Depository Participant SEBI Registration

What does Depository Participant mean?

A depository is a type of entity or association that stores investor securities in electronic form through a registered depository member in the form of shares, debentures, bonds, government securities, mutual fund units, etc. upon request. It also provides services related to equity transactions.

The bank-depository similarity as discussed below

It keeps funds in an account. It keeps securities in an account.
It transfers the funds on the direction of the account holder between their accounts. It transfers the securities on the direction of the account holder between their accounts.
Banks allow transfer without maintaining the money. Depositories allow transfer of ownership without maintaining the securities.

What are the features of Depositories in India?

This functions as a relation between the shares issuing listed companies and their shareholders. A DP may be a bank, financial institution, broker, or any individual qualified under SEBI standards and responsible for the final transfer of the depository's shares to investors. The lender receives a confirmation from the depository at the conclusion of a transaction.

What services are offered by Depository?

  • Dematerialization (usually known as demat) method of transforming investor's physical certificates into an equivalent number of electronic securities
  • Rematerialization, known as Remat, is a method of converting securities held in electronic form into demats accounts back into physical certificates.
  • Securities Transfer, change of beneficial ownership
  • Trade settlement on pledging and Unpledging of Securities for loan against shares
  •  Business benefits are transferred directly to the customer's Demat and Bank account

What is the requirement of the Depository?

A depository minimizes the risk of physical securities holding. With the advent of the depository network, risks such as injury, loss or theft have been reduced considerably since the shares are kept in and transferred electronically. We also raising trading paperwork and fasten the transfer of shares.

What are the different types of Depository?

  • In compliance with the 1996 Depository Act, two depositories are established in India, namely National Securities Depository Limited (NSDL), supported by the National Stock Exchange, Industrial Development Bank of India, and Unit Trust of India, among others. The other depository is the CDSL, which is sponsored by the Bombay Stock Exchange Bombay Stock Exchange, State Bank of India, Bank of India among others. 

Who may be the Depository Participant?

The Depository Participant may be a financial institution, scheduled commercial banks, foreign banks operating in India with RBI approval, corporations / houses clearing, stock brokers, etc.

Depository and Depository user are both governed on the basis of guidelines provided by them under SEBI's jurisdiction.

The process for issuing a registration certificate as a depository client is explained below:

  • The applicant requiring registration shall, together with the fees of INR 15,000, submit an application to the board for registration in Form E through the depository in which the applicant intends to serve as a member.
  • The depository shall then forward this request to the Board not later than 30 days after its receipt, together with a recommendation that the applicant meet the eligibility criteria set out in the Regulations.
  • Upon receipt of the application, the board may require the applicant or the depository to which the applicant is admitted as a participant, to provide additional information or to present it in person, if appropriate for the certificate to be issued. The board may even refuse the request if it considers that it is not complete in all respects and does not comply with the instructions specified.
  • For the purposes of issuing a registration certificate, the Board considers as mentioned below all matters related to the success of the activities of the Depository Applicant:
  • The candidate should be one of the groups below:
    1. An agency of public finances as specified
    2. Only a foreign bank working in India with the sanction of RBI
      A stock exchange clearing company.
    3. Government Financial Services
      A stockbroker issued a board
    4. Registration certificate. Others such as those listed in the regulation
  • The candidate should be a genuine person.
  • The applicant should have the option to be admitted as a trustee of the depository by which the petition was filed with the commission.
  • When the board is satisfied that the claimant is eligible for the certification, the qualification certificate in Form F shall be issued subject to payment of fees as provided for in the regulations.

As the depository network improves market share supply, the likelihood of collusion, theft and failure has been reduced; customers are therefore more interested in investing in this method.