PROJECT REPORT

ON

STUDY OF INVESTORS PREFERENCE TOWARDS DEMAT

ACCOUNT.

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE

DEGREE OF

BACHELOR IN COMMERCE (ACCOUNTING AND FINANCE)

UNDER THE FACULTY OF COMMERCE

BY

MS. EKTA RAMCHANDANI NARENDAR

UNDER THE GUIDANCE OF

R.D. & S.H. NATIONAL COLLEGE AND S.W.A. SCIENCE COLLEGE

ACADEMIC YEAR

2019-2020

1
 R.D. & S.H. NATIONAL COLLEGE AND S.W.A. SCIENCE COLLEGE

CERTIFICATE

This is to certify that Ms. Ekta Ramchandani Narendar has worked and duly completed
her/his Project Work for the degree of Bachelor in Commerce (Accounting & Finance) under
the Faculty of Commerce in the subject of Finance and her project is entitled, “Study of
investors preference towards demat account” under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.

It is her own work and facts reported by her personal findings and investigations.

Name of the Guide: Mrs. Krupa Shah

Signature:

B.A.F. Co-ordinator: Mr. Mukesh Kanojia.

Signature:

Principal: Dr. Neha Jagtiani

Signature:

Name of External Evaluator:

Signature:

2
 DECLARATION BY LEARNER

I the undersigned MISS. EKTA RAMCHANDANI NARENDAR here by, declare that
the work embodied in this project work titled “STUDY OF INVESTORS PREFERENCE
TOWARDS DEMAT ACCOUNT” forms my own contribution to the research work carried
out under the guidance of PROF. KRUPA SHAH is a result of my own research work and
has not been previously submitted to any other University for any other Degree/ Diploma to
this or any other University.

Wherever reference has been made to previous works of others, it has been clearly indicated
as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Ms. Ekta Ramchandani

Certified by

Name and signature of the Guiding Teacher

Prof. Krupa Shah

Signature:

3
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me chance to
do this project.

I would like to thank my PRINCIPAL Dr. NEHA JAGTIANI for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our COORDINATOR MR. MUKESH KANOJIA for her
moral support and guidance.

I would also like to express my sincere gratitude towards my project GUIDE MRS. KRUPA
SHAH whose guidance and care made the project successful.

I would like to thank my COLLEGE LIBRARY, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my PARENTS AND PEERS who supported me
throughout my project.

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 INDEX

CHAPTER TITLE PAGE

NO. NO.
EXECUTIVE SUMMARY 8

1. INTRODUCTION 9

1.1. Working of Demat Account 13

1.2. Demat Participants 14

1.3. Documents required to open a Demat Account 16

1.4. Opening a Demat Account 20

1.5. Aims and Objectives of Demat Account 21

1.6. Trading Account 22

1.7. Working of Trading Account 23

1.8. Advantages of Trading Account 23

1.9. Documents required to open a Trading Account 24

1.10. Procedure to Open a Trading Account 26

1.11. Difference Between Demat and Trading Account 27

1.12. Rematerialisation 28

1.13. Futures of rematerialization 28

1.14. Procedure of Rematerialzation 28

1.15. Precautions of Rematerialisation 30

1.16. Difference between Dematerialisation and 31

Rematerialisation

1.17. Different types of Companies for Demat Account 32

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2. RESEARCH METHODOLOGY 44

2.1. Research Objective 44

2.2. Research Design 44

2.3. Data Collection Method 45

2.4. Sampling Method 45

2.5. Sample Size 45

2.6. Graphs 46

3. REVIEW OF LITERATURE 47

4. DATA ANALYSIS, PRESENTATION AND 59

INTERPRETATION

4.1. Findings 73

5. SUGGESTION, LIMITATION AND CONCLUSION 75

5.1. Suggestions 75

5.2. Limitation 77

5.3. Conclusion 78

Bibliography 79

Annexure 80

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Abbreviations

NSDL - National Securities Depository Limited.

CDSL - Central DepositoryServices (India) Ltd

SEBI - Securities and Exchange Board of India

RBI - Reserve Bank of India

DP - Depository Participants

ISIN - International Securities Identification Number

DRF - Dematerialization Request Form

DM - Depository Module

DRN - Depository Request Number

DPM - Depository Participant Module

ICAI - Institute of Chartered Accountants of India

ICWAI - Institute of Cost Accountants of India

ICSI - Institute of Company Secretaries of India

IRDA - Insurance Regulatory and Development Authority of India

HUF - Hindu Undivided Family

RRN - Rematerialisation Request Number

BSE - Bombay Stock Exchange

NSE - National Stock Exchange

KYC - Know Your Customer

IIFL - India Infoline Limited

IPO - Initial public offering

ICICI - Industrial Credit and Investment Corporation of India

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 EXECUTIVE SUMMARY

The commencement of E-Trading and Demat has transformed the capital market in
India. With the help of Demat account the buying and selling of shares has become much faster.
It provides for the assimilation of bank, stock exchange.

Before demat came into existence if one wants to invest in stock market, he has to
connect a broker on phone or meet him personally to place order. A broker generally gives
such importance and additional services only to high net worth customers. But the introduction
of demat trading made a common or a small investor get an opportunity to avail the services at
an affordable price which is much lesser than what is charged by a physical broker over a
phone. Online trading has given customer a real time access to account information, stock
quotes elaborated market research and interactive trading.

The prerequisites of Internet are a computer, a modern and a telephone connection,

registration with the broker, a bank account and depository account. The introduction of
depository services is considered as the beginning of the trading of stocks at a click.
Dematerialization facilitates to keep the securities in electronic form instead of physical form.

It offers more advantages than physical share certificates. Despite of various advantages
of demat the awareness level among the investors is not adequate because of numerous reasons.

This project was undertaken with an objective of studying the mind-set of people
regarding demat account, to study the role of dematerialization in India economy. The study
was conducted I Mumbai. A sample size of 50 people was taken. The data was collected using
Convenience Sampling Method and was collected randomly through questionnaire.

This research is descriptive in nature. Finally, the whole study of the research would
help the people to get knowledge about demat account. To understand is importance and utility
also to invest in stock through a medium if demat account.

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CHAPTER 1:

INTRODUCTION

Stock market is a place where people buy/sell shares of publicly listed companies. It offers a
platform to facilitate seamless exchange of shares. In simple terms, if A wants to sell shares of
Reliance Industries, the stock market will help him to meet the seller who is willing to buy
Reliance Industries. So here the trading of shares requires the shares to be dealt with and other
securities. Earlier they were dealt manually as the receipt was given paper only. But now a
days with the growing technology the shares are being dealt online with the help of demat
account. Demat account place a important role in this.

Ever since the Bombay Stock Exchange (BSE) was established in 1875 and much later into the
20th century, traders used to shout out the prices of stocks they wanted to buy and sell. The
money would be exchanged through physical receipts called certificates. This resulted in heavy
paperwork that took up a lot of time. Lengthy paper-based processes also delayed settlements
as both buyers and sellers had to deliver the certificates to start the transfer process. To counter
this and to take advantage of electronic trading that had gained traction in the West and Asian
markets, the process of dematerialisation of shares was initiated in 1996. Physical certificates
were converted into securities of equivalent numbers in the electronic form and credited to the
investor’s demat account. This can be said to be the advent of the demat way of trading.

9
The introduction of dematerialization conversion of physical shares into electronic form – in
the mid 90’s was a radical move that change the character of the Indian market forever.

The Nation Securities Depository Limited (NSDL) India’s first and largest depository of
electronic securities has completed 22 years of operations.

It gave another leg-up to the Indian Market in its quest to rub shoulders with its global
counterparts, eliminate frauds by companies and brokers, improve the efficiency of Stock
Exchange Clearing Houses, reduce brokerage rates and attract more.

A demat account is opened by the investor at the time of registering with the investment
broker or sub-broker. This account is preferred for trading (buying and selling of stocks) to
enable electronic settlements. Almost every shareholder must have this account to trade in
stocks as required under Securities and Exchange Board of India (SEBI) laws. One cannot
trade in stocks without having a legitimate demat account.

10
We belong to a new era where transformation and change are the only constants. It can also be
safely reiterated that communication and knowledge-driven technology are the ruling orders of
the day. It also applies to India, which is now playing a significant role in the global
marketplace and is predicted to be one of the strongest and fastest growing economies in the
foreseeable future. In other words, what was once a predominantly agricultural economy is all
set to transform into a digital one.

The Indian capital market has always been a vibrant one and contributed largely to the nation’s
economic development and growth. This is evident from the volume of transactions conducted
daily at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) which
perpetually attract potential investors to join the share trading fraternity to reap huge benefits,
either for the short or long term.

Post 1991, when the winds of change started blowing across the Indian sub-continent, the
Indian capital market started undergoing modernization, particularly in the spheres of trading
& settlement. It all began with the creation of the Demat – a fully automated mechanism for
trading. Since today’s investor no doubt is tech-savvy, the Demat system had ensured sheer
transparency in the process of trading while also eliminating risks associated that had hitherto
been associated with bad deliveries. Moreover, Demat, which in other words is the
transformation of stocks held in paper form to electronic form has eliminated huge loads of
unnecessary paperwork. There was also the risk of loss or theft of share certificates which no
longer exists.

• Birth of Demat

The revolutionary process of Dematerialization began with the stockholder opening a Demat
account with his broker. This was somewhat similar to opening a bank account where his
physical certificates would get transformed into an electronic and fungible form maintainable
with his Demat account. This balance, moreover, would be devoid of distinguishing features
of any sort. Ever since its evolution, the Demat account has substantially eliminated the
problems of fake documents, stolen shares, forged & mismatched signatures, mutilation and
duplication of share certificates and other transfer problems which led to multiple arbitration
cases and other investor disputes.

With the promulgation of the Depository Ordinance 1995, the Indian Government promoted a
highly technical and fully automated model for all stock exchanges that offered screen-based
trading as also depositories as a panacea to all investor problems. The implementation of the

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Depositories Act of 1996, moreover, has ensured the success of the depository concept in the
capital markets of India and in trading & settlement — hitherto a time consuming and
cumbersome process – is now possible at the touch of a button.

• The Indian Depository System: An Overview

The discussion on dematerialization remains incomplete if one ignores the role played in it by
the National Securities Depository Ltd (NSDL), India’s first and biggest depository, set up in
1996. The NSDL was promoted by certain national institutions which were principally
responsible for the country’s economic development. Its prime objective was to establish and
maintain an infrastructure that matched international standards for dealing in securities in
demat form. By using flexible and innovative technology systems, NSDL ensures the
soundness and safety of the Indian capital market. It also develops suitable settlement solutions
thus, increasing efficiency, minimizing risk and reducing costs. NSDL also enables the
processing of securities transactions by book entries. A DP or Depository Participant, the
NSDL’s agent offers depository services to all investors. As per SEBI guidelines, banks,
financial institutions, stockbrokers and custodians are eligible for being DPs. The investor, also
called the BO or beneficial owner opens a Demat accountwith any DP to dematerialize his
holdings and to trade in and/or transfer them subsequently.

The Central Depository Services (India) Ltd (CDSL) came next in February 1999, with the
BSE Ltd as its main promoter. It was a joint venture with leading nationalized banks such as
SBI, Bank of Baroda, Bank of India and Union Bank of India with Standard Chartered Bank
and HDFC Bank also participating. The principal aim of the CDSL is to provide dependable,
convenient & secure depository services to investors at affordable costs. It is also linked with
all other major Indian stock exchanges such as the BSE Ltd; NSE & the MCX Stock Exchange.
The balance shown in the investor’s account which is maintained and recorded with the CDSL
is obtainable from the DP. The DP provides an account statement to the investor periodically
and this gives out details of his holdings as also transactions.

Angel Broking is spearheading the digital revolution in the brokerage industry and has
launched its digital KYC facility, an ultra-fast account opening experience through digital
signature using bio-metric devices. The e-KYC facility allows investors to fill up a simple
form, provide biometric authentication at their home, receive account activation and start
trading within an hour. Use form to take advantage of Angel Broking’s eKYC.

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1.1 Working of Demat account

Demat account holds all the shares and investments in an electronic or dematerialised form. It
holds all the government securities, bonds, shares, mutual funds, and Exchange Traded Funds
(ETFs). The use of demat accounts is comparable to using a bank and bank accounts to
maintain once assets rather than personally storing and exchanging paper money each time a
transaction is made. Using a debit at a store creates a digital record of a purchase and the
amount is deducted from the cardholder’s account. Funds are exchanged between buyer and
seller without paper currency. Likewise, with dematerialization, the stock transaction are
completed without physical certificate. It is important to understand a few bodies and
processes to know the complete functioning of a demat account. The functioning of a demat
account is explained here.

• Central Depository: The two major depositories in the country are Central
Depository of Securities Ltd. (CDSL) and National Depository of Securities Ltd.
(NDSL). They hold the details of your account on your behalf. This works similar to a
bank.
• Unique ID: Every demat account has a unique verification number for identification.
This comes in handy in various situations. This can be used for transactions or it can
be used for the stock exchange to help the companies identify and credit the securities
to your account.
• Depository Participants: The depository can be accessed only through the
depository participants (DPs). These are intermediaries between the CDSL and the
investor. DPs can be banks, brokers or financial institutions that are authorised to
offer demat services.

• Portfolio Holding: Your demat account holds all your holdings and every time you
check it, you can see your account status with all its details. This is because the
account is updated automatically each time you transact (buy or sell securities).

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1.2 Demat Participants

There are certain participants who participate in this Dematerialization/demat account for
their personal benefits or profits. They are as follows:

• Investors
• The Depository
a. NSDL
b. CDSL
• Depository Participants

• Investors
There are different types of investors such as Individuals, Partnership Firm, HUF,
Company. Individual investors are the investors who invest solely by their ends and
invest through demat accounts. Partnership firms are made by two or more partners
where they invest through demat account for their several benefits in the form of
returns. Similarly, HUF and Companies too invest through the demat accounts and do
the dealings of securities for getting certain returns.

• The Depository
A Depository is an organisation which holds investors securities in electronic form.
The depository also provides services related to various transactions in such
securities. A depository interfaces with its investors through Depository Participants.
Depository Participants maintain investors accounts (demat account) which are

14
 similar to Saving Bank/Current Account with a bank Purchase and Sale of securities
can be done through demat account. Presently there are two depositories in India i.e.
NSDL (National Securities Depository Limited) and CDSL (Central Depository
Services Limited).

• NSDL
National Securities Depository Limited is an indian central securities depository based
in Mumbai. It was established on 8th November, 1996 as the first electronic securities
depository in India with national coverage. It was established based on a suggestion
by a National Institution responsible for the economic development of India.
• CDSL
Central Depository Services Ltd is the second Indian Central Securities Depository
based in Mumbai. Its main function is holding the securities either in certified or
uncertified form, to enable book entry, transfer of securities. CDSL is promoted by
Bombay Stock Exchange Limited (BSE) jointly with State Bank of India, Bank of
India, Bank of Baroda, HDFC Bank, Axis Bank and Union Bank of India.

• Depository Participants
Depository Participant (DP) is described as an Agent (law) of the depository there are
the intermediaries between the depository and the investors the relationship between
the DPs and the Depository is governed by an agreement made between the two under
the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as
such with SEBI under the sub section 1A of Section 12 of the SEBI Act. As per the
provisions of this Act, a DP can offer depository related services only after obtaining
certificate of registration from SEBI. SEBI (D&P) Regulations, 1996 prescribe a
minimum net worth of RS. 50 lakh for stockbrokers, R&T agents and non-banking
finance companies (NFBC), for granting them a certificate of registration to act as
DPs. If a stockbroker seeks to act as DP in more than one depository, he should
comply with the specified net worth criterion separately for each such categories of
DPs, however, depositories can fix a higher net worth criterion for their DPS.

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16
1.3 Documents required to open a Demat Account

A Demat account is similar to any other bank account, except that it is used to hold securities
and other financial instruments. As the procedure to open the demat account is almost the
same across different firms and institutions, the list of mandatory documents required to
register the account is also the same. The different types of documents required is also the
same. The different types of documents required for opening a Demat Account are:

• Proof of Identity (POI) (Eg. Driving Liscense)

• Proof of Address (POA) (Eg. Passport)
• Proof of Income (For trading in derrivatives such as F&A) (Eg. Copy of ITR
Acknowledgement
• Proof of Bank Account (Eg. Cancelled Cheque)
• PAN CARD
• 1 to 3 Passport size Photographs

Here is the detailed list of documents that are required to open a Demat account.

• Proof of Identity (POI) List of documents admissible as Proof of Identity:

PAN card with a valid photograph. This is a mandatory requirement for all
applicants except those who are specifically exempt from obtaining PAN (listed in
“Exemptions/Clarifications” to PAN section).
Unique Identification Number (UID) (Aadhar/ Passport/ Voter ID card / Driving
License).
Identity card/document with applicants photo, issued by any of the following:
Central/State Government and its Departments, Statutory /Regulatory Authorities,
Public Sector Undertakings, Scheduled Commercial Banks, Public Financial
Institutions, colleges affiliated to Universities, Member IDs by Professional
Bodies such as ICAI, ICWAI, ICSI, Bar Council etc and Credit Cards/Debit Cards
issued by Banks.
• Proof of Address (POA) List of documents admissible as Proof of Address:
Passport/Voters Identity Card /Ration card Registered Lease or Sale Agreement
of Residence/Driving License/ Flat Maintenance/ bill Insurance Copy.
Utility bills like telephone bill (only landline), Electricity Bill or Gas Bill-Not
more than 3 months old.

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 Bank Account Statement /Passbook- Not more than 3 months old.
Self-declaration by High Court and Supreme Court judges, giving the new address
in respect of their own accounts.
Proof of Address issued by any of the following: Bank Managers of Scheduled
Commercial Banks, Scheduled Co-operative Bank or Multinational Foreign.
Banks/Gazetted Officer/Notary public / Elected representatives to the Legislative
Assembly or Parliament/Documents issued by any Government or Statutory
Authority.
Identity Card/Document with address, issued by any of the following: Identity
card/document with applicants photo, issued by any of the following
Central/State Government and its Departments, Statutory /Regulatory Authorities,
Public Sector Undertakings, Scheduled Commercial Banks, Public Financial
Institutions, colleges affiliated to Universities,and Professional Bodies such as
ICAI, ICWAI, ICSI, Bar Council etc.to their Members.
For FII/Sub account:Powe of Attorney document given by FII/Sub-account to the
Custodian (which are duly notarized and/or apostilled or consularised) that
mentions the registered address.
The proof ofaddress in the name of the spouse may be accepted.
Note: Documents having an expiry date should be valid on the date of submission.

• Proof of Income (POI) List of documents admissible as Proof of Income

A photography of the Income Tax Return (ITR) Acknowledgement slip submitted
to the Income Tax Department during tax filing.
A Net Worth Certificate certified by a Chartered Accountant, alternatively a
photocopy of the Annual Accounts duly audited by a qualified Chartered
Accountant.
Proof of Salary in the form of a recent Salary Slip or relevant document which
proves income or net worth like form 16.
A statement of Demat account holdings with an eligible Depository Participant.
Current bank account statement reflecting the income history of the client for the
past 6 months.
Other documents that substance ownership of assests through self-declaration
along with documents supporting the claim.
Exemptions/Clarifications to PAN
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In case of transactions undertaken on behalf of Central Government and/or State
Government and by officials appointed by Courts e.g. Official liquidator ,Court
receiver etc.
Investors residing in the state of Sikkim.
UN entities/multilateral agencies exempt from paying taxes/filing tax returns in
India.
SIP of Mutual Funds up to Rs.50,000/- p.a.
In case of institutional clients, namely FIIs,MFs,VCFs,FVCIs, Scheduled
Commercial Banks, Multilateral and Bilateral Development Financial Institutions,
State Industrial Development Corporations, Insurance Companies registered with
IRDA and Public Financial Institution as defined under section 4A of the
Companies Act 1956, Custodians shall verify the PAN card and provide duly
certified copies of such certified PAN details to the intermediary.
Note: Sufficient documentary evidence in support of such claims to be collected.
• List of people authorised to attest the documents:
Notary Public, Gazetted Officer, Manager of a Scheduled Commercial/Co-
operative Bank or Multinational Foreign Banks (Name, Designation & Seal
should be affixed on the copy).
In case of NRIs, authorized officials of overseas branches of Scheduled
Commercial Banks registered in India, Notary Public, Court Magistrate,
Judge, and Indian Embassy/ Consulate General in the country where the client
resides are permitted to attest the documents.
Apart from these documents, the Depository Participant or your broker might
ask you to present additional proof of identity, address, and income. Once all
the documents are submitted, verified and checked by the concerned
departments, your account will be open.

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1.4 Opening a Demat Account:

A demat account can be opened with no shares at all. It does not require any minimum
balance. The first step towards opening a demat account is to select a DP, fill up the account
opening form, and submit the document. Having a PAN card is a compulsory requirement for
opening a demat account. The rest of the steps are explained here.

• Once you submit the form, you will get a copy of rules and regulations, terms of
agreement, and the charges you will incur.
• An in-person verification is also necessary. A member of the DP staff will contact the
individual to verify the details provided in the account opening form.
• After the verification, the DP person will provide an account number or client ID.
You can also check these details by checking your account details online.
• An annual maintenance fee is paid for a demat account. This fee covers the account
transaction charges. The fee is levied for debiting securities to and from the account
on a monthly basis. The charges are subject to your choice of the DP. Some DPs
charge as per the amount of the transaction while the others charge a flat fee which is
same for every transaction. The fee can also vary on the type of transaction (buying or
selling). There can be another fee for converting the share into physical form or vice-
versa.

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1.5 Aims and objectives of a Demat Account

There are multiple reasons why the Demat account opening has been promoted aggressively
since its inception. The rationale behind it is mentioned as under:

1. The fact that Demat accounts allow the investor to hold shares in the electronic form
eliminates the risk of misplacement, damage, theft, and forgery, as was the case with
physical shares. Hence, the objective of a Demat account is to make handling of
shares safer than before.
2. A Demat account also aims to make operations simpler. Transfer of shares is now
easier than ever, and it can be completed within a few hours as compared to months,
previously. Moreover, the procedure to change address has been made seamless and
less time-consuming with the advent of Demat accounts.
3. Convenience is another area which Demat accounts look to improve. It has done away
with, cumbersome processes like buying and pasting share market stamps, and
restrictions on selling shares in odd lots. Thus making the process simple and
convenient.

Additionally, the electronic process means that transactions of shares involve much less
paperwork, thus making it a cost-effective activity. Having understood the meaning and
objectives of Demat accounts, let us now take a look at certain concepts and processes
associated with such accounts.

• DEMAT ACCOUNT CHARGES IN INDIA

Demat account charges are something you can't get away with. In this competitive stock market
space,although,a few brokers may come up with few short-term marketing tactics to attract
you,but if you are here for regular trading then there will be a few types of Demat Account
Charges you need to pay.

Since you are specifically looking for demat account charges in India, we have safely assumed
that you already understand what is a demat account, its usage, advantages disadvantages etc.

While you may be one of those users who already know the intricacies related to the charge
levied on your trades.However,there are still some of our beginner level trading friends who

21
are just getting started and have a limited understanding of the different expenses you need to
pay to your broker.

Furthermore, such charges end up to be perceived as hidden charges

• Demat Account Charges Types:

Apart from brokerage charges, there are few types of charges that are generally levied by the
stockbrokers:

• Opening charges

Opening charges are nominal or nil. Some banks do it for free if you open a 3-in-1 account,
where you can open a savings account, demat account and trading account In one go

• Safety charges(Custodian fee)

Earlier, you would have had to constantly worry about keeping share certificates safe.
However, demat accounts have erased such anxieties. Your shares can no longer be stolen as
they are kept in a electronic format. Depository participants (DPS) and banks charge a
custodian fee for holding them safe. It is usually charged annually unless specified otherwise

1.6 Trading Account

A trading account can be any investment account containing securities, cash or other
holdings. Most commonly, trading account refers to a day trader's primary account. These
investors tend to buy and sell assets frequently, often within the same trading session, and
their accounts are subject to special regulation as a result. The assets held in a trading account
are separated from others that may be part of a long-term buy and hold strategy.

22
1.7 Working of Trading Account

A trading account acts like a link between demat account and bank account of an investor.
When an investor wants to buy shares, he places an order through his trading account. The
said transaction goes for processing in the stock exchange. Upon execution, the required
number of shares get credited into his demat account and a proportionate sum gets deducted
from his the bank account.
A similar kind of process is followed in order to sell equity shares. The investor places a sale
order for say 100 shares with the help of his trading account. It goes for processing in the
relevant stock exchange. When the order is executed, the required number of shares are
debited from his demat account and a proportionate sum gets credited to his bank account.

1.8 Advantages of Trading Account

• One-point Access
You may find multiple exchanges in India which trade in different securities and
commodities. Some of the leading exchanges are National Commodity and Derivatives
Exchange (NCDEX), and Multi Commodity Exchange (MCX). Having an online trading
account enables access to all these exchanges via common platform. Wealth creation
becomes one click away.

• Reliable Information
Equity investing is all about taking the right decision at the right time. Online trading
platforms extend valuable services like research reports prepared by experienced and
knowledgeable professionals. The reports enable investors to make informed investment
decisions. Ultimately, there is a higher probability of earning higher returns.

• Notifications and customisation:

Trained executives hired by online trading platforms provide customised support to the
clients round-the-clock. It can be a technical issue or some other difficulty to handle the
trading platform. Additionally, alerts can be set through SMS or emails in order to get
notification about the buy and sell targets.

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• Flexibility:
After trading platforms have become app-based, it has become easy to access them with
the help of laptop, smartphones and other hand-held devices. Online trading has
introduced the flexibility to keep a track of investments from anywhere and at any point
in time.

• Seamless Transactions:
Online trading has made the procedure of fund transfer and conducting equity trading
very seamless. With the help of advanced technology, clients are in a favourable position
to save and invest conveniently and easily.

1.9 Documents required to open a Trading Account

Trading account acts as an interface between investor’s Demat Account and savings bank
account. The trading account opening procedure and the mandatory documents required
are similar across organisations. Before submitting any document having an expiry date,
ensure that it is valid on the submission date. Here is the detailed list of documents that
you need for opening a trading account.

• Proof of Income
You may submit any one of these as a proof of income:

A photocopy of the Income Tax Return(ITR) acknowledgement slip submitted to the

Income Tax Department during tax filing.

Certificate of net worth or photocopy of the annual statement of accounts authenticated

by a Chartered Accountant.

Salary slip of the current month or Form 16.

Latest statement of bank account containing the income history of last 6 months.

Any documents that prove ownership of assets through self-declaration.

• Proof of Identity
You may submit any one of these as a proof of identity:

24
PAN card having a valid photograph.

Aadhar card /Voter ID card/ Driving License /Passport.

Identity card having applicant’s photo which is issued by Central/State Government and
its Departments, Statutory/Regulatory Authorities, Public sector Undertakings, Scheduled
Commercial Banks, Public Financial Institutions, University affiliated Colleges,
Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council, and Credit/debit cards
issued by banks.

• Proof of Address
You may submit any one of these as a proof of address:

Passport/Voters ID/Ration card/Registered Lease or Sale Agreement of

Residence/Driving License/Flat Maintenance Bill/Insurance Copy.

Utility Bills like landline telephone bill, electricity bill, gas bill which is not more than 3
months old.

Bank passbook which is not more than 3 months old.

Self-declaration of new address given by judges of High Court and Supreme Court.

Address proof which is issued by bank managers of Scheduled Commercial

Banks/Scheduled Co-operative Bank/ Multinational Foreign Banks, Gazetted Officer/
Notary public, Member of Legislative Assembly, Member of Parliament.

Identity card containing address which is issued by Central/State Government and its
Departments, Statutory/Regulatory Authorities, Public sector Undertakings, Scheduled
Commercial Banks, Public Financial Institutions, University affiliated Colleges,
Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council.

Address proof given in the name of the spouse.

25
1.10 Procedure to open a trading account

• First, select the stock broker or firm. Ensure that the broker is good and will take your
orders in a timely manner. Remember, time is of utmost importance in the stock
market. Even a few minutes can change the market price of the stock. For this reason,
ensure that you select a good broker.
• Compare brokerage rates. Every broker charges you a certain fee for processing your
orders. Some may charge more, some less.
• Some give discounts on the basis of the amount of trades conducted. Take all this into
account before opening an account. However, remember that it is not necessary to
choose a broker who charges the lowest fees. Good quality brokerage services
provided often may need higher-than-average charges.

• Next, get in touch with the brokerage firm or broker and enquire about the account
opening procedure. Often, the firm would send a representative to your house with the
account opening form and the Know Your Client (KYC) form

• Fill these two forms up. Submit along with two documents that serve as proof of your
identity and address.

• Your application will be verified either through an in-person check or on the phone,
where you will be asked to divulge your personal details.

• Once processed, you will be given your trading accounts details. Congrats, you will
now be able to conduct trades in the stock market.

26
1.11 The Difference Between Demat and Trading Account

The following are the main areas where a Demat and a Trading Account differ:

• The functionality of a Demat VS a Trading Account

One major difference between the two accounts pertains to the functions each
performs. A trading account is used for the buying and selling of the securities by
means of it getting debited from your demat account and sold it in the market. A
demat account, on the other hand, allows investors to keep their financial instruments
in an electronic format. This also works in a way where you can change your
electronic format securities into physical form as well.

• The nature of the two accounts

A trading account functions in the same way as your current bank account would; it in
fact, links up your demat and your bank account. It works to sell your shares in the
market by withdrawing it form your demat account.
Demat account is the place where the shares and securities that you buy form the
market are stored. Unlike a trading account that functions like a current bank account,
a demat account works like a saving account.

27
 • The role of the two accounts
Both these accounts, as different as they may be, are crucial for any trading in the
share markets. When as an investor, you buy the shares of any company, you use the
trading account to do so. The money is debited from your bank account and the shares
are reflected in your demat account where they are also credited.
Similarly, when you sell your shares through your trading account, the same gets
debited from your demat account and are then sold in the market. The proceeds of this
sale is credited back to your bank account. Thus, in order to trade in the stock
markets, it is mandatory to have both a demat as well as a trading account.

1.12 Rematerialisation

Rematerialisation 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 DP releases the request to NSDL and sends the
request form to the Issuer/ R&T agent. The Issuer/ R&T agent then prints the certificates,
despatches the same to the client and simultaneously electronically confirms the acceptance
of the request to NSDL. Thereafter, the client's blocked balances are debited.

1.13 Features of rematerialisation

• A client can rematerialise his dematerialised holdings at any point of time.

• The rematerialisation process is completed within 30 days.

• The securities sent for rematerialisation cannot be traded.

1.14 Procedure of rematerialisation

• The client will submit a request to the DP for rematerialisation of holdings in its
account.
• On receipt of the request form, the DP will verify that the form is duly filled in and
issue to the client, an acknowledgement slip, signed and stamped.

28
• The DP will verify the signature of the client as on the form with the specimen available
in its records.
• If the signatures are different the DP will ensure the identity of the client.
• If the form is in order the DP will enter the request details in its DPM (software provided
by NSDL to the DP). While entering the details, if it is found that the client's account
does not have enough balance, the DP will not entertain the request.

• The DP will intimate the client that the request cannot be entertained since the client
does not have sufficient balance.
• If there is sufficient balance in the client's account, the DP will enter the request in the
DPM and the DPM will generate a Rematerialisation Request Number (RRN).
• The RRN so generated is entered in the space provided for the purpose in the
rematerialisation request form.
• Details recorded for the RRN should be verified by a person other than the person who
entered the data. The request is then released to the DM by the DP.
• The DM forwards the request to the Issuer/ R&T agent electronically.
• The DP will fill the authorisation portion of the request form.
• The DP will then despatch the request form to the Issuer/ R&T agent.
• While processing the request, the Issuer/ R&T agent may report some objections.
Depending on the nature of objection, the Issuer/ R&T agent may reject the request or
process it partially, seeking rectification for the remaining, and send an objection memo
to the DP.
• The Issuer/ R&T agent accepts the request for rematerialisation prints and despatches
the certificates to the client and sends electronic confirmation to the DM.
• The DM downloads this information to the DPM and the status of the rematerialisation
request is updated in the DPM.

• The DP must inform the client about the changes in the client account following the
acceptance of the request.

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1.15 Precautions of rematerialisation

• The client has to mention the lot type in the rematerialisation request form.
• Securities sent for rematerialisation cannot be traded.

• Before initiating a rematerialisation request in a security the client must ensure that he
has sufficient free balances in that security in his depository account.

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1.16 Difference between Dematerialisation and Rematerialisation

Comparison Dematerialisation Rematerialisation

parameters
Meaning The transformation of Conversion of the
physical certificates of electronic records of the
shares and debentures share to paper (physical)
to electronic form form
Identification Dematerialised shares They possess distinct
of Shares do not have a distinct numbers issued by the
number RTA
Transaction All transactions take All transactions post-
mode place in electronic rematerialisation take
formats only place physically
Account The Depository The company is in charge
maintenance participant (NSDL or of account maintenance
authority CDSL) is in charge of
the account
maintenance
Maintenance The annual charges for No maintenance charges
costs maintenance vary are necessary for physical
between Rs. 500 and certificates
Rs. 1000
Security Threat of forgery and
Threats to the digital
fraud to physical
form are low
paperwork is higher
Difficulty Dematerialisation is an
Rematerialisation is a
easy process. It is a
complex process that takes
ubiquitous part of
a long time. It is difficult
share trading; almost
and may require expert
every investor has
assistance
experienced once

31
1.17 Different types of companies for Demat Account

1. ZERODHA

Zerodha is India’s Largest stock broker in terms of total active clients base. The discount
broker is active since 2010. Here is a comprehensive review of this discount broker, as well
as its products, offerings and services.

Zerodha, is amongst one of the newest members of the Indian equity and derivative trade
economy who have pioneered in the art of interweaving technology with conventional
financial services thereby giving a superb boost to the conventional equity and derivative
based trading industry in India.

Started in 2010, Zerodha is officially recognized as India’s first and most prominent discount
broker. It was founded by Nithin Kamath who had worked as a stock trader before starting
his own broking house.

Apart from bringing a competitive pricing model that made it the first of its kind, Zerodha is
also acknowledged as a pioneer in technology for trading in India.

The broking house officially began its operations on 15th August 2010. As its name, mixing
the English word ‘Zero and the Sanksrit ‘Rodha’ (Barrier), would suggest, Zerodha had the
vision to break possible barriers that various traders, investors and various other aspiring
money-makers face in the country’s economic scenario.

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2. ANGEL BROKING

Angel Broking is one of the leading full service broking houses in India. Lets have a detailed
Angel Broking Review & get good understanding of Angel Broking Demat Account, Angel
Broking Brokerage Charges, Angel Trading Platforms & other important features. Angel
Broking Pvt Ltd is one of the leading broking houses in India and has been in the business
since 1987. It is dedicated to a retail stock trading model. It provides modern and useful
trading platforms as well as expert advisory services to its customer base.

The Angel Group is also officially a member of the Bombay Stock Exchange, National Stock
Exchange and two commodity exchanges- the NCDEX and MCX. It is also registered as a
Depository participant with CDSL.

As a broking house, it has more than 27 years of expertise in share and commodity markets.
The Angel Group comprises Mutual Funds, Commodities, Life Insurance, Institutional
Equities and Angel Fincap.

Angel Broking also has a nation-wide presence in 1000 cities. It has a strong network of
8500+ sub-brokers and more than 1 million clients.

Its main offerings include Equity Trading, Commodities, Portfolio Management Services,
Mutual Funds, Life Insurance, IPO, Depository Services and Investment Advisory. It also
provides Wealth Management and Ebroking facilities.

As a firm, Angel Broking has prized best value for money through innovative products, up-
to-date technology and trading strategies as well as personalized services and assistance. It
also holds firm emphasis on ethical practices and transparency.

Angel Broking has also achieved several distinctive milestones in its history, including many
accolades and honors from major stock exchanges like NSE and BSE.

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3. SHAREKHAN

Sharekhan is one of the largest full service broker based out of Mumbai, India with over 1.4
million client base. Sharekhan, as the name resembles is a beast in the Indian equity and
derivative trading terrain who were in fact, one of the first to introduce the Indians with the
concept of online trading.

Our article today is meant to elaborate and analyses the ways in which the company enacts in
terms of the products it has to offer, the services it extends, the brokerage amount it imposes,
other relevant charges it seeks and of course the significance as well as the effectiveness of
the all the platforms it has made its presence on.

The brand Sharekhan was originally a part of SSKI Group and was recently acquired by BNP
Paribas Group. It has branches & franchises in over 550 cities across India.

They provide brokerage services through their online trading website sharekhan.com and
1850 offices. It also has international presence in the Oman and UAE countries.

Sharekhan has now more than 14,00,000 customers in India and its client base includes
individual investors, institutional and traders, corporates & NRI’s. Their offer investment
activities in BSE and NSE.

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4. EDELWEISS

Edelweiss Broking Ltd is a well-known Group in the financial sector. They have mid-sized
retail broking business with a client base of 5 lakh plus.

Edelweiss is a financial services providing firm located in Mumbai, India. The company not
only providing broking services but also offer investment advisories to the clients in order to
gain from the stock market opportunities and make a good relationship with all of them.

The Edelweiss stock broking company is one of the substantial financial service providers
available in India. It offers a huge spectrum of financial services and products to all of its
clients.

The company basically provide financial services to individuals, corporations, and

institutions. Its products and services are designed for various consumer segments and asset
classes all over the country and global geographies as well.

The stockbroking company has a significant presence in substantial retail segments by its
businesses namely, housing finance, life insurance, mutual fund, retail financial markets, and
stock markets as well.

Basically, in the previous year, the company was holding an asset base of around Rs. 59,400
Cr. and generated revenue of Rs. 8,623 Cr.

It has around 425 branches in 200 locations. Also, the team of 11,938 professionals is
handling more than 12,00,000 clients since 2008.

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5.5PAISA

5Paisa is one of the well-known discount broker based out of Mumbai. The broking house is
known to be one of the fastest growing & provides one of the lowest brokerage in the
industry.

Lets have a detailed 5Paisa Review & get good understanding of 5Paisa Brokerage Charges,
its Demat Account, Trading Platforms & other important features.

5paisa was launched in the year 2016 and as on date serves more than 7,500 retail customers.
It has targeted to acquire around 50,000+ customers in current fiscal period.

The customer base is entirely new and is not acquired from IIFL. The broking house is in the
process of demerging from IIFL and is also in the process of getting listed on the stock
exchanges.
5paisa has planned to commence trading in commodities and to offer personal loans in near
future. It also intends to include funding products like IPO, NCDs etc.
As a part of its product profile – this is planned to be routed through a NBFC of IIFL Group.
They does not have any major investment infrastructure.

They only has a set up office in Mumbai, apart from this, it does not have physical presence
in any other part of India or world. For assisting the customers, it has set up a call center
format.

36
The Discount broker has been recording a daily turnover of INR 1,200 crore which is mainly
from equity trading and a miniscule portion, say around a percent is towards currency.

6. KOTAK SECURITIES

Kotak Securities, has known for their unorthodox approach to embrace new technologies and
ideas over the past few years. In short, they have proven worthy to be called a well know and
well respected full service brokerage firm.

Nevertheless, in today’s article, we will dig deep into Kotak Securities Review & their ways
of operation and the convenience of using their respective products, services, offers, customer
support, research and advisory and most importantly all the platforms they offer to their
respective clients for the purpose of remote trading.

Kotak Securities as a brokerage house serving across all the financial trading asset classes,
and the CEO of the company is Jaideep Hansraj. It was established in the year 1994.

The company was incorporated in Mumbai, Maharashtra before it went on to serve the
nationwide traders and investors. The firm has been ever since operating as a subsidiary for
Kotak Mahindra Bank and claims itself to be the best broker as of today.

Perhaps, that is not exaggerating at their end, considering the fact that they have over 13 lakh
active accounts in the present that are managed by their gigantic network of over one
thousand and two hundred branches spread across three hundred and seventy seven cities in
India.

37
As a matter of fact, their traders and investors make up to 5 lakh trades on an average day.
Furthermore, they have also managed to time and again pioneer many services.

In fact, they were the very first in the nation to introduce Mobile Stack Trading App that
could track all the investments of a person on the go.

They also came up with the concept of SMS alerts right before the execution of depository
transaction. And they have also been recognized for their tremendous efforts more than once.

Today, they stand as the proud winners of Gold award presented to them at ACEF for Email
marketing & successful use of technology, “Early adopter of Analytics” award presented to
them at Machine learning conference 2018, Best Brokerage India 2018 – by Triple A Asset
Country Awards in the Best Advisors South Asia Category and many more.

38
7. IIFL SECURITIES

India Infoline or IIFL is the most popular financial and investment service broker in India.

India Infoline (IIFL) was first incorporated in 1995. It is a brokerage firm of India Infoline
Groups. IIFL is a fast growing financial services solution provider in India.

Equity or Commodity Broking and Research is the key offering of India Infoline. India
Infoline was listed on BSE (532636) and NSE (INDIA-INFO) for security trading.

IIFL has a wide network of 4500+ branches spread over 950+ cities across India. In Oct
2012, IIFL was reported for average daily turnover of Rs 4355 crores in Equity and Rs 2254
crores in commodities.

IIFL was initially launched as the retail broking firm and launched its 5 paisa trading solution
or platform. It’s 5Paisa firm offered discount brokerage charges in the stockbroking industry
and also given freedom to make transactions from various traditional ways.

The company always friend to re-invent and innovate itself continuously. The stockbroking
form facilitates users to trade in all types of investment options with one single trading
platform.

IIFL was awarded with ‘Best Broker with Global Presence’ at the BSE IPF. IIFL also has
international presence through its subsidiaries in New York, Mauritius, Colombo, Dubai,
London, Singapore and Hong Kong.

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8. MOTILAL OSWAL

Motilal Oswal Securities Ltd. is a Mumbai based company that was incorporated in 1987. They
have a reputed name in the world of financial services providers providing services across
Institutional Broking, Private Wealth Management, Retail Broking and Distribution,
Investment Banking & more.

Motilal Oswal is a financial services firm with various products and services such as Retail
Broking and Distribution, Private Wealth Management, Institutional Broking, Asset
Management, Private Equity, Commodity Brokering, Investment Banking, Currency Broking
and Home Finance.

The Full Service brokers client includes foreign institutional investors, retail customers,
mutual funds, financial and corporate clients.

Motilal Oswal has a network spread over 550 cities and towns comprising 2300 Business
locations operated by the company and its Business Partners. The company had 10 lakh
registered customers and team of approx. 2200 employees.

Motilal Oswal Securities has a very solid research team. They invest almost 10% of their
revenue on equity research. By 2017, company had 30 research analysts researching over 240
companies across 25-divisions. From research perspective, Motilal Oswal’s research reports
are very accurate.

40
9. ICICI

ICICI Direct is a retail trading business which provides investment service from ICICI
Securities. The broking house as a subsidiary of the ICICI Bank is a technology driven open
conciliator working towards providing many financial trading based services to their respective
traders and investors throughout the nation.

ICICI Direct is the 2nd largest retail stock brokering firm in India that offers a wide range of
investment to the retail and institutional customers.

ICICI Securities is part of ICICI Group. The broking house provides these services to more
than 20,00,000 customers through ICICI Direct.

Their website offers a complete suite of investment products such as Mutual Fund & IPO,
Online Equity Trading, Fixed Deposit, Bond, Derivatives Trading, NCD, wealth products,
Home Loans, etc. ICICIdirect.com is one of the most visited investment portals in India.

It provides a 3-in-1 account, which includes ICICI Bank Account, ICICI Demat Account and
ICICI Trading Account offering for retail stock market investors in India. It is very simple
and efficient way to invest in various financial instruments.

The customers can visit any of the ICICI Bank branches or ICICIDirect offices to get in-
person help on financial products. ICICIDirect provides timely pay-in and pay-out and
hassle-free settlements.

41
10. KARVY

Karvy is one of the well known brokerage firm is based out of Hyderabad and is a part of
country’s prominent business group – Karvy Group. It is one of the biggest stockbroking firms
who provide core financial services to the customers.

Karvy is the comprehensive stock broking house available in India since 1983. The company
was established by C Parthasarathy and its headquarters are located in Hyderabad, India.

Karvy is a well-diversified group today. The company not only provide the entire spectrum of
financial services even also offer data processing and managing systems.

Since the company’s most of the financial services were custom-made for retail businesses, the
requirement of building skill as well as scale in the transaction processing area became
extremely important.

Moreover, during the highly stressed and critical environment in the segment of financial
services, the non-financial services assisted Karvy to bring stability in the business.

The financial service businesses of the Karvy Group is positioned among the top-five financial
businesses in the nation over its business area.

The company is serving more than 70 million investors in diverse dimensions and also provides
flexible investor services to more than 600 corporate groups, all this has made the best
stockbroking company of India.

The Karvy Group is good at offering depository participant, stockbroking services, financial
products including- (fixed deposits, bonds and mutual funds), advisory services, commodities
broking, wealth management, merchant banking and corporate finance, NBFC ( macro and

42
micro businesses, loans to individual investors, forex, currencies, data management, data
analytics, registrar & transfer agents and market research.

Karvy broking house itself honours on enduring customer fundamental all the times with a
combination of prominent edge technology and a huge range of corporate offices available in
the country.

43
CHAPTER 2:

RESEARCH METHODOLOGY

A research objective is a clear, concise, declarative statement, which provides direction to

investigate the variables under the study. Research objectives describe what we expect to
achieve by a project. Research objectives may be linked with a hypothesis or used as a
statement of purpose in a study that does not have a hypothesis. The research objectives drive
all aspects of the methodology including instrument design, data collection, analysis etc

It is necessary to define research objectives because well defined objectives create clear links
between your research paper and the big, important question that motivates it. A clearly defined
objective directs researcher in the right direction. In order to get the right solution a clearly
defined objective are very important. Without clear objective a researcher is aim less and
direction less in conducting the study

2.1 Research objectives

1.To study the role of dematerialization in the Indian economy.

2.To study people's mind concept about demat account.

3.To study how much people think that demat account is safe and convenient.

4.To study that does the people think that using demat is more easier and less costly.

2.2 Research Design

The most common used research design is descriptive research design. Descriptive research
design is typically concerned with describing problem and its solution. Descriptive research
design study rests on one or more hypotheses. Descriptive research requires clear specification
of who, why, what, when, where and how of the research descriptive design is directed to
answer these problems.

44
2.3 Data Collection Method

When collecting data to approach the purpose of a research there are two ways in which the
data can be collected. In order to acquire knowledge about the topic primary and secondary
data is used.

• Primary Data

Primary data can be collected either through experiment or through survey. The data
collection for this study was done through questionnaire. Information to find out the investment
potential and goal was found out through questionnaires. Due to the purpose of the research
only the questionnaire method would be able to approach the topic and be able to collect the
answer in a satisfactory manner. Further, the primary data will be used to analyze the factors
and how these are related to the respondent.

• Secondary data

The data used in this research is mainly secondary data combined with multiple sources. The
secondary data has been the data collection through different types of research conduct within
the topic, articles and that are written on newspapers, magazines and some online book. This
data helped to know some extra information about the topic and also helped me to achieve the
additional knowledge about demat accounting.

2.4 Sampling Method

Convenience sampling method is used as to obtained by selecting convenient population units.

The convenience sampling method is selected neither by probability nor by judgement but by
convenience. Through this method the research has obtained the primary information by testing
the questions.

2.5 Sample Size

Considering the constraints it was decided to conduct the study based on sample size of 100
people in specific age groups.

45
2.6 Graphs

46
CHAPTER-3

REVIEW OF LITERATURE

Bhatt & Bhatt (2012) in their paper entitled “Financial Performance Evaluation of
depositories in India ( A comparative study of NSDL & CDSL)” explores the fact that the trend
of automation especially, Dematerialization, has enabled the Indian capital market to take the
world center stage & scale to unprecedented heights. Securities market in India has grown
exponentially. The analysis of the progress of NSDL & CDSL in economic terms clearly
reveals that both the depositories have shown a remarkable progress in terms of DEMAT
accounts, DEMAT value &quantity, Settlement value and quantity and the number of
depository participants. Their study reveals that both the depositories have been working
financially smoothly over a period of last six financial years.

Chaudhary & Malik ( 2011) in their paper “ Depository system in India : An appraisal” states
that majority of the participants are resided with NSDL with stake of 55 percent. Thus, it acts
as the primary organization with the majority of participants in the system. Further the paper
analysis concludes that the respondents have no clear & crisp idea regarding the services
offered by the DPs to their clients. In order to overcome geographical & time barriers formal
& informal communication need to be developed. The majority of respondents were
comfortable with the prevailing fee structure of depository which shows the existing fee
structure followed by NSDL is benevolent.

George ( 1996 ) in his article “ Towards a paperless settlement system” explains about the role
of the NSDL in revolutionizing the paperless stock settlement system in the country. He has
examined steps taken by the depository to ensure that the scripless trading system is a success.
He has also stressed the importance of the role of regulatory body in making the depository
system successful.

Jeyanthi (2007) in his research work “A study on National Stock Exchange of India Limited”
has highlighted that the NSE has created a niche for itself not only in the national arena but
also in the international market with the adaptation of required structural changes. Therefore

47
there is no doubt that NSE will be an attractive destination for the national & international
investors to park their funds in the years to come. Javaid ( 2003) in his thesis “ A study of
operations of stock exchanges with the special reference to Delhi Stock Exchange” discussed
that Indian stock market has emerged as a major source of finance for the corporate sector. It
is an institution evolved in the industrial developed capitalistic economies with free market
mechanism. Stock exchange was termed as institutional allocator of resources par excellence.

Kaur (2013) in her paper “Investors preference between Demat & Remat and awareness
regarding depository & its various laws” explains the depository system in India, focussing on
the reasons for investors preference between Remat & Demat. To sum up she concludes that
the growth rates of Demat account holder is increasing over years. The Indian system of capital
market is two tier system-Indian government allows holding securities in any form i.e. either
in physical securities or in electronic (Demat) form. The respondents feel that the
dematerialization provides enough services & it is convenient to use. Majority of people are
shifting towards dematerialization as compared to the past history & study.

Olekar & Talwar (2013) in their paper “Online trading & Demat account in India – Some
issues” observed that the banks normally levy a lower service charges compared to other
depository participants. He also found that when the numbers of users are more online, the
speed of transactions is affected.

Rao (1995) in his paper “Depository System : A boon for India capital markets” holds the
view that the introduction of depositories would improve the market efficiency. It is also
expected to arrest the prolonged depression in the stock market. The paper analysis shows the
manner in which the depository would help to revive the stock market. To sum up, he states
that the eligibility criteria will require companies to improve their internal systems. He is
hopeful that depository system will bring a sea change in corporate democracy, particularly in
corporate management, price discovery in market place & proxy exercise etc.
Sahoo ( 1995 ) in his article “ The depositories ordinance , 1995 explained” has explained the
provisions of Depositories Ordinance 1995, which provides a legal basis for the establishment
of depositories in securities with a view to ensure free & expeditious transfer of securities.

1. CDSL says active demat accounts hit 2 crore mark

48
DATE:-January 27, 2020
By Nehal Vora, Managing Director, CEO

CDSL is the largest depository in the country in terms of active demat accounts and accounts
for 67 per cent of the new accounts added in FY20.

Central Depository Services (CDSLNSE 1.07 %) on Monday said the number of active demat
accounts opened with it has crossed two crore (20 million) mark.
CDSL is the largest depository in the country in terms of active demat accounts and accounts
for 67 percent of the new accounts added in FY20.
The depository firm, which began operations in 1999, reached the one crore active demat
accounts in September 2015.

Nehal Vora, MD & CEO, said: “CDSL became the first depository to open its branch in
IFSC, GIFT City and continuing with many firsts, CDSL has now become the first
Depository to reach the milestone of two crore active demat accounts. The growing active
demat accounts are testimony to CDSL’s ability to offer ease of doing business to its demat
account holders, DPs, Registrar & Transfer Agents (RTAs) and Issuers.”

49
2. Govt to Make it Compulsory for Unlisted Companies to Issue Shares in
Demat Form

Date:-August 27, 2018

Place:- New Delhi

The government will soon make it mandatory for unlisted companies to issue new shares only
in the dematerialised form, senior officials said, amid intensified efforts to fight the black
money menace.

Besides, the unlisted corporate would have to ensure that shares are transferred only in
dematerialised (demat) or electronic form.

Initially, these regulatory requirements, expected to be effective from the first week of October,
would cover more than 70,000 public companies, two senior government officials told PTI.

Officials said that to begin with, issuance of new shares and transfer of shares by unlisted
companies would have to compulsorily be in the demat form and that the decision has been
taken after extensive discussions with stakeholders. With respect to issuance of bonus shares
and stock split also, the entities would have to issue them in the demat form, they added.

The proposed move would help in enhancing transparency in ownership at corporates, curb be
nami transactions and bolster the efforts to weed out shell companies that are allegedly used
for illicit activities, they said.

50
According to the officials, having shares in the dematerialised form would also bolster the
Know Your Client (KYC) framework for unlisted companies and prevent instances such as
pledging of duplicate shares.

The ministry also held extensive deliberations with market regulator Sebi on the matter of
unlisted companies having their shares in the dematerialised form, the officials said.

One of the officials said the corporate affairs ministry held discussions with depositories as
well as registrars to an issue and transfer agents. They have been asked to keep costs at
minimum for conversion of shares in physical form to dematerialised form by the unlisted
companies, the official added.

At present, listed companies need to have shares in electronic form but is not compulsory. The
corporate affairs ministry would soon be issuing rules under the Companies Act, 2013, for
unlisted firms with respect to having shares in the demat form.

A decision about making it mandatory for all unlisted companies to convert their existing
shares into demat form would be taken in due course. Till that time, it would be voluntary for
them, the officials said.

Under the Companies Act, 2013, there are public as well as private companies. Generally, those
having more than 200 members are classified as public companies and they have to follow
stricter corporate governance norms.

In the case of private companies, the number of members cannot be more than 200 and there
are various restrictions on these entities.

There were more than 11.89 lakh active companies at the end of June. Out of them, 71,506
were public companies and over 11.10 lakh companies were private ones, as per data compiled
by the ministry.

Clamping down on the black money menace and illegal assets, the ministry has already struck
off the names of more than 2.26 lakh companies that have not been carrying out business
activities for long and more such entities would face action in the coming weeks. Many of these
companies are suspected to have been used as a conduit for illicit fund flows.

51
Section 29 of the Companies Act, 2013 pertains to public offer of securities to be in
dematerialised form. Every company making a public offer and such other class or classes of
public companies as may be prescribed shall issue the securities only in dematerialised form
by complying with the provisions of the Depositories Act, 1996.

Further, certain class of companies "may convert its securities into dematerialised form or issue
its securities in physical form in accordance with the provisions of this Act or in dematerialised
form in accordance with the provisions of the Depositories Act, 1996 and the regulations made
there under," as per Section 29.

52
3. New demat accounts climb to 10-year high as retail investors pile into equities

Date:-January 22, 2020

A demat account is opened by an investor with a depository participant to invest in securities

such as stocks and bonds.
Assets managed by the mutual fund industry have grown from ₹24.09 tn in Dec 2018
to ₹27.26 tn in Dec 2019.
Retail investors piled into the Indian stock market in a year that saw soaring equities and a
slowing economy, driving the number of new dematerialized accounts opened in 2019 to a 10-
year high.
According to data from the Securities and Exchange Board of India (SEBI), both new demat
accounts, and the total number of such accounts hit a 10-year high in 2019. While new demat
account openings rose 12.5% from the previous year to touch 4.5 million, total demat accounts
at the end of 2019 stood at 39.3 million, up from 34.8 million in 2018.
A demat account is opened by an investor with a depository participant to invest in securities
such as stocks and bonds. The securities are held in digital format.
Retail investors piled into the Indian stock market in a year that saw soaring equities and a
slowing economy, driving the number of new dematerialized accounts opened in 2019 to a 10-
year high.
According to data from the Securities and Exchange Board of India (SEBI), both new demat
accounts, and the total number of such accounts hit a 10-year high in 2019. While new demat

53
account openings rose 12.5% from the previous year to touch 4.5 million, total demat accounts
at the end of 2019 stood at 39.3 million, up from 34.8 million in 2018.
A demat account is opened by an investor with a depository participant to invest in securities
such as stocks and bonds. The securities are held in digital format.
According to analysts, policy changes like easier know-your-customer (KYC) norms, greater
internet penetration, affordable devices and technology, which enabled easy access to services
have increased the financialization of savings.
Prakarsh Gagdani, CEO, 5paisa.com, said: “A significant increase in mobile and internet
accessibility and entry of new millennials into the investment ecosystem has boosted account
opening." He added that market-savvy retail investors who have access to proper research will
continue to invest in stock markets besides investing in equities through mutual funds.
5paisa.com is an online discount brokerage firm and part of the IIFL group.
“Equities are becoming attractive in India due to the slowdown of yield in physical assets like
real estate and gold. Further, the markets have performed well in 2019 especially in large caps
which drums headline interest from the retail population," said Nikhil Kamath, co-founder and
chief investment officer, Zerodha.
Kamath believes that government-led initiatives to create pan-India awareness on mutual funds
and financial assets have helped penetration in non-metros. “However, there will need to be a
specific shift from physical assets which we think will be strongly motivated as real estate and
gold continue to underperform, and as interest rate cuts decrease yield on traditional retail fixed
deposits."
In 2019, the equity benchmark index Sensex jumped 14.38% while the BSE Midcap and BSE
Smallcap indices were down 3.05% and 6.85% respectively. The primary markets were tepid
with 16 initial public offerings (IPOs) raising a total of ₹12,361.56 crore, against 24 IPOs
raising ₹30,959.07 crore in 2018.
Mutual funds have also attracted retail investors, with money collected through systematic
investment plans (SIPs) showing a growth trend. Total money collected through SIPs
was ₹98,612 crore in 2019. An SIP is an investment plan offered by mutual funds wherein one
invests a fixed amount in a mutual fund scheme periodically at fixed intervals.
According to data from the Association of Mutual Funds in India, there are 87.13 million
accounts in the mutual fund industry as of December 2019, of which 89.8% is accounted for
by retail investors. There were 78.21 million retail investor accounts, 8.17 million high
networth individuals (HNI) accounts and 0.74 million institutional investor accounts. Since

54
December 2014, there is an increase in investor accounts from 40.3 million to 87.1 million in
December 2019.

Assets managed by the Indian mutual fund industry have grown from ₹24.09 trillion in
December 2018 to ₹27.26 trillion in December 2019, representing a 13.18% growth in assets
over December 2018. The proportionate share of equity-oriented schemes is now 42.3% of the
industry assets in December 2019, up from 41.9% in December 2018. Individual investors
primarily hold equity-oriented schemes while institutions hold liquid and debt oriented
schemes. 69% of individual investor assets are held in equity oriented schemes, said Amfi.

55
4. Sensex, Nifty rally on global cues, but see worst fall in 11 years in FY20

Date:- April 01, 2020

Benchmark index BSE Sensex ends at 29,468.49, up 3.62%, while the Nifty closes at 8,597.75,
up 3.82%.

Positive global cues, mainly over improvement in data from China, lifted investor sentiments.

Sensex

Indian stock markets ended nearly 4% higher on Tuesday, mirroring the confidence in global
markets after Chinese manufacturing activity rose. The BSE Sensex ended at 29,468.49, up
1,028.17 points or 3.62%, while the 50-share index Nifty closed at 8,597.75, up 316.65 points
or 3.82%.
Markets in other parts of Asia were mostly firm. China, Hong Kong and Korea edged higher,
while Japan and Australia ended lower. China on Tuesday said its official manufacturing PMI
for March was at 52, indicating an expansion and defying expectations of a contraction.
Analysts polled by Reuters had expected the figure to come in at 45 for the month.
PMI readings below 50 point to a contraction, while figures above that level indicate an
expansion.
According to Ajit Mishra, vice-president, research at Religare Broking Ltd, positive global
cues, mainly in response to improvement in China’s manufacturing data, lifted investor
sentiments, which led to buying in the Indian markets despite the rise in coronavirus cases.

56
The India volatility index, or VIX, also fell 10.29% to end at 64.49 on Tuesday, which could
indicate that probably there may be some respite in the sharp sell-off in Indian markets.
However, the financial year 2020 that ended on Tuesday saw the steepest market fall in 11
years. Benchmark indices Sensex and Nifty lost 23.8% and 26.03%, respectively, in FY20, the
worst since FY09.
The markets slipped considerably towards the end of the fiscal, with benchmark indices falling
over 20% in March alone as the number of covid-19 cases increased in India and a mandatory
21-day nationwide lockdown disrupted life and business.
For smaller stocks too, it was one of the worst years since FY09. In FY20, BSE Midcap index
lost 31.72% and BSE Smallcap 36.06%.
Until the spread of covid-19 is curbed, market sentiment is likely to remain fragile, analysts
said.
According to analysts at Nomura, fears of an escalation, given the scenario in some European
countries, have severely impacted market sentiment and hence, volatility is expected to remain
extremely high in the near term.
“In the near-term, in case the covid-19 outlook in India improves, we expect a bounce-back in
high-beta sectors such as financials that underperformed in the fall. From a one-year
perspective, we remain selective as growth falters materially," Nomura said.
For other asset classes too, it was a year of significant losses. The Indian rupee was down
8.46% in FY20 while Brent crude was down by a massive 66.42%. In FY19, both rupee and
Brent crude were down 5.7% and 2.6%, respectively.
Foreign institutional investors bought Indian shares worth $390 million in FY20, the lowest in
four years. Domestic institutional investors, including mutual funds and insurance companies,
pumped in ₹1.25 trillion in this fiscal, the highest in at least a decade.
Analysts feel the impact of covid-19 on gross domestic product (GDP) growth would be front-
loaded and much depends upon the period of lockdown, the extent of economic disruption
affecting productivity and the policy response related to all aspects, including medical and
public health, administrative, economic, financial and regulatory.
“The moderate recovery of 5.5% expected in FY21 was meant to be achieved in 19 days while
attaining the FY20 level of production by remaining 346 days of the year. This calculation is
significantly upset post covid-19 now," said ASK Wealth Advisors Pvt Ltd.

57
5. New demat accounts in 2018 touch 10-year high at 4 million: Report

Date:-February 12, 2019

Retail investors also showed an increase in interest in mutual funds and systematic
investment plans.
The number of dematerialised (demat) accounts opened in 2018 reached a 10-year high at 4
million, according to a report by Mint, quoting Securities and Exchange Board of India (SEBI)
data.
The total number of demat accounts rose to 34.8 million in 2018 from 30.8 million in the
previous year, marking a 13-percent increase. This indicates a shift in saving patterns from
traditional instruments such as gold, real estate and bank deposits to alternatives such as equity
and stocks.

A demat account is opened by an investor with a depository participant to invest in securities

such as stocks and bonds. The securities are held in electronic format, making it easier for users
to trade shares.

58
CHAPTER-4

DATA ANALYSIS, PRESENTATION AND INTERPRETATION

1. AGE

AGE NUMBER OF RESPONDENTS

0-20 58
21-40 33
41-60 07
60&Above 02
TOTAL 100
INTERPRETATION:-

From 100 respondents, 58 number of respondents belongs to 0-20 years of age group, 33
respondents belongs to 21-40 years of age group, 7 respondents belong to 41-60 years of age
group and 02 respondents belong to 60 and above years of age group.

2. SALARY

59
 SALARY NUMBER OF RESPONDENTS
2,50,000 79
2,50,000-5,00,000 17
5,00,000-7,50,000 04
7,50,000&above 00
TOTAL 100

INTERPRETATION:-

From 100 respondents, 79 respondents are earning 2,50,000 annually, 17 respondents are
earning approximately 2,50,000-5,00,000 annually whereas annual income of 5,00,000-
7,50,000 is earned by 04 respondents and there are no respondents with the annual income of
7,50,000 who are investing or having any demat accounts from these respondents.

3. OCCUPATION

60
 OCCUPATION NUMBER OF RESPONDENTS
STUDENT 62
SERVICE 18
HOUSEWIFE 07
BUSINESS 08
PROFESSOR 04
OTHER 01
TOTAL 100

INTERPRETATION:-

From 100 respondents, 62 respondents are students, 18 respondents belong to the profession of
servicing, 07 respondents are housewives whereas 8 respondents own their business, 04
respondents are professors by profession and 1 respondent is into some other fields.

4. SOURCE OF KNOWING DEMAT ACCOUNT

61
 SOURCES NUMBER OF RESPONDENTS
FAMILY&FRIENDS 57
INTERNET 28
ADVERTISEMENT 19
BROKER 13
OTHER 11
TOTAL 100

INTERPRETATION:-

From 100 respondents, 57 respondents came to know about demat account through family and
friends whereas 28 respondents found it on internet whereas 19 respondents came to know
through advertising while 13 respondents approached brokers for the same and 11 respondents
were using other sources to know about demat account.

5. DEMAT ACCOUNT OPENED BY

62
 OPTIONS NUMBER OF RESPONDENTS
BROKER 29
BANK 57
OTHER 16
TOTAL 100

INTERPRETATION:-

From 100 respondents, 29 respondents opened their demat accounts with the help of Brokers,
57 respondents have opened the demat account with the help of bank while 16 respondents
have opened with sources of demat account.

6. SECURITIES TO BE PURCHASED USING DEMAT ACCOUNT

63
 SECURITIES NUMBER OF RESPONDENTS
SHARES 56
MUTUAL FUNDS 33
INSURANCE 10
BONDS 01
TOTAL 100

INTERPRETATION:-

From 100 respondents, 56 respondents purchase shares through demat account, 33 people
purchase mutual funds through demat account, 10 respondents use demat account for
purchasing insurance policies and 1 respondent use demat account for purchasing orf investing
in bonds.

7. UPDATES ABOUT DEMAT ACCOUNT

64
 OPTIONS NUMBER OF RESPONDENTS
YES 77
NO 05
MAYBE 18
TOTAL 100

INTERPRETATION:-

From 100 respondents, 77 respondents are updated about demat accounting whereas 5 are
totally unaware about this and 18 are not totally updated about demat accounting.

65
8. CHALLENGES/PROBLEMS FACED WHILE OPENING DEMAT
ACCOUNT

CHALLENGES/PROBLEMS NUMBER OF RESPONDENTS

TECHNICAL PROBLEM 70
SOFTWARE PROBLEM 12
PAYMENT PROBLEM 14
OTHER 04
TOTAL 100

INTERPRETATION:-

From 100 respondents, 70 respondents were facing technical issues while opening or operating
demat account, 12 were facing software problem, 14 were facing payment regarding issues
while 04 respondents were facing other problems.

66
9. PERIOD OF USING DEMAT ACCOUNT

PERIOD NUMBER OF RESPONDENTS

1 YEAR 61
2-5 YEARS 35
5-7 YEARS 03
7-10 YEARS 01
TOTAL 100

INTERPRETATION:-

From 100 respondents, 61 respondents are using demat account from 1 year, 35 respondents
are using it from 2-5 years whereas 3 respondents were using it from 5-7 years and there was
respondent who was using demat account from 7-10 years.

67
10. ANNUAL CHARGES PAID FOR MAINTAINING DEMAT
ACCOUNT

ANNUAL CHARGES NUMBER OF RESPONDENTS

500 65
750 21
1,000 11
1,500 03
TOTAL 100

INTERPRETATION:-

From 100 respondents, 65 respondents are paying 500 RS. as annual charges for maintaining,
21 respondents are paying annual charges of RS. 750, 11 are paying 1000 RS. as annual charges
and 3 respondents are paying Rs. 1500 for the same.

68
11. DEMAT ACCOUNT vs. PHYSICAL SHARE CERTIFICATE

OPTIONS NUMBER OF RESPONDENTS

YES 77
NO 05
MAYBE 18
TOTAL 100

INTERPRETATION:-

From 100 respondents, 77 respondents are considering demat account better than physical
certificate, 5 are considering physical ones better than demat account and 18 respondents are
not sure that which one is better.

69
12. FACTORS INFLUENCING TO OPEN DEMAT ACCOUNT

FACTORS STRONGL AGREE NEUTRAL DISAGREE STRONGL

Y AGREE Y
DISAGREE
PAPERLESS 45 24 30 01 00
ACTIVITY
TIME SAVING 39 32 28 01 00
EASY TO 34 31 33 02 00
MANAGE
GOVERNMENT 24 30 45 01 00
COMPUTATIO
N
STORE 32 23 44 01 00
BUNDLE OF
SHARES

INTERPRETATION:-

From 100 respondents ,

45 respondents strongly agree that Paperless Activity is a factor influencing for opening the
demat account, 24 respondents agree for the same, 30 are neutral about it whereas 1 disagree
for it and no one strongly disagreed with the point.

70
39 respondents strongly agree that Time Saving is a factor influencing for opening the demat
account, 32 respondents agree for the same, 28 are neutral about it whereas 1 disagree for it
and no one strongly disagreed with the point.

34 respondents strongly agree that Easy to Manage is a factor influencing for opening the demat
account, 31 respondents agree for the same, 33 are neutral about it whereas 2 disagree for it
and no one strongly disagreed with the point.

24 respondents strongly agree that Government Computation is a factor influencing for opening
the demat account, 30 respondents agree for the same, 45 are neutral about it whereas 1 disagree
for it and no one strongly disagreed with the point.

32 respondents strongly agree that Storing Bundle of shares is a factor influencing for opening
the demat account, 23 respondents agree for the same, 44 are neutral about it whereas 1 disagree
for it and no one strongly disagreed with the point.

71
13. SATISFACTION FROM SERVICES PROVIDED BY THE BROKER

OPTIONS NUMBER OF RESPONDENTS

YES 78
NO 08
MAYBE 14
TOTAL 100

INTERPRETATION:-

From 100 respondents, 78 respondents are totally satisfied from the services provided by broker
whereas 8 respondents are not satisfied at all with it and 14 are not totally satisfied with it.

4.1 FINDINGS
72
The objective of the study was to analyse the mindset of people towards dematerilisation. The
study has been carefully analysed using the techniques of percentage analysis, rank analysis,
weighted average score analysis and the square analysis. The final chapter is an attempt to
summarise the findings of the study based on which few suggestions have been made.

• Majority of people use their demat account rarely and second majority is once in
a month.
• Many people have came to know about the demat account from majorly two
sources i.e internet and friends and family.
• It is also observed that majority of people think that demat is better than old type
of physical share certificates.
• Majority of people receive regular updates about their demat balance from their
DP provider.
• The factors like paperless activity, time saving and easy to manage have
influenced people to open a demat account
• The majority of people pay annual maintenance charges less than rupees one
thousand
• Most of the people have opened their demat account through a broker
• The majority of the people have faced no challenges during using their demat
account
• Most of the people purchase shares and mutual funds using demat account
• Majority of people are being using their demat account since the period between
1 to 5 years
• In this world of fast changing technology, upgraded software is very
Important.Make sure broker provides all three versions of software(Desktop,
web, and Mobile) at no extra cost.And user interface of this software is easy to
use.Before opening the account every broker provides the demo for the software
• Stockbroker should be registered with SEBI and Stock exchanges such as NSE
and BSE. They should display the registration number on their website.
• No constituent of demat system has been entrusted with the task of investors
Education and awareness by SEBI

73
• It is the combined responsibility of SEBI, Depositories and DPs to make people
aware and educate about the demat system. But major responsibility lies on the
shoulders of the Depositories.
• The objective of accelerating awareness among present and prospective investors
has not been much weightage by the depositories and its constituents.
• Other than brokerage, Customer support is a very important factor in choosing a
discount broker. Good customer support creates a positive environment for
smooth and healthy trading.

74
CHAPTER-5

SUGGESTIONS, LIMITATIONS AND CONCLUSION

5.1 SUGGESTIONS

There’s no harm in opening a Demat account. In fact, it’s always a right time to get started in
the stock market in my opinion. One should be aware before you open a demat account is the
brokerage charges which will be applicable and the facilities that they will get.

• Uniformity in practices of both the depositories

There are two depositories in our country. One is NSDL and the other is CDSL. Both these
depositories are following different patterns accounts number and they have different pricing
structures. In NSDL, every account number and the DP ID number is required to identify the
account holder, whereas the CSDL allots only one number containing both information. This
practice leads to confusion in the mind of investors. In pricing structure, NSDL charges custody
fee whereas the CDSL does not charge any custody fee. The practice is not uniform and this
leads to uncertainty in the mind of investors. If they shift from one depository to another, they
have to pay sell and purchase charges for their own securities, which is undesirable. Thus it
needs to sort out of this issue.

• Rematerialisation should not be discouraged

As per Depository Regulations, one opt for rematerialisation any time he wants. In this process,
electronic shares are converted into physical shares, and the client can keep these physical
shares with him. But this option exists only on the papers, as practically it is very difficult to
get any security rematerialized. The companies don’t pay any attention to the rematerialisation
request. It is, therefore, necessary that steps should be taken to ensure that the client is always
given the choice of getting his physical shares back in case he wants to do so. He should not
be discouraged on his account and the companies should entertain the request within the
reasonable time.

75
 • Uniformity codes of securities

In stock exchanges, securities have different codes and in Depositories, securities have ISIN
number. Steps can be taken to ensure that the uniform codes are followed in every institution
of the country. This may result into adoption of ISIN number in the Stock Exchanges also. If
uniformity of codes of securities are introduced, lot of confusion regarding the codes can be
avoided from the minds of the investor.

• Increase the Applicability

The regulator should ensure that all the companies adopt the Demat System. There are
Companies, which have not entered into the agreement with any of the Depositories. Steps
Should be taken to entered into the agreement with any of the Depositories. Steps should be
taken to ensure that these Companies also enter into the agreement at the earliest. The Investors
of these Companies are feeling a lot of inconvenience, as they are not able to take the
advantages, offered by the Depositories System.

• Investors Education

The investor should be property educated about rules and procedures of the Depositories
System and their implications. The Despositories and the intermediaries should ensure that the
investors, dealing with them, are properly educated about their rights and 291 duties in the
Demat System. Most of the investor are still not aware the functioning of the System. In the
process, if they suffer any loss due to their ignorance, they blame the system. Therefore, it is
necessary to educate the investors. The NSDL has been conducting Investors Depository
Meets(IDMs)since 2001 in cities and towns.

76
5.2 LIMITATIONS

• It is compulsory for the capital market regulator to keep a close watch on the
trading in dematerialized securities and to check that trading does not act as a
detriment to investors.
• The role of key market players in case of dematerialized securities, such as stock-
brokers, needs to be supervised as they have the capability of manipulating the
market.
• Multiple regulatory frameworks have to be followed, including the Depositories
Act, Regulations and the various By-Laws of various depositories.
• Additionally, agreements are entered at various levels in the process of
dematerialization. Investors may find the process complicated.
• Brokerage charged and AMCs : Some high-profile stock-brokerage firms charge high
rate for their services.

• On-line fraud: Although a digital account assures advance security, it is however not
unbreachable.

• Multiple accounts: Some people hold multiple Demat accounts.

• Trading in securities may become uncontrolled in case of dematerialized securities.

77
5.3 CONCLUSION

In India stocks and securities are held electronically in a dematerialized account(or “Demat”),
in preference to the investor taking physical possession of certificates. A demat account is
opened by the investor while registering with an investment broker (or a sub-dealer). the
dematerialized account number is quoted for all transactions that permit the electronic
settlement of transactions, each shareholder can have a dematerialized in order to get admission
to the dematerialized account requires an internet password and a transaction password.
Transfer or buy of securities can then commence. The purchases and sales of securities in the
dematerialized account are made automatically once the transactions were showed and
finished.

India followed the demat machine for electronic storage, in which shares and securities are
represented and maintained electronically, therefore removing the problem related to paper
holding. After the introduction of the deposit system by using the depositary regulation of 1996,
the procedure of sales, purchases, and transfers of socks became a whole lot less difficult and
most of the dangers associated with paper certificate have been mitigated.

In 1996, trading commenced in NSE for stocks in the form of demat account. It was the start
of new paperless inventory marketplace surroundings. If an investor buys a stock nowadays, it
is credited to the investors account in days. Nowadays. The stocks are transferred to the demat
account of the investor.

A demat is to your stock what a bank account is to your cash. In short, it is the account that
contains all its action in digital or dematerialized form. Just like the financial institution
account, a demat account includes certificates of its economic units inclusive of share,
bonds,government securties , mutual funds and traded funds (ETFs). You cannot alternate
within the stock market without a demat account.

78
BIBLOGRAPHY

• https://www.angelbroking.com/demat-account/what-is-demat-account
• https://www.5paisa.com/what-is-demat-account
• https://www.kotaksecurities.com/ksweb/account-types/demat-account
• https://www.angelbroking.com/demat-account/concepts-process-objectives
• http://www.yourarticlelibrary.com/accounting/share/demat-account-advantages-and-
disadvantages/56800
• https://www.livemint.com/market/stock-market-news
https://www.cheapstockbroker.com/best-10-share-trading-account-in-india/
• https://www.livemint.com/market/stock-market-news/markets-kick-off-fy21-on-a-weak-
note-down-4-as-virus-cases-rise-11585765186371.html
• https://www.google.com/search?q=Sensex,+Nifty+rally+on+global+cues,+but+see+worst+fa
ll+in+11+years+in+FY20&rlz=1C1CHXU_enIN712IN712&sxsrf=ALeKk02C5Cn88wYBIkCBbbEm
6jZlLrF89Q:1585984907581&source=lnms&tbm=isch&sa=X&ved=2ahUKEwjp9aOYns7oAhX1
_XMBHU94BUAQ_AUoAnoECAsQBA&biw=1366&bih=653#imgrc=EY0cizu0zGT71M
• https://top10stockbroker.com/karvy-review/
• https://www.angelbroking.com/demat-account/difference-between-dematerialisation-vs-
rematerialisation
• https://top10stockbroker.com/motilal-oswal-review/
https://top10stockbroker.com/sharekhan-review/
• https://top10stockbroker.com/hdfc-securities-review/
• https://www.google.com/search?rlz=1C1CHXU_enIN712IN712&sxsrf=ALeKk00xy0hMnQBP6
idp-
4D_USVHCn8j_A:1586070479653&q=project+demat+account+graph&tbm=isch&source=uni
v&hl=en&sa=X&ved=2ahUKEwiG4Zz83NDoAhXP4zgGHU65Cc4QsAR6BAgJEAE&biw=1366&bi
h=653
• https://www.google.com/search?q=format+of+demat+account&tbm=isch&ved=2ahUKEwjE
yvTd0LLoAhWs5HMBHUE2B_IQ2-
cCegQIABAA&oq=formAT+of+demat+account&gs_l=img.1.0.0.15892.16192..18670...0.0..0.3
28.640.3-2......0....1..gws-wiz-
img.Y7kU7vr78Ws&ei=crx5XsTJKqzJz7sPweyckA8&bih=653&biw=1366&rlz=1C1CHXU_enIN7
12IN712
•

79
ANNEXURE
Name*

Age*

• 0-20
• 21-40
• 41-60
• 60&above

Salary*

• 2,50,000
• 2,50,000-5,00,000
• 5,00,000-7,50,000
• 7,50,000

Occupation*

• Student
• Service
• Housewife
• Business
• Professor
• Other

From where did you came to know about demat account? *

▪ Family& friends
▪ Internet
▪ Advertisement

80
 ▪ Broker
▪ Other

From whom did you opened your demat account? *

▪ Broker
▪ Bank
▪ Other

What do you purchase using your demat account? *

• Shares
• Mutual funds
• Insurance
• Bonds

Do you receive updates about demat balance? *

• Yes
• No
• Maybe

Did you face any challenges/problems during using your demat account? *

• Technical problem
• Software problem
• Payment problem
• Other

From how long you are using demat account? *

81
 • 1 year
• 2-5 years
• 5-7 years
• 7-10 years

How much annual maintenance charges do you pay yearly? *

• 500
• 750
• 1,000
• 1,500

Do you think demat account is better than old type of physical share certificate? *

• Yes
• No
• Maybe

What factors influenced you to open the demat account? *

Strongly Agree Neutral Disagree Strongly

agree disagree
Paperless
activity
Time saving
Easy to
manage
Government
computation
Store bundle
of shares

82
Are you satisfied by the services provided by the broker? *

• Yes
• No
• Maybe

83