Functioning of NSDL
NSDL performs the following functions through its participants:
- It maintains investors’ holdings in the electronic form.
- It enables the surrender and withdrawal of securities to and from the depository.
- If effects settlement of securities traded on exchanges.
- It carries out settlements that have not been done on the stock exchanges.
- It makes allotment in electronic form, of initial public offerings (IPO).
- It offers facility for freezing or locking of investors’ accounts.
- It facilitates offer of securities as a mortgage for loans.
Participants of NSDL
NSDL performs its functions through its participants. The following are some of the important NSDL participants:
IIT Trust, Corporation Services, Global Trust Bank, HDFC Bank, City Bank Custodial services, Morgan Stanley Custodial Services, Reliance Share and Stock brocking, Janata Sahakari Bank, Industrial Development Bank of India, State Bank of India, Standard Chartered National Securities Clearing Corporation, Deutsche Bank.
Here is a Complete list of NSDL Depository Participants in India
Legal aspects of NSDL
NSDL was established by passing of the Depositories Act, 1996, but with retrospective effect from September 1995. Companies Act and Securities Contact Regulation Act were amended suitably to facilitate the operations of NSDL.
Section 22A of the Indian Securities Contract Regulations Act dealing with restrictions on transfer of shares was deleted. Sections 108 and 111 of the Indian Companies Act were amended to dispense with transfer forms and other formalities relating to the physical transfer of shares. The statements issued by the depository are considered valid documents of title.
On the basis of the depository’s statement, transfers are effected by book entries in the pass book. Transactions in Demat are not subject to stamp duty.
Transactions of the NDSL
As we have seen already, the transactions of the stock market are divided into two categories namely,
- New issues and
- Secondary market transactions.