quality of services.

2. Establish a partner relationship with its investor service agents and vendors

that will help in keeping up its commitments to the customers.

3. Provide high quality of work life for all its employees and equip them with

adequate knowledge &skills so as to respond to customer’s need.

4. Continue to uphold the values of honesty & integrity and strive to establish

unparalleled standards in business ethics.

5. Use state –of – the art information technology in developing new and

innovative financial products and services to meet the changing needs of

investors and clients.
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6. Strive to be a reliable source of value-added financial products and services

and constantly guide the individuals and institutions in making a judicious

choice of it. Strive to keep all stake- holders (shareholders, clients, investors

and regulatory authorities) proud and satisfied.

Achievements

 Among the top 5 stock brokers in India (4% of NSE volumes)

 India's No. 1 Registrar & Securities Transfer Agents

 Among the to top 3 Depository Participants

 Largest Network of Branches & Business Associates

 ISO 9002 certified operations by DNV

 Among top 10 Investment bankers

 Largest Distributor of Financial Products

 Adjudged as one of the top 50 IT uses in India by MIS Asia

 Full Fledged IT driven operations

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MILESTONE

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ORGANIZATION CHART

Managing Director

Chief Managing Director

Vice-President Vice-President Vice-President Vice-President

Karvy Karvy Karvy Karvy
Securities Stock Broking Consultants Investors Services
Ltd. Ltd. Ltd. Ltd.

Deputy Deputy Deputy Deputy
General General General General
Manager Manager Manager Manager

Senior Senior Senior Senior
Manager Manager Manager Manager

Branch Manager

N number of Team Leaders

N number of Executives

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INTRODUCTION

Dematerialization or "Demat" is a process whereby your securities like

shares, debentures etc, are converted into electronic data and stored in

computers by a Depository. Securities registered in your name are surrendered

to depository participant (DP) and these are sent to the respective companies

who will cancel them after "Dematerialization" and credit your depository

account with the DP. The securities on Dematerialization appear as balances in

your depository account. These balances are transferable like physical shares. If

at a later date, you wish to have these "Demat" securities converted back into

paper certificates, the Depose Depository functions like a securities bank,

where the dematerialized physical securities are traded and held in custody.

This facilitates faster, risk free and low cost settlement.

In order to dematerialize certificates; an investor will have to first open

an account with a DP & then request for the dematerialization of certificate by

filling up a dematerialization request form (DRF), which is available with DP

& submitting the same along with the physical certificates. The investor has to

ensure that before the certificate are handled over to the DP For demat, they are

defaced by marking “Surrendered for dematerialisation” on the face of the

certificates. Depository is much like a bank and perform many activities that

are similar to a bank.

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Just as one opens a bank account in order to avail of the services of a

bank, an investor opens a depository account with a depository participant in

order to avail of depository facilities.

Following table compares the two.

Bank Depository
Holds funds in accounts Holds securities in account
Transfers funds between accounts Transfers securities between accounts
Transfers without handling money Transfers without handling securities
Safekeeping of money Safekeeping of securities

Transacting the depository way has several advantages over the traditional system

of transacting using share certificates. Some of the benefits are:

• Trading in demat segment completely eliminates the risk of bad

deliveries, which in turn eliminates all cost and wastage of time

associated with follow up for rectification. This reduction in risk

associated with bad delivery has lead to reduction in brokerage to the

extent of 0.5% by quite a few brokerage firms.

• In case of transfer of electronic shares, you save 0.5% in stamp duty.

• You also avoid the cost of courier/ notarization/ the need for further

follow-up with your broker for shares returned for company objection

• In case the certificates are lost in transit or when the share certificates

become mutilated or misplaced, to obtain duplicate certificates, you may

have to spend at least Rs500 for indemnity bond, newspaper

advertisement etc, which can be completely eliminated in the demat

form.
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• You can also receive your bonuses and rights into your depository

account as a direct credit, thus eliminating risk of loss in transit.

• You can also expect a lower interest charge for loans taken against

demat shares as compared to the interest for loan against physical

shares. This could result in a saving of about 0.25% to 1.5%. Some

banks have already announced this.

• RBI has increased the limit of loans against dematerialized securities as

collateral to Rs2mn per borrower as against Rs1mn per borrower in case

of loans against physical securities.

• RBI has also reduced the minimum margin to 25% for loans against

dematerialized securities as against 50% for loans against physical

securities.

In short the advantages of opening a demat account are

 Shorter settlements thereby enhancing liquidity

 No stamp duties on transfer of securities held in demat form.

 Elimination of risk associated with physical certificated such as bad

delivery, fake securities.

 Reduction in handling large volume of paper;

 Nomination facility

 Transmission of securities (such as shares, debentures, bonds and

units) is done by DP eliminating the need to correspond with each

company separately.

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 Change of name, address, dividend mandate, registration of power of

attorney, transmission etc. can be effected across companies held in

demat form by a single instruction to the DP

Though under the Depositories Act, 1996, there is no compulsion and the

investor can hold shares either in physical or in dematerialized form. But according to

Sebi’s directive certain shares have to be traded compulsorily in dematerialized form

where the seller cannot sell in physical form. However, after he has bought the shares

the investor can ask for rematerialization of the shares.

The Depository Account must be opened with a Depository Participant. NSDL

interfaces with investor trough Depository Participants (DPS). A list of names and

addresses of all Authorized DP’s is available with the NSDL and CDSL and one can

meet any of these DP’s place and make a choice at your based on your comfort and

convenience. Opening a depository account is as simple as opening a bank account.

One can open a depository account with any DP.

To open a Depository Account, you have to submit the duly filled in Account

Opening form along with the following documents:

• Fill up the account opening form, which is available with the DP.

• Residential Proof - Copy of Ration Card, Passport, Driving License,

Telephone Bill, Electricity Bill or Rental Agreement.

• Sign the DP-client agreement, which defines the rights and duties of the DP

and the person wishing to open the account.

• Receive your client account number (client ID).

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• This client ID along with your DP ID gives you a unique identification in the

depository system.

There is no restriction on the number of depository accounts a person can

open. However, if your existing physical shares are in joint names, you have to open

the account in the same order of names before you submit your share certificates for

demat. A sole holder of the share certificates cannot add more names as joint holders

at the time of dematerializing his share certificates.

However, if the investor wants to transfer the ownership from his individual

name to a joint name, he should first open an account as the sole holder (account A)

and dematerialize the share certificates. He should then open another depository

account (account B) in which he is the first holder and the other person is the second

holder and make an off market transfer of the shares from the account A to account B.

The investor will incur a charge on this transaction. Alternatively, the certificates can

be transferred to the joint ownership and then sent for Dematerialization.

Right now, as per the Companies Act, there is no nomination facility for

shares (whether in the physical or in the electronic form). The nomination facility for

shares can be availed of only when the relevant provisions in the Companies Act are

amended. NSDL captures the details of the nominee when the account is opened so as

to offer the facility as soon as the relevant amendments are effected in the Law.

A client can choose to open more than one account with same DP. In

addition to this, he has a choice of opening accounts with more than one DP.

However a broker can open just one Clearing Member account per card/ stock

exchange for clearing purpose, but he can still open multiple beneficiary
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accounts Beneficiary is the personal account wherein brokers can keep their

personal holdings.

Account opening

Any investor who wishes to avail depository services must first open an

account with a depository participant of NSDL The process of opening a

Demat account is very similar to a bank account The investor can open an

account with any depository participant of NSDL An investor may open an

account with several DPs or he may open several account with single There are

several DPs offering various depositary related services. Each DP is free to fix

its own fee structure Investors have the freedom to choose a DP based on

criteria like convenience , comfort has to enter into an agreement with the DP

The form and contents of this agreement are specified by the business rules of

NSLD

Types of depositary account depends on the operation to be performed

There are three types of Demat accounts which can be opened with a

depositary participant viz

(a) Beneficiary Account (b) Clearing member Accounts and (c) intermediary

account

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Types of accounts

Beneficial owner Clearing member Intermediary

Account Account Account

House Non-House

• A DP may be required to open three categories of accounts for client –

beneficiary account, clearing member account and intermediary account

• A beneficiary account is an ownership account The holder/s of securities

in this type of account own those securities

• The clearing member account and intermediary account are transitory

account The securities in these are held for commercial purpose only

• A clearing member account is opened by a broker or a clearing member

for the purpose of settlement of trades

• An intermediary account can opened by a SEBI registered intermediary

for the purpose of stock leading and borrowing

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BENEFICIARY ACCOUNT

This is an account opened by investor to hold their securities in

dematerialized from with a depository and to carry out the transactions of sale

purchase of such securities in book entry form through the depositary system A

beneficiary account holder is legally entitled for all rights and liabilities

attached to the securities held in that account Therefore, the account is called

“beneficial owner account” a beneficial account can be in the name of

individual, corporate, HUF, minor, bank, financial institution , trust etc or the

broker himself for the purpose of his personal investments in demat form . The

account is opened with a DP

House account vs. non –house account opened by a DP for the

custody of and transactions in its own investment is referred to as a house

account DPS Are required to open house accounts for their own investments

to prevent co-mingling of asset with that of their clients

Neither the depositories ACT nor the regulations made under the

act lay down any specifications about who can open a beneficiary account since

all beneficial owners are deemed to be member of a company (under section 41

(3) of the companies act) only those who are eligible to become members of a

company act can open a beneficiary account with a depository Thus all legal

entities with the exception of partnership firms can open an account in the

depository system

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Documents for verification: For the purpose of verification, all investors have

to submit the following documents along with the prescribed account opening form

Proof of identity- a beneficiary account must be opened only after

obtaining a proof of identity of the applicant The applicants signature and

photograph must be authenticated by an existing account holder or by the

applicant bank or after due verification made with the original of the applicants

valid passport , voter id , driving license or PAN card with photograph and

further

Proof of address- The account opening form should be supported with

proof of address such as verified copies of ration card/ passport/ voter ID/ PAN

card/driving license / bank passbook an authorized official of the participant,

under his signature, shall verify the original documents

In case any account holder fails o produce the original documents for

verification within the foreside period of 30 days, it must be immediately

brought to the notice of NSDL Failure to produce the original within the

prescribed time would invite appropriate action against such account holder,

which could even include freezing of their accounts

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Common information: The process of opening an account with a depository,

nature of such an account, and various factors to be considered for opening a

depository account are explained below. Some details are common to all types of

accounts. These are:

1. Name of the holder

2. Date of birth (for individual accounts)

3. Occupation

4. Address & phone / fax number

5. Bank details like name of the bank, type of the account

(current/savings), accounts number, branch address, MICR, etc

6. PAN number, if applicable

7. Details of nomination

8. Specimen signatures

Beneficiary account- procedure for opening an account

Investor have the choice of selecting a DP based on their convenience,

comfort, service, levels, safety, reputation charges, etc they have flexibility to

have more than one account with the same DP or any other DPS No minimum

balance is required for opening a depository account Investor also have the

freedom to close an account with one DP and open another one with any other

DP

The type of the account opening from to field by an investor and the list

of documents required depend on the type of beneficiary account to be opened

–whether it is for NRI’s or corporate or individual Further, the individual
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account can be in a signal name or joint name clearing members and brokers

have to open in a beneficiary account if they have to deal with their own

holdings

There are several client types in the depository system and different

codes are allotted to them. These are listed below

1. Resident

• Ordinary

• HUF

2. Financial institutions

• Government –sponsored FI

• State financial corporation

• Other

3. FIIS

• Mauritius –based

• Others

4. NRI

• Repatriable

• Non-Repatriable

• Depository receipt

5. Body corporate

• Domestic company

• Overseas corporate body Repatriable

• Government company

• Central government
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• State government

• Co-operative body
• NBFC
• Non –NBFC
• Broker
• Foreign bodies
• Group companies
• Others
• OCB-Nonrepatriable
• Depository receipt
6. CM (clearing member)

7. Foreign national – national /depository receipt

8. Mutual fund –depository receipt

9. Trust, Bank

10. Intermediary

Clearing Member Account

The entities that are authorized to pay out from a clearing corporation/

clearing house against traders done by them or their clients are known as

clearing members. CMs are identified in the system through their CM-BP ID.

All pay-in and pay-out transactions are carried out through their accounts.

There are two types of clearing members:

1. All members of a stock exchange popularly know as brokers, are

clearing members;

2. Custodians who are permitted by the stock exchange to act as a clearing

members.
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PROCEDURE TO OPEN A CLEARING MEMBER ACCOUNT

The steps undertaken to open the account are same as those of the

individuals, difference lies in the type of the clearing members has to first

register itself with the depository and obtain a business partner identification

number (CM-BP-ID). The clearing member is identified by the combination of

CC-CM-ID given by the DP.

Immediately after opening a clearing account, the DP should inform the

depository the details of clearing members name, CM-BP-ID, client-ID, and

date of the opening the account in DPM system.

The clearing account should only be for clearing and settlement purpose and

nit for any other purpose, e.g., holding of securities received in a settlement received

in a settlement account should be transferred to the transferred to respective beneficial

accounts as soon as possible, but in no case later than the time prescribed by the

depository/ stock exchange/ SEBI in this regard. The opening of clearing members

account constitutes a “standing instruction” to receive credits from the clearing

corporation when there is a pay-out.

The Clearing House deals with ONLY ONE designated account for pay-in

and pay-out with the Broker. This single account allows you to know to which

account securities must be delivered and received from. One Clearing Member Pool

Account is opened per card / Stock Exchange to settle trades in the Dematerialised

form.

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Structure Of Clearing Account

The clearing account is identified in the depository system by its CM-

BP-ID. The internal structure of the Clearing Account consists of three parts to

facilitate easy book keeping.

• Arrangement of clearing account

 Pool Account

 Delivery Account

 Receipt Account

Clearing Corporation (CC)/Clearing House (CH)

Clearing Account
Delivery Account Pool Account Receipt Account

Selling Buying
client Client

a) Pool Account: It has two roles in clearing of Securities, viz., before

pay-in, the selling client of the clearing member transfers securities from

his client Account to the Clearing Account. After receiving pay-out, the

clearing member transfers securities from his Clearing Account to the

account of the buying client.

b) Delivery Account: The securities before pay-in, the securities move

from the Pool Account To the Delivery Account. The movement will be

automatic if clearing member has given such an undertaking to its

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Clearing If the Clearing Corporation. It will be effected on the basis of

instruction received from the Clearing house/ Clearing Corporation. If

the clearing house/ Clearing Corporation has not taken such

undertaking, the clearing member to its DP must submit a delivery

instruction form. At the time of pay-in, NSDL flushes out the securities

in the Delivery Account & transfers the same to the Clearing house/

Clearing Corporation.

c) Receipt Account: On pay-out day, the Clearing house/ Clearing

Corporation transfers securities to the Pool Account (to The extent of

net receipt) through the Receipt Account. This account can be used to

trace details of settlement-wise receipt of the clearing member.

Market Type & Settlements Number: A clearing account can be broken

into compartment and sub-compartments. Each compartment can be called as

market type and be as settlement number. Hence, if securities are moved from

any clearing account, apart from the CM-BP-ID, the combination of market

type and settlement number must be provided. A diagrammatic illustration of

the internal structure of a clearing account is depicted in next page.

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Clearing Account
(IN503265)

Physical Rolling Action Rolling

2000014 9000152 2000248
Delivery Pool Receipt Delivery Pool Receipt Delivery Pool Receipt

2000015 9000153 2000248

2000016 9000152 2000249

Settlement calendar: Settlement calendar is decided by the stock exchange. It

contains details for each market type & settlement number. The detail for each

settlement consists of the date of trading, pay-in time, pay-out date, settlement

number etc. Clearing member can obtain the settlement calendar from its own stock

exchange. This is also available in the depository software of the DP.

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MARKET TRANSFERS: Any trade, which is cleared & settled by the clearing

house/ Clearing Corporation of the stock exchange, is considered as a market trade in

the depository. Consequently, the transfers routed through the clearing account.

Typically, a market trade has the following legs of transactions.

a. Receiving securities for pay-in from clients (client to clearing

members)

b. Delivering securities to the clearing house/clearing corporation for

pay-in. (clearing house/clearing corporation)

c. Receiving pay-out from the clearing house/clearing corporation.

(Clearing House/clearing Corporation to clearing member)

d. Distribution of pay-out to clients. (Clearing member to client)

A diagrammatic illustration of the settlement of a market trade in a

depository is depicted below:

DP of buyer DP of Buyer’s
CM

D C

NSDL CH/CC

A B

DP of Seller DP of Seller’s
CM

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Receiving securities for pay-in from clients (client to clearing member)

A selling client of a clearing member (broker) would transfer securities from

his beneficial owner account to the clearing account of the clearing member for

onwards delivery to the clearing house/clearing corporation. This transfer is effected

by his DP on the basis of a delivery instruction provided by the selling client. A

diagrammatic Illustration for securities received for pay-in from clients is depicted

below:
NSD

DP2
DP1

Seller Seller Seller Clearing
Member

Indicates flow of securities

Indicates paper /electronic instruction given.

OFF MARKET TRANSFERS: Any trade, which is not cleared and settled

by the clearing house/clearing corporation of the stock exchange, is considered

as an off-market trade in the depository. Consequently, the transfer is not

routed through the clearing account. Such transfers take place directly between

two beneficiary accounts. Both buyer and seller may open account either with

the same DP or with different DPs. The buyer and seller will trade amongst

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themselves and later on will exchange money, i.e., settle funds amongst

themselves. The selling client would deliver securities from its beneficiary

account to the beneficiary account of the buying client. This transfer is effected

by the DP of the selling client on the basis of a delivery instruction provided by

the selling clients. A diagrammatic illustration of the settlement of an off-

market trade in depository is depicted below:

Indicates flow of securities

Indicates paper /electronic instruction given.

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Depository:

A Depository is a Company where the shares of an individual are held in the

electronic form, at the request of the shareholder. This eliminates the physical form of

holding. IDBI, UTI, SBI and NSE promoted the National Securities Depository

Limited (NSDL). The Central Securities Depository Limited (CDSL) was promoted

by BSE.

Your money may be held in the form of liquid cash at your home or may

be deposited in a bank. The bank holds your funds in the electronic form and

subsequently debits or credits the account. Depending on your issuance of

cheques or deposit of cheques. The advantages of safety and convenience of

dealing with a Bank overweigh the reasons for holding liquid cash in your

home. Your financial assets such as Equity Shares may be compared to the

above example. You may hold physical share certificates in your home and be

exposed to the various risks of lack of safety, mutilation, loss etc. Alternatively,

you may deposit your shares in an organization called a Depository, which

holds your shares in the electronic form. You can dematerialize shares of only

those companies that have signed agreement to dematerialize their shares with

the depository. You cannot dematerialize shares if they are not in your name,

i.e. shares held in street name (market deliveries) cannot be dematerialized.

However, when you send shares to the registrar to be transferred to your name

you can request that you want those shares in dematerialized form.

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Karvy Consultants Ltd. has four DPMs as on date. They are:

1.Hyderabad-IN300394

2.Lucknow - IN301557

3.Bangalore- IN301926

4. Mumbai - IN302470

In India depositories are required to be registered with SEBI and are

governed by the provision of the Depositories Act, 1996 and regulation and

bylaws framed for depositories by the SEBI.

The depositories work in a completely computerized environment with

electronic linkages with the point of origination for the transactions that may

cause the change in ownership of securities. A depository will be electrically

linked with the Register of the members maintained by the company/registrar,

clearing and settlement system in the stock exchanges, stock lending

organization (if in existence), custodians of securities, depository participants

and brokers.

Function of Depository

Dematerlisation: one of the primary functions of depository is to eliminate or

minimize the movement of the physical securities in the market. This is achieved

through dematerialisation of securities. Dematerlisation is the process of converting

securities held in physical form into holdings in book entry form.

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Account Transfer: The depository gives effect to all transfers resulting from

the settlement of trade and other transactions between various beneficial

owners by recording entries in the accounts of such beneficial owners.

Transfer and Registration: A transfer is the legal change of ownership of a

security in the records of the issuer. For effecting a transfer, certain legal steps

have to be taken like endorsement, execution of a transfer of security occurs

merely by passing book entries in the records of the depositories, on the

instructions of the beneficial owners.

Corporate Actions: A depository may handle corporate actions in two ways.

In the first case, it merely provides information to the issuer about the persons

entitled to receive corporate benefits. In the other case, depository itself takes

the responsibility of distribution of corporate benefits.

Pledge and hypothecation: Depositories allow the securities placed with

them to be used as collateral securities in physical form to the lender or its

custodian. These securities are verified for authenticity and often need to be

transferred in the name of lender. This has a time and money cost by way of

transfer fees or stamp duty. If the borrower wants to substitute the

Pledging/Hypothecating the securities makes the process very simple and

collateral accounting through book entries in the records of the depository.

Linkage with clearing system: whether it is a separating clearing

corporation attached to a stock exchange or a clearing house (department) of a

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stock exchange, the clearing system performs the function of ascertaining the

pay-in (sell) or pay-out (buy) of brokers who have traded on the stock

exchange. Actual delivery of securities to the clearing system from the selling

and delivery of securities from the clearing system to the buying broker is done

by the depository. To achieve this, depositories and the clearing system should

be electronically linked.

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Depository Participant:

Depository Participant (DP) is an organisation that acts as an Agent of the

Depository and interacts with the investor. A DP is responsible for maintaining your

securities account and operating it only under your written instructions. The

Depositories Acts mandates that investors can use Depository facilities only through

DP’s. The distribution channel and geographical spread of the DP’s offices allows

you to access the Depository at a low cost. DP can only access their own clients'

information. They cannot access the client information of any other DP. The

information of your holdings in the account is completely confidential& it is similar

to your account balance in a bank.

You can select your DP to open a demat account just like you select a bank

for opening a savings account. Some of the important factors for selection of a

DP can be:

1. Convenience - Proximity to your office/residence, business hours.

2. Comfort - Reputation of the DP, past association with the organisation,

whether the DP is in a position to give the specific service you may

need?

3. Cost - The service charges levied by DP and the service standards.

Individual accounts can be opened by Ordinary Resident, HUF, NRI

Repatriable and NRI Non-Repatriable. Body Corporate, Banks, Trusts, Financial

Institutions, Foreign Institutional Investors, and Overseas Commercial Banks etc can

open corporate Accounts. An account can be opened in the name of HUF in a similar
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way to individual account and mentioning the account category as HUF. However,

Kartha of HUF will sign the application, agreement and all transactions under the

account

An account cannot be opened in the name of the firm. It has to be opened in

the name of any of the Partner as an Individual account only.

Procedure for Dematerialisation

Dematerialisation Process:

1
Investor DP

2A 2 5

R & T Agent 3 NSDL
4

Steps:

1. Client/ investor submits the DRF (Demat Request Form) and Physical

certificates to DP. DP checks whether the securities are available for demat.

Client defaces the certificates by stamping ‘Surrender for Dematerlisation’.

DP punches two holes on the name of the company and draws two parallel

lines across the face of the certificate.

2. DP enters the demat request in his system to be sent to NSDL. DP dispatches

the physical certificates along with the DRF to the R & T Agent.

3. NSDL records the details of the electronic request in the system and forwards

the request to the R&T Agent.

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4. R&T Agent, on receiving the physical documents and the electronic request,

verifies and checks them. Once the R&T Agent is satisfied, Dematerialisation

of the concerned securities is electronically confirmed to NSDL.

5. NSDL credits the dematerialized securities to the beneficiary account of the

investor and intimates the DP electronically. The DP issues a statement of

transaction to the client.

a. DPs provide Dematerlisation request forms (DRF) to their clients.

b. The client completes the DRF in all respect 7 submits to the DP along with the

security certificates to be dematerialized.

c. The DP checks the DRF for validity, completeness and correctness. The

following points should be checked particularly:

 The security certificate sought to be dematerialized are attached to DRF.

 The attached security certificates are marked (defaced) with the words

‘surrendered for dematerialisation’. This is a precautionary measure to

prevent misuse of share certificates by anyone.

 The certificate are not mutilated or defaced in a manner affecting any

material information.

 The name of client on DRF and the certificates is exactly the same as in

the client’s account in DPM. However, minor variations in the name (like

abbreviated name, initials in the place of first name, middle name, minor

name mistake in the name) may be permitted if it can be reasonably

established that both names are of the same person. The permitted

variations refer to initials not being spelt out fully or put prior to after the

surname. In such cases, if the signature on the DRF matches the specimen

signature available with the DP, the securities can be considered for demat.

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 Details like security type, face value, paid-up value, pari passu status,

certificate numbers, distinctive numbers, number of certificates, total

quantity of securities and lock-in statues are filled-in correctly.

d. If the DRF & the accompanying security certificates are found in order, the

DP should accept the DRF and certificates.

e. If DRF and the accompanying security certificates are not found in order, the

DP should return the DRF and certificates.

f. The DP should enter the dematerialisation request in the DPM. DPM generates

a request number (DRN), which should be mentioned on DRF.

g. An authorized person, other than one who entered the DRF details in the

DPM, should verify the details of DRN and release a request to NSDL.

h. Once the DP has received the certificates defaced by investor, the DP punches

two holes on the name of the issuer or its R&T Agent for dematerialisation.

DRF and enclosures have to be sent at the “address to which physical

certificate to be sent” communicated by NSDL. The forwarding letter should

refer to the allotted DRN and should refer to the allotted DRN and should Be

sent within seven days of accepting it from the client.

i. The issuer or its R&T Agent verify the DRF & the accompanying certificate

for validity, completeness and correctness. They also match the details with

the intimation received from NSDL against the same DRN.

j. In case DRF is not found in order, the issuer or its R&T Agent send an

objection memo to the DP, with or without DRF & security certificates

depending upon the reason for rejection.

k. DRFs & Certificate are sent back on the following grounds:

• DRN does not match with message from DM

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• Quantity of actual securities is less than DRF

• Quantity of actual securities is more than DRF

l. DRF & certificate are not sent back:

• If the certificate is fake

• If the certificate has been reported to be stolen

• If the duplicates of the original certificates sent for demat have already been

issued

• If the endorsements are forged

• If the securities are not in the name of the account holder as per DRF

• If the details of the certificates do not pertain to the R&T Agent

• If the signatures differ

• If there is any court order on the securities

• If the certificate are received after 15 days of the electronic request.

m. The DP informs the client accordingly & requests removal of reasons for

objection. The DP removes these or provides additional information to the

issuer or its R & T Agent within 15days of receiving the objection memo.

n. The DP, if the client so requires, may generate a new dematerialisation request

& send the securities again to the issuer or R &T Agent.

Precaution to be taken while processing DRF

 Ensure account to have the same sequence of names of holders and name

structure as printed on the physical certificate.

 Ensure ISIN is activated

 Separate DRF for:

• Partly & fully paid-up shares

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• Locked & free holding

• Holdings locked in for different reasons

• Locked in holdings having different release date

• Different ISINs of the company

 ISIN to be entered by DP.

 All joint holders to sign DRF.

 Check DRF form with details on certificate.

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DEMAT PROCESS

The demat process requires defacing of securities which will make the

security certificate undeliverable unless the demat formalities are completed.

Therefore, the client should be assisted in ascertaining whether the securities in

question are available for demineralisation. Clients should be helped in filling

up the demat request properly. Demat rejection causes great inconvenience to

the client. DP should attend to this area with care and caution. One of the

important reasons for demat rejection is signature mismatch. Taking the

following precaution can reduce this:

 If the client is aware that the signature with the company& signature of

the client should be advised to the register the new signature.

 If the signature is slightly different, client should be advised to sign as

per the signature that was recorded by the company and as recorded with

the DP.

 Ensure dispatch of DRFs and certificate to R &T Agents within seven

days.

 Client may be encouraged to use the Transfer-cum-demat facility if it is

offered by the company. They should be made aware of the procedures

of the scheme.

 In case of joint holdings, the clients should be informed about the

availability of Transposition cum Demat facility.

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CLOSURE OF ACCOUNT:

Closure on Client’s Request- A DP can close a depository account on receipt

of an application in the prescribed format. The application should be made by the

account. In case joint-holders. An account can be closed sought to be closed, the

following steps are necessary.

a. Re-materialization of all securities standing to the credit of the same

account making the application for closure; or

b. Transferring the balance to the credit of another account opened by

the same account holder(s) either with the same participant or with a

different participant.

Before closing the account the DP should ensure that all pending transactions

have been settled. The request for closure should be processed only after ensuring that

there is no balance lying in the account.

Consolidations of accounts- Some clients have opened multiple accounts to

dematerialize their shares held in multiple combination and sequence of names.

However, they may not need so many accounts after they have dematerialized

their shares and may want to bring all their share holdings into one or fewer

accounts. This can be achieved by using normal off Market transfer instruction.

Closure by DP – the DP may also initiate closure of a client’s account if the

client has defaulted in performing should give sufficient notice to the client

before initiating closure of his account. The notice should clearly state the

reasons for closure of his account. The notice should clearly state the reasons

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for closure of account. The process of closing account in such a case is the

same that of client-initiated closure.

Closure/ Shifting of Clearing Account –A clearing member may transfer

its clearing account from one DP to another DP. For this, simultaneously

applications have to be made for closure of account to the earlier DP and for

opening of new clearing member account to the new DP. On receipt of the

application, the new DP forwards the application to the depository for approval

and allotment of a new CM-BP-ID is allotted, the new DP opens a new

Clearing account and intimates the depository about the new client- ID. On

receipt of intimation from the intimates the clearing member. All pay-out of

securities, subsequent to the closure of old clearing account, take place in the

new account. Pg-17-3

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TRADING & SETTLEMENT:

This is the an area where the DP must the DP must take immense care

while accepting and processing request listed below should from the account of

his client to another account. The aspects listed below should be kept in mind.

 Ensure that the delivery instruction book given to each client has pre-

printed serial number and client-ID.

 Inform clients about the pay-in deadline of the stock exchange and the

deadline of the DP.

 Each DIS received should be inwarded correctly with the date and time

stamp.

 Late stamp must be affixed on the instructions received after the expiry

of the deadline set by the DP.

 Ensure the correctness of execution date on the DIS.

 Ensure signature on DIS matches with the records of the DP.

 Ensure that the signatures of all holders are obtain in case of joint

accounts.

 If the client has not issued “standing instructions”, he should be made

aware that a receipt in instruction will be required to the credits into the

account on purchase of shares.

 Client should be made aware of the accounting freezing facility.

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SETTLEMENT

The settlement of trades in the stock exchanges is undertaken by the clearing

corporation (CC)/ clearing house (CH) of the corresponding stock exchanges. While

the settlement of dematerialized securities is effected through depository, the funds

settlement is effected through the clearing banks. The clearing members directly with

the CC/ CH settle the physical securities.

Exclusive demat segment follows rolling settlement (T+5) cycle and the

unified (erstwhile - physical) segment follows account period settlement cycle. In case

of rolling settlement cycle, the account period is reduced to one day.

• In case of settlement of trades done in exclusive demat segments, the pay-in

and pay out of funds and securities are effected on the same day afternoon and

evening (same day) thus reducing the blockage of funds and limiting exposure

to the clearing corporation.

• Settlement of funds is effected through the clearing banks and depository

plays no role in this.

• Settlement of securities is effected through NSDL depository system.

• Clearing and settlement of the regular market trades is effected through the

clearing members of the clearing houses of respective stock exchanges. All

trading members of stock exchanges are clearing members of clearing houses.

In addition, for settlement of institutional trades, custodians are also allowed

to act as clearing members.

• Clearing members of clearing house, dealing in dematerialized securities are

expected to open a clearing account with any DP for the purpose of settling

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trades in dematerialized securities. As, in the mixed (unified) segment, there is

a possibility for all clearing members to receive dematerialized securities, they

are expected to open clearing accounts.

If there is any short delivery at the time of pay-in of securities, these

short positions are auctioned in the Demat segment as done in the Unified

(erstwhile-physical) segment.

Selling and Buying Of Shares:

Selling dematerialized shares in stock exchanges is similar to the

procedure for selling physical shares. Instead of delivering physical shares to

the broker, you instruct your DP to debit your account with the number of

shares sold by you and credit your broker's clearing account.

For this, a delivery instruction has to be given to your DP in a standardized

format, which will be available with your DP.

In short, for selling demat shares;

• You can sell shares in any of the stock exchanges linked to a depository

through a broker of your choice.

• Give an instruction to your DP to debit your account and credit your

broker's clearing member pool account. (this is a depository account

used exclusively for settling transactions by a broker)

• On the pay-in day, your broker gives instruction to his DP for delivery

of the shares to clearing corporation of the relevant stock exchange.
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• The broker receives payment from the clearing corporation

• You receive payment from your broker for the sale in the same manner

you would receive payment for a sale in the physical mode.

Buying Demat Shares:

The procedure for buying dematerialized shares in stock exchanges is similar

to the procedure for buying physical shares. When you want to purchase shares in

electronic form, you have to instruct your broker to purchase the dematerialized

shares from the stock exchanges linked to a depository.

Once the order is executed, you have to instruct your DP (vide a simple format

which is available with the DP) to receive securities from your broker's clearing

account.

Alternatively, you may give a standing instruction to receive credits into your

account and do away with giving a separate receipt instruction each time you expect a

credit. You have to ensure that your broker too gives a matching instruction to his DP

to transfer the shares purchased on your behalf into your depository account.

You should also ensure that your broker transfers the shares purchased from

his clearing account to your depository account, before the book closure. This is really

important because shares that remain in the clearing account of the broker on the book

closure/ record date will not be eligible for corporate benefits.

In brief, the transactions relating to purchase of shares are:

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• You can purchase shares in any of the stock exchanges connected to a

depository through a broker of your choice and make a payment to your

broker;

• Your broker receives credit in his clearing account with his DP on the

pay-out day;

• Broker gives instructions to his DP to debit his clearing account and

credit your account;

• You instruct your DP for receiving credit into your depository account

either through a specific receipt instruction or using the "standing

instruction" facility.

• In case you are not using the "standing instruction" facility then, your

depository account is credited only if the instructions given by you and

your broker match.

Other Services

Besides demat and trading Depositories also offer other services, these are:

o Pledging/ hypothecation of dematerialized securities.

o Electronic credit in public offerings of companies.

o Receipt of non-cash corporate benefits such as bonus, rights in electronic
form.

o Stock lending and borrowing.

o Transmission of securities.

Pledging: Dematerialized shares could be pledged; in fact, this is more

advantageous as compared to pledging share certificates.

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To pledge your Demat shares

• Both you (pledgor) as well as the lender (pledgee) must have depository

accounts.

• You must initiate the pledge by submitting the details of the securities to

be pledged in a standard format (available with DPs).

• The pledgee should confirm the request through his DP.

• Once this is done, your securities are pledged

• All commercial documentation between the pledgor and the pledgee are

handled outside the depository system.

After you have repaid your loan, you can request for a closure of pledge by

instructing your DP through a standard format. The pledgee on receiving the

repayment as well as the request for closure of pledge will instruct his DP

accordingly.

Even the locked-in securities can be pledged, however they cannot be invoked

before the lock-in release date.

Even after the securities are pledged, the pledgor continues to remain the

beneficiary holder of those securities and will receive benefits of a corporate action, if

any.

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Initial Public Offerings: Credits for public offers can be directly received into

demat account. In the public issue application form of depository eligible companies,

there will be a provision to indicate the manner in which securities should be allotted

to the applicant. All you have to do is to mention your client account number and the

name and identification number of your DP.

Any allotment due to you will be credited into your account.

If the applicant is allotted securities in dematerialized form, but the details

regarding the beneficiary account are incomplete/ wrong, the person will get physical

delivery of allotted securities.

If securities were allotted in the dematerialized form, these would be credited

to applicant’s account any day between allotment date and listing date, at the

discretion of the company.

The issuer company/ their R&T agent will forward the applicant the allotment

advice giving the number of shares allotted in dematerialized form. Through this you

can come to know that you have been allotted shares.

An amendment to the company law requiring all future public issues above

Rs100mn to compulsorily offer securities in dematerialized form is awaiting

legislative approval. After this all the issues above Rs100mn will require investors to

trade only in demat way.

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Partly paid up and fully paid up shares in the depository, will be given

separate ISINs (International Securities Identification Number). These are also traded

separately at the stock exchanges.

The company issues call notices to the beneficial holders of securities in the

electronic form. The details of such beneficial holders will be provided to the issuer/

their R&T agent by NSDL. After the call money realization, issuer/ their R&T agent

will electronically convert the partly paid up shares to fully paid up shares.

Receipt Of Cash/ Non-Cash Benefits: When any corporate event such as

rights or bonus or dividend is announced for a particular security, depository will give

the details of all the clients having electronic holdings in that security as of the record

date to the registrar. The registrar will then calculate the corporate benefits due to all

the shareholders. The disbursement of cash benefits such as dividend/ interest will be

done directly by the registrar. In case of non-cash benefits, depository will directly

credit the securities entitlements in the depository accounts of all those clients who

have opted for electronic allotment based on the information provided by the registrar.

The bonus/ rights issue against holding in dematerialized form can be either in

the physical/ dematerialized form as per the choice of the investor. If no choice is

given, by default, the securities will be issued in the physical form.

Even if an investor has holdings in physical form, he can receive the bonus/

rights issue against this in the dematerialized form.

In case of fractional part, as in the physical segment, it would be paid in cash

and the remaining whole part would be credited to the investors account.

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The statement of holding and transaction statement is sent by the investors DP,

it will show the bonus/ rights credit into investor’s account. This report is sent to the

investor every fifteen days. In addition, an allotment advise will be send by the issuer/

their R&T agent for bonus/ rights entitlement.

Stock Lending and borrowing: Through the depository account securities in

the demat form can be easily lent/ borrowed. Securities can be lent or borrowed in

electronic form through an approved intermediary, who has opened a special

'intermediary' account with a DP.

To Lend Securities: You have to instruct your DP through a standard format

(which is available with your DP) to deposit your securities with the intermediary.

If the intermediary accepts your deposit of securities, the securities will be

moved from your account into the intermediary's account. If you wish to recall the

securities lent by you, you can make a request vide a standard format available with

your DP.

To Borrow Securities: You have to instruct your DP through a standard format

(which is available with your DP) to borrow securities from the intermediary.

If the intermediary accepts your request, the securities will be moved from the

intermediary's account to your account. If you wish to return the securities borrowed

by you, you can make a request vide a standard format available with your DP.

Transmission Of Securities: Transmission of securities due to death, lunacy,

bankruptcy, and insolvency or by any other lawful means other than transfer is also

possible in the depository system. In the case of transmission, the claimant will have
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to fill in a transmission request form, (which is available with the DP) supported by

valid documents. The DP, after ensuring that the application is genuine, will transfer

securities to the account of the claimant. For this, the claimant must have a depository

account. The major advantage in transmission of dematerialized holdings is that the

transmission formalities for all securities held with a DP can be completed in one go,

unlike in the case of share certificates, where the claimant will have to interact with

each issuing company or its R&T Agent.

In case where the deceased was one of the joint holders in the Client account,

the surviving client(s) shall be the person(s) recognized by depository as having title

to the securities held in that joint Client account. In case where the deceased was a

sole holder of the Client account, his legal heir(s) or the legal representative(s) will be

the person(s) recognized by depository as having title to the securities held in that sole

Client account.

Security: National Security and Depository Limited claims to have undertaken

sufficient security measures. These measures are:

• A DP can be operational only after registration by Sebi, which is based

on the recommendation from NSDL and Sebi’s own independent

evaluation. Sebi has prescribed criteria for becoming a DP in the

regulations.

• DPs are allowed to effect any debit and credit to an account only on the

basis of valid instruction from the client.

• Every day, there is a system driven mandatory reconciliation between

the DP and NSDL.
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• There are periodic inspections into the activities of both DP and R&T

agent by NSDL. This also includes records based on which the debit/

credit are effected.

• The data interchange between NSDL and its business partners is

protected by standard protection measures such as encryption. This is a

SEBI requirement.

• There are no direct communication links between two business partners

and all communications between two business partners are routed

through NSDL

• All investors have a right to receive their statement of accounts

periodically from the DP.

• Every month NSDL forwards statement of accounts to a random sample

of investors as a counter check.

• In the depository, the depository holds the investor holdings on trust.

Therefore, if the DP goes bankrupt the creditors of the DP will have no

access to the holdings in the name of the clients of the DP. These

investors can then either dematerialize their holdings or transfer them to

a different account held with another DP.

• Investor grievance: All grievances of the investors are to be resolved by

the concerned DP. If they fail to do so the investor has the right to

approach NSDL.

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• Insurance Cover: NSDL has taken a comprehensive insurance policy to

protect the interest of the investors in cases of failure of the DP to

resolve a genuine loss. The details of the policy is as under:

• Upper limit per claim: Rs200mn.

• Number of claims allowed: unlimited

• Minimum value of the claim: Rs150, 000

• To cover claims valued less than Rs150, 000 NSDL has an investor

protection fund in place.

Besides all these safety measures efforts have been done to make this electronic

system foolproof.

DEMAT SHARES: ARE THEY 100% SAFE

When you buy physical shares from the stock market, you could never be

certain of the validity of the title of shares. There were many reasons- the sellers'

signature did not match, or the certificates were fake, forged or stolen, and so on.

Demat shares are supposed to obviate these problems. Buying shares in the

demat form always guarantees you a good title as soon as the settlement is over. The

biggest attraction of trading in demat shares is that the shares you buy come with a

clean title and immediately after the settlement on the relevant stock exchange.

Rule 100 of market regulator SEBI determines whether the shares delivered in

a settlement, are good or not. Under rule 100, the shares that have been transferred the

company can still withdraw any number of times, if a transfer is found to be invalid

for any reason.
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Suppose a sells physical shares to B and B gets them dematerialized. Later B

sells the shares in the stock exchange and C buys them. Meanwhile A discovers that

his share certificates were stolen and fraudulently sold by someone else. He gets a

court order restraining the company from further transferring the shares and attaching

them (currently in possession of C). This is known as 'stop transfer'. So C who has

bought dematerialized shares is now struck with the shares. He cannot sell these

shares since they would be frozen in his account

In demat shares, pre-demat problems about the validity of a share do not effect

the interest of the buyers after dematerialization. Shares go through a verification

process at the registrars' before they are dematerialized.

Therefore the responsibility lies with the registrar. The registrar must find a

remedy if the original transfer of shares, before their dematerialization comers under

doubt. But there is a catch. The company and its registrars are not responsible if the

reasons for original transfer being invalid were not available at the time of

dematerialization. Matters have to be dealt with on a case-to-case basis. Which means

that even demat buyer may find that his shares have been frozen in his demat account.

This kind of case has to be contested in court by the parties involved.

This issue is not directly addressed in The Depositories Act, 1996. Sebi’s

regulations on depositories and depository participants also do not mention the issue.

Matters get more complex if an investor has traded further in shares of the

same company in his demat account. Demat shares are fungible and don’t have

distinctive numbers. It is not easy to track the sale or trade of shares after they are

dematerialized.

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In a rare event of your DP going bankrupt or closing the operations, the

interests of the investors will be fully protected. In such a situation, the investors will

be given an option of either transferring the securities to a new DP or they may

rematerialise the securities

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ANALYSIS OF CUSTOMER SATISFACTION

Sample size selected: 100

Total Number of customer available for survey: 100

sample for survey

100

50
Series1

0
1

The sample size selected for the survey was 100.(Hundred) customers of

KARVY CONSLUTANT STOCK BROKING were available for survey. So opinion

was taken to know the customer satisfactions towards demat account.

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1.Respondent came to know the about “KARVY FINANCIAL CONSULTANT “

Total no. Of sample taken: 100

1 2 3 4 5
News Papers/
Friends Business Magazines Online Agent/Financial Others
47 18 10 14 11

11%
Friends

14% News
Papers/BusinessMagazin
es
47% Online

10% Agent/Financial

Others

18%

Source: Survey Data

The above table and chart shows the respondents know

KARVY FINANCIAL CONSULTANT :-

• 47.00% of respondent know KARVY FINANCIAL CONSULTANT

through their Friends.

• 18% of of respondent know KARVY FINANCIAL CONSULTANT

through News Papers & Magazine.

• 14% of respondent know KARVY FINANCIAL CONSULTANT

through Agents & Financial Institutions.

• 11% of respondent know KARVY FINANCIAL CONSULTANT

through Others.

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2.They are interested to visit “KARVY FINANCIAL CONSULTANT “

Yes No
94 6

No
6%

Yes
No

Yes
94%

Source: Survey Data

The above table and chart shows that 94% of respondents are interested

to visit KARVY FINANCIAL CONSULTANT & only 6% of Respondent

are not interested to visit the same .

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3. They Respondents are interested to visit “KARVY FINANCIAL CONSULTANT

“ because of visual pleasure, hospitality & Excellent Guideline etc

Agree Just agree No Opinion Just Disagree Disagree
47 45 8 0 0

50
47 45
40
30
Series1
20
10 8
0 0 0
Agree Just No Just Disagree
agree Opinion Disagree

Source: Survey Data

The above table and chart shows that 47% of Respondents are interested

to visit “KARVY FINANCIAL CONSULTANT “ , 45% of Respondent just

agree & 8% of Respondent are not interest to give there opinion .

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4. They Respondents are definitely use service “KARVY FINANCIAL CONSULTANT

“Because attitude of employee.

69 24 7 0 0

80

70

60
Agree
50
Just agree
40
No Opinion
69
30
Just Disagree
20
Disagree
10 24
7
0 0 0
Agree Just agree No Just Disagree
Opinion Disagree

Source: Survey Data

The above table and chart shows that 69% of Respondents are interested to

visit “KARVY FINANCIAL CONSULTANT “Because of there attitude, and,

24% of Respondent just agree only 7% of Respondent are constant.

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5. They Respondents are definitely using service of “KARVY FINACIAL CONSULTANT
because what they benefit gets from them.

50 41 8 1 0

60

50
Agree
40 Just agree
30 No Opinion
50 Just Disagree
20 41
Disagree
10
8
0 1 0
Agree Just agree No Opinion Just Disagree
Disagree

Source: Survey Data

The above table and chart shows that 50% of Respondents are interested

to visit “KARVY FINANCIAL CONSULTANT because they get that much of

benefits from them , and, 41% of Respondent just agree only 8% of

Respondent constant..1% of Respondent just disagrees.

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6 They Respondents are interested “KARVY FINANCIAL

CONSULTANT “

because they introduce new scheme and we get benefit .

Yes No

86 14

No
14%

Yes
No

Yes
86%

Source: Survey Data

The above table and chart shows that 86% of respondents are interested to use

service of “KARVY FINANCIAL CONSULTANT” because they introduce new

scheme and we get benefit & only 14% of Respondent are not interested to visit the

same.

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7 They Respondents use “KARVY FINANCIAL CONSULTANT

“because Karvy People know customer value and money value.

54 39 6 1 0

60
50
40
30 54
20 39
10
6
0 1 0
Agree Just agree No Opinion Just Disagree
Disagree


Source: Survey Data

The above table and chart shows that 54% of respondents are satisfied

with the service of “KARVY FINANCIAL CONSULTANT” because the

Karvy People know customer value and money value. 39% Respondents just

agree .6% of parole say no opinion and only 1% of Respondent say just

disagree.

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Customer satisfaction towards karvy stock exchange project report mba marketing

Customer satisfaction towards karvy stock exchange project report mba marketing

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