A depository in a simple term means a place where something is deposit for storage and security, however in our capital market, this term has a lot of relevance, we define.

Likewise our bank holds investor fund, similarly depository maintains an account for investors securities share, debentures, mutual fund etc hold by them in a dematerialised or an electronic form. A buy transaction will result in a credit entry while a sell transaction leads to debit entry in a demat account.

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It helps in reducing the paper work involved in trade, expedites the transfer and reduces the risk associated with physical shares such as damaged, theft, interceptions and subsequent misuse of the certificates or fake securities. Another important function of depository is that it eliminate the risk how do invoice factoring companies make money with holding the securities in a physical form like loss,damage,theft or delay in deliveries etc.

Depository system in india

We have 2 depositories in India which are well known as NSDL National securities depository limited and CSDL Central Depository Services India Limited. Depository system of stock trading in india interface with the investors through their agents called Depository participants DPs.

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DPs could be the free cash oregon settler private, public and foreignfinancial institutions and Sebi-registered trading members.

Depository participant provides the service of opening a demat account to the investor; they are coming with different schemes like three-in-one demat account, free depository system of stock trading in india account etc to lure the investors to open an account with them.

However, they are making an investment in to securities more reachable by providing services like transaction SMS on registered mobile number, contract note for every transaction at your door, E-trading platform, investment advice etc.

Investor should take accessibility, charges and service factors of Depository participant DPs into consideration before opening an account with them.

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