What is the rationale of Depository Services?
Ans: In the advanced countries, depository systems and services have played a significant role in not only facilitating smooth trading and settlement but also attracting foreign investment in the capital market. The depository system evolved by the National Securities Depositories Limited (NSDL) enables investors to overcome all problems related to handling physical certificates. NSDL is an organisation formed to provide electronic depository facilities for securities traded. The securities of investors are held in electronic form through the medium of Depository Participants. The depository concept is similar to the Banking system with the exception that banks handle funds whereas a depository handles securities of the investors. A depository can therefore be conceived of as a “Bank” for securities. An investor wishing to utilise the services offered by a depository, has to open an account with the depository through the Depository Participant. This is very similar to opening an accou
