“A Study On Customer Satisfaction Towards Depository Participants”
Contents Sl. No. Titles I Chapter 1 Executive summary Introduction Design of the study - Statement of the Problem - Objective - Methodology Sampling design Data Collection Method - Limitation of the study II
III IV
Page No. 3 5
7
Chapter 2 Organization Profile Introduction to Dematerlisation - Accounting Opening - Clearing member account - Market Type & Settlements Number - Depository - Function of Depository - Depository Participant - Procedure for Dematerialisation - Demat process - Closure of account - Trading & Settlement - Selling And Buying Of Shares - Other Services - Demat Shares: Are They 100% Safe
9 24 29 34 37 41 42 43 44 48 50 51 53 54 55
Chapter 3 Results & discussion with Charts & graphs
63
Chapter 4 Appendix • Questionnaire Bibliography
88 98
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“A Study On Customer Satisfaction Towards Depository Participants”
EXECUTIVE SUMMARY Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants” HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. In addition it also provides demat services, mutual funds etc. 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 project emphasis on
“Customer satisfaction towards depository
participants” . Objectives of the Study: •
To know the concept of dematerialization,
depository and depository
participants. •
To know the percentage of people satisfied with the services of DP.
•
To know the investment habit of people in securities
•
To know how Demat account is helping in trading..
•
To find out the behavior of respondents towards shares
Research Methodology: Data source: Primary Data: Through Questionnaire Secondary Data: HDFC Bank’s reports, Magazines & Websites. Sample size: 100 customers of HDFC BANK Area Covered for research: Only Belgaum HDFC BANKS customers. Sampling Procedure: Random sampling method from available database.
Findings:
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“A Study On Customer Satisfaction Towards Depository Participants” Most of the investors are small investors (that is about 51%. And about 32% are long term investors , and 17% are traders. The respondents aware of the new services provided by HDFC BANK are mainly from agents that is about 39%,and from friends is 21%,and from newspaper is 17%, and broker is 17% and from others is 6%.
From the analysis it is clear that 33% of the respondents are extremely satisfied with Demat services and 36% are satisfied and 13% are neither satisfied/Nor satisfied and 18% of them are unsatisfied.
From the analysis it clearly states that 16% of the respondents are extremely satisfied with the service of settlement(Selling/Buying) and 37% are satisfied and 28% are neither satisfied/Nor unsatisfied,15% are unsatisfied and 4% are extremely unsatisfied.
20% of the respondents are extremely satisfied with the service of sell ‘n’ cash and35% are satisfied,33% are neither satisfied nor unsatisfied, 7% are unsatisfied and 3% are extremely unsatisfied
46% of the respondents are satisfied by telephone queries,9% are extremely satisfied,25% are neither satisfied ,11% are unsatisfied,9% are extremely unsatisfied.
21% of the respondents are extremely satisfied regarding the co-operation by staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4% are unsatisfied. 24% of the respondents are 20% satisfied with the services of DP,25% of the respondents are 40% satisfied with the services of DP, and 32% are 60% satisfied with the services of DP. 30.4% of the respondents prefer DP over other DP’s because of quality service,9.8% because of rates charged,34.8% for nothing in particular, and 25% for safety.
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“A Study On Customer Satisfaction Towards Depository Participants” 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 NSE 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 Indi Design of the study
Tile of the project: “Customer satisfaction towards depository participants” Statement of the Problem: HDFC BANK is providing the Demat service. Hence in this report an attempt is made to know the present customer satisfaction towards depository participants
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“A Study On Customer Satisfaction Towards Depository Participants” RESEARCH OBJECTIVES: •
To know the concept of dematerialization,
depository and depository
participants. •
To know the percentage of people satisfied with the services of DP.
•
To know the investment habit of people in securities
•
To know how Demat account is helping in trading..
•
To find out the behavior of respondents towards shares
Methods and Methodology Sampling Design:
Sampling since segment wise investors in HDFC BANK were available the overall customers were considered for the study... 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 HDFC BANK.
Field Study: Directly approached respondents.
DATA COLLECTION METHOD: 1. PRIMARY DATA: For a study of this nature primary data is collected through Questionnaire. 2. SECOUNDARY DATA: This is been is collected through HDFC Bank’s 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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“A Study On Customer Satisfaction Towards Depository Participants”
Limitations of study •
Since Sample size is only 100,it does give the entire picture..
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants”
ORGANISATION PROFILE
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“A Study On Customer Satisfaction Towards Depository Participants� HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. BROAD AREAS IN WHICH IT OPERATES The Bank operates in three segments: retail banking, wholesale banking and treasury services. The retail banking segment serves retail customers through a branch network and other delivery channels. The wholesale banking provides loans and transaction services to corporate and institutional customers. The treasury services segment undertakes trading operations on the proprietary account, foreign exchange operations and derivatives trading. The Bank operates in India. Retail Banking
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“A Study On Customer Satisfaction Towards Depository Participants� This segment raises deposits from customers and makes loans and provides advisory services to such customers. The objective of the Retail Bank is to provide its target market customers a range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like automated teller machines (ATMs), phone banking, net banking and mobile banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has an array of retail loan products, including auto loans, loans against marketable securities, personal loans and loans for two-wheelers. It is also a provider of depository participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form. HDFC Bank has launched an international debit card in association with VISA (VISA Electron) and also issues the MasterCard Maestro debit card. The Bank launched its credit card business during the fiscal year ended March 31, 2001. By September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2 million cards. The Bank is also engaged in the merchant acquiring business with over 50,000 point-ofsale (POS) terminals for debit/credit cards acceptance at merchant establishments. Wholesale Banking , The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small and mid-sized corporates and agri-based businesses. For
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“A Study On Customer Satisfaction Towards Depository Participants� these customers, the Bank provides a range of commercial and transactional banking services, including working capital finance, trade services, transactional services and cash management. The bank is also a provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. It provides cash management and transactional banking solutions to corporate customers Treasury Services Within this business, the bank has three main product areas: Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. Risk management information, advice and product structures, as well as fine pricing on various treasury products are provided through the Bank's Treasury team. The Treasury business is responsible for managing the returns and market risk on this investment portfolio CUSTOMER FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People CAPITAL STRUCTURE Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants” bank's equity and about 19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB
VARIOUS SERVICES FOREX AND TRADE SERVICES ., HDFC Bank has a range of products and services that one can choose from to transact smoothly. The following are different methods of transacting in foreign exchange and remitting money. Travellers cheques Foreign currency cash. Foreign currency drafts Cheque deposits Remittances Cash to master Trade services Foreign services branch locator
Important guidelines and schedules
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“A Study On Customer Satisfaction Towards Depository Participants” All Foreign Exchange transactions are conducted by strictly adhering to RBI guidelines. Depending on the nature of your transaction or point of travel, you will need to understand your Foreign Exchange limits.
LOANS
Home Loans Personal Loans Two Wheeler Loans New Car Loans Used Car Loans Overdraft Against Car Express Loans Loans Against Securities Loans Against Property
PERSONAL
BANKING
Savings Accounts These Accounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. Whatever may be the occupation, bank is confident that customer will find the perfect banking solution. Open an account in your name (customer’s name) or register for one jointly with a family member today.
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“A Study On Customer Satisfaction Towards Depository Participants� Current Accounts Now, with an HDFC Bank Current Account, experience the freedom of multi-city banking! Customer can have the power of multi-location access to his account from any of banks 500 branches in 220 cities. Not only that, he can do most of his banking transactions from the comfort of
his office or home without stepping out.
At HDFC Bank, it understand that running a business requires time and money, also that customers business needs are constantly evolving. That's where it come in. It provides him with a choice of Current Account options to exclusively suit his business - whatever the size or scope. Fixed Deposits Long-term investments form the chunk of everybody's future plans. An alternative to simply applying for loans, fixed deposits allow the customer to borrow from his own funds for a limited period, thus fulfilling his needs as well as keeping his savings secure.
As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs, Charges or Fees Brochures will attract Service Tax @10% & Education Cess @2% of the service tax amount effective 10th September 2004. The same will appear as separate debits in the statements.
PRIVATE BANKING HDFC Bank offers Private Banking services to high net worth individuals and institutions. Banks team of seasoned financial and investment professionals provide
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“A Study On Customer Satisfaction Towards Depository Participants” objective guidance backed by thorough research and in-depth analysis keeping in mind customers financial goals. Multiple Recognition from Euro money At HDFC Bank, they have always strived towards providing exceptional service to each of their esteemed customers. As testament to this dedication, they have earned the following ranks in a recently conducted Euromoney Survey. Rated as the best private bank in the super effluent category in India HDFC Bank Investment Advisory Services - Helping you take your Investment portfolio further. Dedicated investment advisor HDFC Private Banking service involves a high degree of personalization. When customer avail of this facility, a dedicated Investment Advisor serves him. This seasoned finance professional adds value to his portfolio by keeping him up to date with financial markets and investment opportunities .PAYMENT
SERVICES
With HDFC Bank's payment services, one can bid goodbye to queues and paper work. Its range of payment options make it easy for customer to pay for a variety of utilities and services. Verified by visa If one wants to be worry free for his online purchases. Now he can shop securely online with yhis existing Visa Debit/Credit card. Net safe Now shop online without revealing your(customers) HDFC Bank Credit Card number. Prepaid refill
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“A Study On Customer Satisfaction Towards Depository Participants” If a person is a HDFC Bank Account holder and a prepaid customer, he can now refill his Prepaid Mobile card with this service. Bill pay One can pay his
telephone, electricity and mobile phone bills at his convenience.
Through the Internet, ATMs, his mobile phone and telephone - with Bill Pay, bank’s comprehensive bill payments solution
Visa Bill Pay One can pay his utility bills from the comfort of his home! Pay using his HDFC Bank Visa credit card and forget long queue and late payments forever Insta pay One can Pay his bills, make donations and subscribe to magazines without going through the hassles of any registration. Direct pay Shop or Pay bills online without cash or card. Debit your(customers ) account directly with bank’s Direct Pay service! Smart pay(with credit cards) With Smart Pay, paying customers r electricity, telephone, mobile phone, water bills, gas and insurance premia payments becomes easy like never before Visa money transfer One can transfer funds to any Visa Card (debit or credit) within India at his own convenience through HDFC Bank's Net Banking facility. e-Monies Electronic Funds Transfer Transfer funds from customers account to any account in any Bank in India at 15 locations - FREE of cost! Online payment of excise and service tax One can make his Excise and Service Tax payments at his own convenience. Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants�
PREFFERED/CLASSIC BANKING If a customer expects more from everything, even HDFC bank, will invite him into the world of exclusive banking. Where he will never again have to wait to be served. With HDFC Bank Preferred Programme, his comfort always comes first.
Ideal for seasoned professionals or businessmen, this programme will provide him with a banker dedicated to take care of all his banking and investment needs. It also means he get preferential rates on various banking products and other exclusive benefits. HDFC BANK CLASSIC BANKING If a person wants to experience banking beyond the ordinary, our HDFC Bank Classic
Programme
is
just
for
him.
Becoming an HDFC Bank Classic customer entitles him to a host of benefits, including a bouquet of preferentially priced products and specialized wealth management solutions. AWARDS AND ACHIEVMENTS HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". They realized that only a single-minded focus on product quality and service excellence would help them get there. Today, they are proud to say that they are well on the way towards that goal.
2006
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“A Study On Customer Satisfaction Towards Depository Participants� Business Today
Best Bank in India.
Forbes Magazine
One of Asia Pacific's Best 50 companies.
Businessworld
Best listed Bank of India.
The Asset Best Domestic Bank. Magazine's Triple A Country Awards Asiamoney Awards Best Local Cash Management Bank in Large and Medium segments. Euromoney Awards "Best Bank" in India.
2005 Asia money Awards Best Domestic Commercial Bank Asia money Awards Best Cash Management Bank - India . The Asian Banker Retail Banking Risk Management Award in India. Excellence Hong Kong-based Best Bank India Finance Asia magazine Economic Awards
Times "Company of the Year" Award for Corporate Excellence.
Asiamoney also named the bank:
Best Local Cash Management Bank in India 2004 - US$11-100m Best Local Cash Management Bank in India 2004 - >US$501m Best Local Cash Management Bank in India 1989-2004 (poll of polls) Best Overall Domestic Trade Finance Services in India 2004 Most Improved company for Best Management Practices in India 2004
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“A Study On Customer Satisfaction Towards Depository Participants� The Business Today-KPMG Survey published in the leading Indian business magazine Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in 2005. The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance Bank" in India, in 2006. HDFC Bank named the "Most Customer Responsive Company - Banking and Financial Services in The Economic Times - Avaya Global Connect Customer Responsiveness Awards 2005" HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005. HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A Country Awards 2004 and 2003. In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most Respected Companies" as part of The Business World Most Respected Company Awards 2004. In 2004, Forbes Global again named us in its listing of Best Under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue. In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial Services" - India as part of the Asian Banker Awards 2003. In 2003, Forbes Global named us in its ranking of "Best Under a Billion, 200 Best Small Companies for 2003".
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“A Study On Customer Satisfaction Towards Depository Participants� Leading business newspaper The Financial Express named HDFC Bank the "Best New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003. Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the "Best Bank in the Private Sector" for the year 2003. Leading Indian business magazine Business Today in a survey rated us "Best Bank in India" 2003, and "Best Private Sector Bank" in India in 1999. NASSCOM and economictimes.com have named us the 'Best IT User in Banking' at the IT Users Awards 2003. There have been some other proud moments as well:
London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002 Asiamoney magazine has named us "Best Commercial Bank in India 2002". For our use of information technology we have been recognized as a "Computerworld Honors Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA. Our technology initiative has been included as a case study in their online global archives.The Economic Times has conferred on us The Economic Times Awards for Corporate Excellence as the Emerging Company of the Year 2000-01. Leading Indian business magazine Business India named us "India's Best Bank" in 2000. In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300 Best Small Companies" in the world and as one of the "20 for 2001" best
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“A Study On Customer Satisfaction Towards Depository Participants” small companies in the world.
CORPORATE GOVERNARCE HDFC Bank recognizes the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organizational efficiency. This Corporate Governance Policy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance.
BOARD OF DIRECTORS
Mr. Jagdish Capoor, Chairman Mr. Aditya Puri , Managing Director Mr. Keki Mistry Dr. (Mrs.) Amla Samanta Mr.Anil Ahuja Dr. Venkat Rao Gadwai Mr.Vineet Jain Renu Karnad
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“A Study On Customer Satisfaction Towards Depository Participants” Mr.Aravind Pande Mr. Ranjan Kanpur(w.e.f January 9, 2004) Mr. Bobby Parikh
(w.e.f.January 9,2004)
VICE PRESIDENT(LEGAL)& COMPANY SECRETARY Mr. Sanjay Dongre AUDITOTS Mr. P.C. Hansotia&Co (Chartered accountants)
REGISTERED OFFICE HDFC BANK House Senapati Bapat Marg Lower Parel Mumbai 400013 Tel No: 56521000 Fax No: 24960739 Web –site : www.hdfcbank.co
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“A Study On Customer Satisfaction Towards Depository Participants�
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 Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants” 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.
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
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“A Study On Customer Satisfaction Towards Depository Participants” •
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.
•
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
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“A Study On Customer Satisfaction Towards Depository Participants” Transmission of securities (such as shares, debentures, bonds and units) is done by DP eliminating the need to correspond with each company separately. 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.
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“A Study On Customer Satisfaction Towards Depository Participants” •
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).
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants� 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 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 Types of accounts
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“A Study On Customer Satisfaction Towards Depository Participants”
Beneficial owner
Clearing member
Account
House •
Intermediary
Account
Account
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 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
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“A Study On Customer Satisfaction Towards Depository Participants” 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 comingling 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 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
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“A Study On Customer Satisfaction Towards Depository Participants� 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
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
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“A Study On Customer Satisfaction Towards Depository Participants” 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 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 o 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
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“A Study On Customer Satisfaction Towards Depository Participants” •
Government company
•
Central government
•
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:
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“A Study On Customer Satisfaction Towards Depository Participants” 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. 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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“A Study On Customer Satisfaction Towards Depository Participants”
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 Receipt Account Delivery Account Pool Account
Selling client
Buying 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
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“A Study On Customer Satisfaction Towards Depository Participants” 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 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 settlementwise 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 below
Clearing Account (IN503265)
PhysicalBabasabpatilfreeppimba.com Rolling 2000014 2000015 2000016 9000153 9000152 Delivery Pool Receipt
Delivery Pool Receipt Receipt
36 Action Rolling 2000249 2000248 Delivery Pool Receipt Receipt Receipt
“A Study On Customer Satisfaction Towards Depository Participants”
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.
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)
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“A Study On Customer Satisfaction Towards Depository Participants” A diagrammatic illustration of the settlement of a market trade in a depository is depicted below: DP of Buyer’s CM
DP of buyer
D
C CH/CC
NSDL A
B
DP of Seller
DP of Seller’s CM
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: NSDL
DP2
DP1
Seller A AAAlle rA
Seller B
Seller C
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Clearing Member
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“A Study On Customer Satisfaction Towards Depository Participants”
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 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:
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“A Study On Customer Satisfaction Towards Depository Participants�
Indicates flow of securities Indicates paper /electronic instruction given.
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
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“A Study On Customer Satisfaction Towards Depository Participants� 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.
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.
Functions of Depository
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“A Study On Customer Satisfaction Towards Depository Participants� 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 dematerialization of securities. Dematerlisation is the process of converting securities held in physical form into holdings in book entry form. 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 stock exchange, the clearing system performs the function of ascertaining the pay-in (sell) or pay-out (buy) of
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“A Study On Customer Satisfaction Towards Depository Participants” 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
Depository Participant: Depository Participant (DP) is an organization 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 organization, 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
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“A Study On Customer Satisfaction Towards Depository Participants” 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 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 Dematerialization Dematerialisation Process 1
Investor
DP 2A
R & T Agent
2 3
5 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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“A Study On Customer Satisfaction Towards Depository Participants” 4.R&T Agent, on receiving the physical documents and the electronic request, verifies and checks them. Once the R&T Agent is satisfied, Dematerialization 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
dematerialization’.
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
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“A Study On Customer Satisfaction Towards Depository Participants” 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.
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 dematerialization 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 dematerialization. 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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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
•
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.
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
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“A Study On Customer Satisfaction Towards Depository Participants” 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.
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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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 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
Trading & Settlement:
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“A Study On Customer Satisfaction Towards Depository Participants” 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.
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.
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“A Study On Customer Satisfaction Towards Depository Participants” •
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 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 (erstwhilephysical) 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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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.
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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: •
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
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“A Study On Customer Satisfaction Towards Depository Participants” 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. 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
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“A Study On Customer Satisfaction Towards Depository Participants� 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. 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.
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“A Study On Customer Satisfaction Towards Depository Participants� 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. 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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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. 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.
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“A Study On Customer Satisfaction Towards Depository Participants” 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 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.
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“A Study On Customer Satisfaction Towards Depository Participants” •
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.
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants” •
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.
•
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.
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“A Study On Customer Satisfaction Towards Depository Participants�
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“A Study On Customer Satisfaction Towards Depository Participants�
Analysis of customer satisfaction
1.Scheme of holding shares Small investors 51 51%
Longterm investors 32 32%
Traders 17 17%
In which scheme you are holding shares 60
50
40
30
Percent
20
10
0 Small investors
Long term investors
Traders
In which scheme you are holding shares
Interpretation: The above table and graph shows that most of the investors are small investors (that is about 51%. And about 32% are long term investors , and 17% are traders. 2 Awareness about new services will come to be known by Friends 21 21%
Newspaper 17 17%
Broker 17 17%
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Agents 39 39% 63
Other 6 6%
“A Study On Customer Satisfaction Towards Depository Participants�
If you are the new services, then how do you come to know the se 50
40
30
Percent
20
10
0 Friends
New spaper
Broker
Agents
Others
If you are the new services, then how do you come to know the services
Interpretation: The above table and chart shows that the respondents aware of the following services is mainly from
agents
that is about 39%,and from friends is 21%,and from
newspaper is 17%, and broker is 17% and from others is 6%. 3a.Schemes/Services awareness and the availed services Schemes/Services Share trading % of respondents
I have availed the service 80 80%
I am aware of the service 20 20%
Please tick fromthe following service(share trading) 100
80
60
Percent
40
20
0 I have availed the f
I m aw are of the f ol
Please tick fromthe following service(share trading)
Interpretation: From the above graph and chart it shows that 80% of the customers have availed the service of share trading and 20% of them are aware of the service.
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“A Study On Customer Satisfaction Towards Depository Participants� 3b. Settlement(selling/Purchasing) Service/Scheme Settlement
I have availed the service 65 65%
I am aware of the service 35 35%
Please tick from the following service(Settlement that is selling/purc 70 60 50 40 30
Percent
20 10 0 I have availed the f
I am aw are of the fo
Please tick from the following service(Settlement that is selling/purcha
Interpretation: From the above graph and chart it shows that 65% of the respondents have availed the service(Settlement) and 35% are aware of the service. 3c. Freezing/Defreezing Service/Schemes Freezing/Defreezing
I have availed the service 5 5%
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I am aware of the service 95 95%
“A Study On Customer Satisfaction Towards Depository Participants�
Please tick from the following service(Freezing/Defreezing) 120
100
80
60
Percent
40
20 0 I have availed the f
I am aw are of the fo
Please tick from the following service(Freezing/Defreezing)
Interpretation: From the above graph and chart 95% of the respondents are aware of the service(Freezing/Defreezing) and 5% of them have availed the service. 3d.Loan against shares Service/Scheme Loan and shares
I have availed the service 20 20%
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I am aware of the service 80 80%
“A Study On Customer Satisfaction Towards Depository Participants”
Please tick from the following service(Loan against shares) 100
80
60
40
Percent
20
0 I have availed the f
I am aw are of the fo
Please tick from the following service(Loan against shares)
Interpretation: From the above table and chart is shows that 20% of the respondents have availed the service (Loan against shares) and 80% are aware of the service 3e. Sell ‘n’ cash Service/Scheme Sell ‘n’ cash
I have availed the service 67 67%
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67
I am aware of the service 33 33%
“A Study On Customer Satisfaction Towards Depository Participants”
Please tick from the following service(Sell 'n' cash) 70 60 50 40 30
Percent
20 10 0 I have availed the
I am aw are of the fo
Please tick from the following service(Sell 'n' cash)
Interpretation: From the above graph and chart it shows that 67% of the respondents have availed the service(Sell ‘n’ Cash) and 33% of them are aware of the service 4a. Express your level of satisfaction towards the following schemes/services. Scheme/Servi ce
Extremel y satisfied
Satisfie d
Neither satisfied/Unsatisfi ed
Unsatisfie d
Demat
33 33%
36 36%
13 13%
18 18%
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Extremel y Unsatisfie d 0 0%
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(dem 40
30
20
Percent
10
0 Extremely satisfied
Satisfied
Neither satisfied/No Unsatisfied
Express your level of satisfaction towards the following service(demat)
Interpretation: From the above graph and chart it shows that 33% are extremely satisfied with Demat services and 36% are satisfied and 13% are neither satisfied/Nor satisfied and 18% of them
are
unsatisfied.
Scheme/Service Extremely satisfied
Satisfied
Settlement
37 37%
Neither Unsatisfied Extremely satisfied/Nor unsatisfied unsatisfied 28 15 4 28% 15% 4%
4b.Settlement(Selling/Purchasing)
16 16%
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“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Set 40
30
20
Percent
10
0 Extremely Satisfied
Neither satisfied/No Satisfied
Extremely unsatisfie
unsatisfied
Express your level of satisfaction towards the following service(Settlem
Interpretation: From the above table and chart it shows that 16% of the respondents are extremely satisfied with the service of settlement and 37% are satisfied and 28% are neither satisfied/Nor unsatisfied,15% are unsatisfied and 4% are extremely unsatisfied.
4c. Freezing/Defreezing of the account Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants� Scheme/Service
Extremel y satisfied
Satisfie d
Unsatisfie d
Extremely unsatisfie d
20
Neither satisfied/No r unsatisfied 51
Freezing/Defreezin g
9
15
5
9%
20%
51%
15%
5%
Express your level of satisfaction towards the following service(Fre 60
50
40
30
Percent
20
10 0 extremely satisfied
neither satisfied/no satisfied
Extremely dissatisfi
unsatisfied
Express your level of satisfaction towards the following service(Freezin
Interpretation: The above table and graph it shows that 20% of the respondents are satisfied with the service of freezing/Defreezing,9% are extremely satisfied,51% are neither satisfied /Nor unsatisfied 15% unsatisfied and 5% are extremely unsatisfied. 4d.Loan against shares Scheme/Service Extremely satisfied
Satisfied
Loan against 11 shares 11%
25
Neither Unsatisfied Extremely satisfied/Nor unsatisfied unsatisfied 45 15 4
25%
45%
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15%
71
4%
“A Study On Customer Satisfaction Towards Depository Participants”
Express your level of satisfaction towards the following service(Loa 50
40
30
Percent
20
10
0 Extremely satisfied
Neither satisfied/No satisfied
Extremely dissatisfi
unsatisfied
Express your level of satisfaction towards the following service(Loan ag
Interpretation: The above table and figure shows that 11% of the respondents are extremely satisfied ,25% are satisfied,45% neither satisfied or unsatisfied,15% unsatisfied,4% are extremely unsatisfied 4e.Sell ‘n’ cash Scheme /service
Extremely satisfied
Satisfied
Sell’n’cash
20 20%
35 35%
Neither Unsatisfied satisfied/Nor unsatisfied 33 7 33% 7%
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Extremely unsatisfied 5 5%
“A Study On Customer Satisfaction Towards Depository Participants”
Express your level of satisfaction towards the following service(Sel 40
30
20
Percent
10
0 Extremely satisfied
Neither satisfied/No Satisfied
Extremely unsatisfie
unsatisfied
Express your level of satisfaction towards the following service(Sell 'n
Interpretation: The above chart and table shows that 20% of the respondents are extremely satisfied with the service of sell ‘n’ cash and35% are satisfied,33% are neither satisfied nor unsatisfied, 7% are unsatisfied and 3% are extremely unsatisfied 4f.Share Trading Scheme/service Extremely satisfied
Satisfied
Share trading
34 34%
15 15%
Neither Unsatisfied Extremely satisfied/Nor unsatisfied unsatisfied 26 15 10 26% 15% 10%
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“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Sha 40
30
20
Percent
10
0 Extremely satisfied
Neither satisfied/No Satisfied
Extremely unsatisfie
Unsatisfied
Express your level of satisfaction towards the following service(Share t
Interpretation: From the above table and chart it shows that 15% are extremely satisfied , 34% are satisfied ,26% are neither satisfied nor unsatisfied,15% are unsatisfied,10% are extremely unsatisfied. 4h.Associated shares Service/scheme Extremely satisfied
Satisfied
Associated shares
17
38
Neither Unsatisfied Extremely satisfied/Nor unsatisfied unsatisfied 38 7 0
17%
38%
38%
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7%
74
0%
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Ass 40
30
20
Percent
10
0 Extremely satisfied
Satisfied
Neither satisfied/No Unsatisfied
Express your level of satisfaction towards the following service(Associa
Interpretation: From the above chart and table it shows that 17% are extremely satisfied,38% are satisfied,38% are neither satisfied nor unsatisfied, 7% are unsatisfied. 4i . Periodic statements Scheme/service Extremely satisfied
Satisfied
Periodic statements
18
50
Neither Unsatisfied Extremely satisfied/nor unsatisfied unsatisfied 32 0 0
18%
50%
32%
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0%
75
0%
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Per 60
50
40
30
Percent
20
10 0 Extemely satisfied
Satisfied
Neither satisfied/No
Express your level of satisfaction towards the following service(Periodi
Interpretation: From the above chart and table it shows that 18% of the respondents are extremely satisfied with the service of (periodic statements) 50% are satisfied, 32% are neither satisfied nor unsatisfied. 4j. Telephone queries: Scheme/service Extremely satisfied
Satisfied
Extremely unsatisfied
46
Neither Unsatisfied satisfied/nor unsatisfied 25 11
Telephone queries
9 9%
46%
25%
9%
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11%
76
9
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Tel 50
40
30
Percent
20
10
0 Extremely satisfied
Neither satisfied/No Satisfied
Extremely unsatisfie
Unsatisfied
Express your level of satisfaction towards the following service(Telepho
Interpretation: From the above chart and table it shows 46% are satisfied by telephone queries,9% are extremely satisfied,25% are neither satisfied ,11% are unsatisfied,9% are extremely unsatisfied. 4k. Co-operation by staff: Service
Extremely satisfied
Satisfied
Extremely unsatisfied
42
Neither Unsatisfied satisfied/Nor unsatisfied 33 4
Cooperation by staff
21 21%
42%
33%
0%
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4%
77
0
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(Co50
40
30
20
Percent
10
0 Extremely satisfied
Satisfied
Neither satisfied/No Unsatisfied
Express your level of satisfaction towards the following service(Co-oper
Interpretation: From the table chart and table it shows that 21% are extremely satisfied regarding the co-operation by staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4% are unsatisfied. 4l. Bills acceptance Service
Extremely satisfied
Satisfied
Extremely unsatisfied
36
Neither Unsatisfied satisfied/Nor unsatisfied 28 18
Bills acceptance
12 12%
36%
28%
6%
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18%
78
6
“A Study On Customer Satisfaction Towards Depository Participants�
Express your level of satisfaction towards the following service(bills 40
30
20
Percent
10
0 Extremely satisfied
Neither satisfied/No Satisfied
Extremely unsatisfie
unsatisfied
Express your level of satisfaction towards the following service(bills a
Interpretation: From the above table and chart it shows that 12% of the respondents are extremely satisfied,36% are satisfied,28% are neither satisfied/Nor unsatisfied,18% are unsatisfied,6% are extremely unsatisfied 5.Problems faced while dealing with DP. Frequent reminders are given Irregular receipt of holding/transaction statement Improper attention given to enquiries Improper format of holding/Transaction statement Billing problems Inadequate information others
17
17%
28
28%
10
10%
0
0%
15 30 0
15% 30%
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“A Study On Customer Satisfaction Towards Depository Participants�
Problems faced while dealing with DP then 40
30
20
Percent
10
0 Frequent reminders a
Improper attention g
Irregular receipt of
Inadequate informati
Billing problems
Problems faced while dealing with DP then
Interpretation: From the above table and chart it shows that 17% are of the opinion that when they face any problem while dealing with DP then frequent reminders are given,28% of them face problem in irregular receipt of holding/transaction statement,10% are of the opinion that improper attention is given to the enquiries,15% face billing problems,30% because of inadequate information. 6.Tariff structure Very high 35 35%
high 30 30%
Reasonable 27 27%
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Low 8 8%
80
Very low 0 0%
“A Study On Customer Satisfaction Towards Depository Participants�
Tariff structure 40
30
20
Percent
10
0 Very high
High
Reasonable
low
Tariff structure
Interpretation: From the above chart and table it shows that 35% of the respondents say that the tariff structure is very high,30% say that it is high, 27% say that it is reasonable,8% say that it is low. 7.Rate of satisfaction for DP services 1 0% 11%
2 20% 24%
3 40% 25%
4 60% 32%
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5 80% 8%
81
6 100% 0%
“A Study On Customer Satisfaction Towards Depository Participants�
How do you rate the services of your DP 40
30
20
Percent
10
0 20%
40%
60%
80%
100%
How do you rate the services of your DP
Interpretation: 24% of the respondents are 20% satisfied with the services of DP,25% of the respondents are 40% satisfied with the services of DP, and 32% are 60% satisfied with the services of DP. 8.Preference of own DP over other DP 1 Quality service 30.4 30.4%
2 Rates charged 9.8 9.8%
3 Nothing particular 34.8 34.8%
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4 in Safety 25.0 25%
82
5 Reach 0 0%
“A Study On Customer Satisfaction Towards Depository Participants”
How do you justify your preference for your DP over other DP's 40
30
20
Percent
10
0 Quality service
Nothing in particula Rate Charged
Safety
How do you justify your preference for your DP over other DP's
Interpretation: 30.4% of the respondents prefer DP over other DP’s because of quality service,9.8% because of rates charged,34.8% for nothing in particular, and 25% for safety. FINDINGS: Most of the investors are small investors (that is about 51%. And about 32% are long term investors , and 17% are traders. The respondents aware of the new services provided by HDFC BANK are mainly from agents that is about 39%,and from friends is 21%,and from newspaper is 17%, and broker is 17% and from others is 6%.
From the analysis it is clear that 33% of the respondents are extremely satisfied with Demat services and 36% are satisfied and 13% are neither satisfied/Nor satisfied and 18% of them are unsatisfied.
From the analysis it clearly states that 16% of the respondents are extremely satisfied with the service of settlement(Selling/Buying) and 37% are satisfied Babasabpatilfreeppimba.com
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“A Study On Customer Satisfaction Towards Depository Participants” and 28% are neither satisfied/Nor unsatisfied,15% are unsatisfied and 4% are extremely unsatisfied.
20% of the respondents are extremely satisfied with the service of sell ‘n’ cash and35% are satisfied,33% are neither satisfied nor unsatisfied, 7% are unsatisfied and 3% are extremely unsatisfied
46% of the respondents are satisfied by telephone queries,9% are extremely satisfied,25% are neither satisfied ,11% are unsatisfied,9% are extremely unsatisfied.
21% of the respondents are extremely satisfied regarding the co-operation by staff ,42% are satisfied,33% are neither satisfied nor unsatisfied,4% are unsatisfied. 24% of the respondents are 20% satisfied with the services of DP,25% of the respondents are 40% satisfied with the services of DP, and 32% are 60% satisfied with the services of DP. 30.4% of the respondents prefer DP over other DP’s because of quality service,9.8% because of rates charged,34.8% for nothing in particular, and 25% for safety. SUGGESTIONS: For the service awareness they must appoint well-qualified agents who can communicate to the respondents. Service awareness must also be given through advertisements in newspapers and local TV channels Customers are facing over crowding ,non-availability of telephone lines so proper measures should be taken to overcome these problems.
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“A Study On Customer Satisfaction Towards Depository Participants” The role of sell ‘n’ cash in the present scenario is helpful to the customers therefore it should be explained to the customers.
CONCLUSION: Customer satisfaction. is the one which is playing a important role in today’s world.
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“A Study On Customer Satisfaction Towards Depository Participants�
Questionnaire
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“A Study On Customer Satisfaction Towards Depository Participants”
Dear Sir/Madam
. Name
: ___________________________________
Address
: ____________________________________
1. In which scheme are you holding your scheme? Small Investors
Long Term Investors
Traders
2. If you are aware of new services then how do you come to know about these services? Friends
News paper
Brokers
Agents
Others
3. Please tick ( ) from the following Schemes/ Services I have availed of the I aware of the following following services services a. Share Trading b. Settlement (Selling / Purchasing) c. Freezing / Defreezing d. Loan against shares e. Sell ‘n’ cash 4. Express your level if satisfaction about the following Schemes / Services. Please Tick form the following. Schemes / Satisfied Mostly Neither Mostly Dissatisfied Services Dissatisfied Satisfied/ Dissatisfied Nor Dissatisfied a. Demat b. Settlement (Selling / Purchasing) c. Freezing / defreezing of an account Babasabpatilfreeppimba.com
87
“A Study On Customer Satisfaction Towards Depository Participants” d. Loan against shares e. Sell ‘n’ cash f. Share Trading g. Associated shares h. Periodic Statements i. Telephone Queries j. Co- operation by staff k. Bills Acceptance 5. If you have faced any when dealing through your DP or you are unsatisfied with the above mentioned Services / Schemes Frequently reminders are given to HDFC for update the information. Irregular receipt of Holding/Transaction statement Improper attention given to the enquires Improper format of Holding/Transaction statement Billing problems Inadequate information
6. Please tick the following: Tariff Structure
1
2
3
4
5
Very High
High
Reasonable
Low
Very Low
7.How do you rate the services of your DP 0% 20% 40% 60%
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80%
88
100%
“A Study On Customer Satisfaction Towards Depository Participants” 8. How do you justify your preference for your DP over other DP’s? Quality Rates Charged Nothing in Safety Reach Service Particulars 9. Any suggestion : -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------THANK YOU
MASTER CODE SHEET 1 3 1 1 3 2 3 1 2 1 3 2 1 2 3 2 1 1 2
4 2 1 4 3 4 2 3 4 3 3 4 2 3 3 4 4 4 1
1 1 1 1 1 1 1 2 1 1 2 1 1 2 2 1 1 1 2
1 1 2 1 2 1 1 2 2 2 1 1 2 2 1 2 1 1 1
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
1 2 2 1 2 1 2 2 2 2 2 2 2 2 2 2 2 2 2
1 2 2 1 2 1 2 2 1 2 1 1 1 2 1 1 1 1 1
1 1 3 2 2 4 2 4 3 2 4 2 2 3 2 2 3 1 2
1 4 1 4 1 4 1 1 1 1 5 1 2 3 5 1 4 3 1
2 3 3 1 2 1 3 2 3 4 3 4 3 2 5 3 2 5 3
1 2 3 4 2 3 4 4 4 1 2 4 3 2 4 4 3 3 2
2 4 2 4 3 2 3 2 3 2 2 1 4 2 5 3 1 2 3
2 4 2 2 2 4 2 4 2 4 4 2 3 2 4 4 3 2 4
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2 3 2 3 2 3 2 3 3 1 2 3 3 1 2 3 3 3 4
1 3 1 2 3 3 2 1 3 2 1 2 3 2 2 1 2 3 2
3 2 3 2 2 3 3 3 2 2 3 2 2 3 3 3 2 2 3
1 2 1 2 3 1 3 3 1 2 2 1 2 2 3 2 2 2 3
89
1 2 2 2 1 3 4 2 5 4 2 5 2 5 2 5 2 5 2
2 1 6 2 1 6 2 6 1 5 6 6 5 6 6 1 2 5 6
1 2 3 1 3 3 3 1 2 3 1 3 2 1 3 2 1 3 2
3 2 3 2 3 2 5 4 5 2 3 4 5 3 5 5 4 2 5
3 3 1 2 1 1 3 1 4 2 1 4 3 1 4 3 3 1 2
“A Study On Customer Satisfaction Towards Depository Participants� 1 1 1 2 1 1 2 3 1 1 1 2 1 1 1 1 2 3 1 1 2 1 3 1 2 1 2 1 1 2 2 1 3 2 1 3 2 1 3 1 2 3 1 2 1 2 3 1 2 1 1 2 1 2 1
3 1 2 4 4 5 2 4 1 2 4 1 5 4 2 1 4 5 4 2 4 1 5 4 1 2 4 2 1 4 4 1 2 4 1 2 4 1 4 2 4 3 1 4 5 1 2 2 4 1 2 4 2 3 4
1 1 1 1 2 1 1 2 1 1 2 1 1 1 1 1 2 1 1 2 2 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1
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2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 2 2 2 2 2 2 2 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 2 2 2 2 2 2 2 2 2 2 2 1 2 2
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 1 2 2 1 2 1 2 1 1 1 2 2 2 1 1 2 2
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2 4 1 2 3 3 3 3 4 4 2 2 2 4 2 3 5 2 5 4 4 2 4 2 4 2 4 2 4 2 1 4 1 2 2 2 2 2 2 2 2 3 3 1 3 3 3 3 3 3 2 3 3 1 2
2 4 3 5 3 1 4 3 1 3 5 3 4 3 2 5 3 2 4 3 2 4 3 2 3 2 3 4 2 4 3 2 3 4 3 3 3 4 3 3 3 3 3 3 3 3 3 3 3 3 2 3 3 1 2
4 3 2 3 4 3 2 3 3 3 4 3 1 3 2 5 1 3 4 3 4 5 1 3 3 3 2 3 2 3 4 5 2 3 2 3 3 3 1 2 3 3 2 3 2 1 2 3 3 3 2 1 3 2 3
2 1 2 5 2 3 2 1 2 3 2 1 2 5 2 3 2 1 2 3 2 3 2 3 3 1 2 3 2 3 2 2 1 2 4 1 2 3 1 2 3 2 1 2 1 2 3 3 2 3 3 2 3 1 2
2 4 4 3 5 2 5 5 2 3 2 1 3 2 4 4 2 4 5 2 3 5 2 3 5 2 5 5 2 3 4 3 3 2 5 2 5 3 4 2 2 3 2 2 2 3 3 2 1 2 1 1 3 1 3
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1 3 2 1 2 3 2 3 2 3 2 3 2 3 3 2 1 2 2 1 3 2 1 2 2 1 2 3 2 2 2 2 1 1 3 2 3 2 2 3 2 3 2 1 3 2 3 2 2 1 2 2 2 2 3
3 3 2 3 3 2 2 2 3 2 3 2 2 2 2 2 3 2 3 2 3 4 2 4 4 2 4 2 4 2 3 3 2 3 2 4 2 4 2 4 4 2 4 5 5 3 2 2 5 5 5 2 1 5 2
3 2 1 3 2 3 2 2 3 1 3 3 3 1 3 3 1 3 3 1 3 3 1 4 3 1 3 4 2 4 3 1 4 2 2 2 2 2 2 2 3 3 3 3 3 2 2 2 2 1 2 3 1 2 1
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1 3 3 1 3 2 3 1 3 3 1 3 4 1 4 1 1 1 1 2 3 2 1 2 1 2 2 1 2 1 2 2 1 2 3 1 3 4 1 2 3 1 3 3 2 2 1 2 2 1 2 2 1 2 1
3 5 4 5 5 4 5 3 5 5 3 2 5 4 3 2 5 4 5 3 5 2 4 5 3 4 5 4 5 4 5 4 5 5 5 4 5 4 5 3 5 6 5 4 6 3 5 3 5 5 3 6 6 3 6
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2 1 1 2 2 1 2 1 2 1 2 2 1 2 1 2 1 2 1 2 1 2 1 2 1 1
4 4 2 4 4 2 4 3 2 2 2 2 2 1 4 2 1 4 2 1 4 2 1 1 2 2
3 2 3 3 3 3 2 2 3 3 1 3 2 3 2 3 3 2 2 2 2 2 2 2 2 2
1 4 2 4 3 2 4 3 2 4 3 3 3 1 3 3 2 3 1 3 3 3 1 3 3 2
1 3 2 3 1 2 3 2 3 2 3 2 4 3 2 4 3 5 3 2 3 3 3 3 3 1
3 1 3 2 1 2 1 1 3 3 3 3 3 3 1 3 5 3 4 3 1 1 4 5 4 3
1 1 2 2 3 3 1 3 2 3 1 3 1 3 3 1 3 1 1 2 3 1 3 1 2 2
2 3 1 2 3 2 3 1 3 2 3 3 2 1 2 3 2 3 2 1 2 2 1 1 2 1
2 1 2 2 2 2 2 3 3 3 2 3 1 2 3 3 2 1 3 3 2 3 2 3 2 2
4 1 5 2 3 1 2 2 5 1 1 2 3 2 2 2 1 2 2 2 1 1 2 5 2 1
3 3 1 2 2 2 3 2 2 2 2 2 3 2 3 1 2 2 1 2 2 1 2 3 2 1
2 3 3 3 2 1 4 4 2 3 3 3 2 2 2 3 2 3 3 3 1 2 3 1 2 1
5 2 6 5 3 2 5 5 6 2 1 3 2 3 6 2 6 2 2 2 6 2 2 6 6 2
3 2 1 3 2 1 3 4 2 1 4 2 1 4 4 2 1 3 3 4 1 2 3 1 2 1
3 6 3 2 4 3 3 6 4 3 3 4 4 4 3 2 5 4 3 4 4 4 5 2 4 6
1 4 . 3 1 2 4 3 1 2 4 3 1 4 3 . 4 3 . . 4 3 4 . 2 3
Glossary Account Freezing: The Depository Participant may freeze the account of a client maintained with him on written instructions received by the Participant in that regard from the client concerned in the form specified under the Business Rules. Account Opening: Any person willing to avail the services offered by a Depository shall open an account with a Depository Participant. Beneficiary: A person who benefits from a trust set up on his / her behalf & anyone who benefits from the proceeds of a will A person who benefits from a contractual or fiduciary relationship
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“A Study On Customer Satisfaction Towards Depository Participants” Beneficiary ID No: Each beneficiary is allotted an ID No. generated by DP by which a beneficiary is identified. This is similar to your Bank A/c No. Or the Folio No. BSE: Bombay Stock exchange is one of the oldest stock exchanges in Asia with over 6,000 stocks listed. Beneficiary Account: An investor or a broker who wants to hold shares in dematerialized (demat) form and undertake scrip less trading must have a depository account called beneficiary account with Depository Participant of his choice. CDSL: Central Depository Securities Ltd is an organization promoted by the stock exchange Mumbai, (BSE) in association with Bank of India, Bank of Baroda, State Bank of India and HDFC Bank to provide electronic depository facilities for securities traded in the equity and the debt market. CDSL is the second depository in India. HDFC is one of the Depository Participants of CDSL. Client Id: Whenever any client opens an account with a Depository Participant he /she is provided with an account number which is known as the beneficiary account number or the Client Id. The combination of the Client Id and the Depository Participant Id is unique. Deface: The client (registered owner) shall submit a request to the DP in the DRF for dematerialization along with the certificates of securities to be dematerialised. Before submission, the client has to deface or cancel the certificates by writing "SURRENDERED FOR DEMATERIALISATION”.
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“A Study On Customer Satisfaction Towards Depository Participants” Defreezing of an account: The client can request his depository participant to release the suspension order and defreeze the account for regular operations. The Depository participant shall defreeze the account only after receipt of the application for defreezing signed by all the account holders Delivery Instructions by client: In order to transfer securities from his account to another a beneficial account owner must give an instruction to his / her Depository Participant. A beneficial account owner must give instruction to his / her DP to transfer DRN: When the securities are found in order with the details of the request as mentioned in the form, the depository participant enters the details in the DPM (Depository participant Module, provided by NSDL to the DP) a Dematerialization Request Number (DRN) is generated by the system. The DRN so generated is entered in the space provided for the purpose in the Dematerialization Request Form. The request is then released to DM (Depository Module – Depository’s software system). The DM forwards the requests to the Issuer / R & T agent electronically. Once the DRN is confirmed or accepted by the Issuer / R & T agent the DM electronically authorize the creation of appropriate credit balances in the client’s account. The DPM shall credit the client’s account automatically. Electronic Public Offering (EPO): An initial public offering, or new issue of shares, in which the process of applying for shares is handled electronically (via websites). Freezing of an account: Any client can give instructions, in the prescribed form, to his Depository Participant to freeze his account either for debit or for all operations.
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“A Study On Customer Satisfaction Towards Depository Participants” Only after receipt of the application for freezing the account signed by all the account holders the Depository Participant shall freeze the account till further notice received from the client in this regard. Fungible: Dematerialized shares do not have any distinctive numbers or certificate numbers. These shares are fungible – which means that 100 shares of a security are the same as any other 100 shares of that security. Hypothecation: The pledging of securities as collateral. A client having a beneficiary account with a DP can hypothecate securities in electronic form against loan / credit facilities extended by a pledge, who has a beneficiary account with a DP. The creation of pledge / hypothecation will be initiated by the pledger through its DP and the pledgee will instruct its DP to confirm the creation of the pledge. The pledge / hypothecation so created can either be closed on repayment of loan or invoked on default. After the pledgor repays the loan to the pledgee the pledgor will initiate the closure of pledge / hypothecation. In case of default by the pledgor in repaying the loan to the pledgee, the pledgee may initiate invocation of pledge / hypothecation, after taking such steps as may be necessary as per the terms of the underlying agreement with the pledgor and the Bye Laws and Business Rules of NSDL and SEBI Regulations. In case of hypothecation, the pledgor will instruct its DP to confirm the invocation of the hypothecation. Initial Public Offering (IPO) : The first offering of a company’s shares to the public. The shares offered may be existing ones held privately, or the company may issue new shares to the public.
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“A Study On Customer Satisfaction Towards Depository Participants” Inter Depository Instructions: Inter-Depository Transfer means transfer of securities which are admitted for dematerialisation on both the depositories from an account held in one depository to an account held in the other depository ISIN: International Securities Identification Number (ISIN) is a code that uniquely identifies a specific securities issue. Market Trade: Trades which are settled through the Clearing Corporation / Clearing House of an exchange are classified as " Market Trades ". NSDL: The National Securities Depository Limited is an organization promoted by the Industrial Development Bank of India, the Unit Trust of India and the 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. NSE: National Stock Exchange is one of the leading stock exchanges in India. The NSE has been set up by leading institutions to provide a modern, fully automated screen – based trading system with national reach. Off Market Trade: Trades which are not settled through the Clearing Corporation / Clearing House of an exchange are classified as " Off Market Trades ". Negotiated trades which are not cleared and settled through the Clearing Corporation / Clearing House are off-market trades. Pledge: To deposit personal property as security for a personal loan of money. If the loan is not repaid when due, the personal property pledged shall be forfeit to the lender. A client (pledgor) having a beneficiary account with a Depository Participant
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“A Study On Customer Satisfaction Towards Depository Participants” can pledge securities in electronic form against loan / credit facilities extended by a pledgee, who too has a beneficiary account with a Depository Participant. Rematerialisation: It is the process by which a client can get his electronic holdings converted into physical certificates. The client has to submit the rematerialisation request to the DP with whom he has an account. The DP enters the request in its system, which blocks the client’s holdings to that extent automatically. The Issuer / R& T agent then prints the certificates, dispatches the same to the client and simultaneously electronically confirms the acceptance of the request to NSDL. Thereafter, the client’s blocked balances are debited. Registrar and Transfer Agent (RTA) : A transfer agent and registrar for a publicly held company keeps record of every outstanding share certificate and the name of the person to whom it is registered. When the share changes hands, the transfer agent transfers the ownership of the stock from the seller’s name to the buyer’s name. The registrar reconciles all transfer records and makes sure that the number of shares debited is equal to the number of shares credited. Settlement: It is the process by which investors pay for shares they have bought and receive payment for shares they have sold. It is also the process by which the investor delivers the shares he has sold to the clearing house and receives the shares which he has purchased from the clearing house of a recognized stock exchange. Settlement Day: The day on which purchased securities are due for delivery to the buyer and payment is due to be made to the seller.
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“A Study On Customer Satisfaction Towards Depository Participants� Statement of Holding: A statement of holding details out the current balance in a depository account. At least once every fortnight the Depository participant sends a statement of Holdings to its clients. Statement of transaction: A statement of transaction details out the various transactions done through that depository account. At least once in every fortnight the Depository Participant sends a statement of transaction to its clients. Karvy’s Online Demat services enable its clients to view their statement of transactions on the net. Transferability of Shares: Shares in a company are freely transferable, subject to certain conditions, such that no shareholder is permanently or necessarily wedded to a company. When a member transfers his shares to another person, the transferee steps into the shoes of the transferor and acquires all rights of the transferor in respect of those shares. For dematerialised shares the depository participant debits and credits the account of the client with an authorisation from such client.
Transmission: Transmission of shares denotes a process by which ownership of share is transferred on legal heir or to some other person by operation of law. In case of transmission no transfer deed and no stamp duty is required. Transmission of shares generally takes place in case of death, insolvency or mental illness or purchase in case of shares by court or in case of amalgamation, where the amalgamating company holds shares in various companies.
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“A Study On Customer Satisfaction Towards Depository Participants”
Bibliography Web sites
• www.Hdfcbank.com • www.sharekhan.com •
info@nsdl.co.in
Books • Company books & Brochures • NSDL Books
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