DEPOSITORY
Depository in simple terms means a place securities are kept safely. Actually, depository is an organization which keeps securities in electronic form and helps in the transfer of ownership of securities. As per section 2(e) of the Depositories Act, 1996, ‘Depository means a company formed and registered under the Companies Act, 2013 and which has been granted a certificate of registration under Securities and Exchange Board of India Act, 1992.’
In the depository system, transactions in securities are done entirely on paperless or electronic basis. This is quite similar to the banking system where one opens an account with a bank. Similarly, in case of depository system, an investor willing to invest in the securities market opens an account (which is called a ‘Demat Account’) with a depository. Whenever securities are allotted to a particular investor, his account will be credited. In the same way whenever any securities are sold by that particular investor, his demat account will be debited by the amount of shares sold by him. A depository also acts a securities bank where dematerialized securities in electronic are kept in safe custody.
Depository in simple terms means a place securities are kept safely. Actually, depository is an organization which keeps securities in electronic form and helps in the transfer of ownership of securities. As per section 2(e) of the Depositories Act, 1996, ‘Depository means a company formed and registered under the Companies Act, 2013 and which has been granted a certificate of registration under Securities and Exchange Board of India Act, 1992.’
In the depository system, transactions in securities are done entirely on paperless or electronic basis. This is quite similar to the banking system where one opens an account with a bank. Similarly, in case of depository system, an investor willing to invest in the securities market opens an account (which is called a ‘Demat Account’) with a depository. Whenever securities are allotted to a particular investor, his account will be credited. In the same way whenever any securities are sold by that particular investor, his demat account will be debited by the amount of shares sold by him. A depository also acts a securities bank where dematerialized securities in electronic are kept in safe custody.
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