International Research Journal of Education and Technology

A depository is an organisation which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered depository participant. It also provides services related to transactions in securities. Depositories provide security and liquidity in the market. They use money deposited for safekeeping to lend to others, they invest in other securities, and they provide a funds transfer system. However, physical dealings in securities had to be completely eliminated to bring the Indian stock markets at par with the international markets, through scrip less trading in which transactions, in securities take place by a book entry method, without the physical delivery of securities or movement of cheques for payments. The essential part of scrip less trading is the dematerialization of share certificates through depositories. All certificates are surrendered to the issuer company that has issued the securities. On receipt of the certificates through the depository participants and on the advice of the depository with company has already entered into an agreement, the certificates in respect of these securities, and the name of beneficial owners whose name is recorded as such with a depository are deleted. The depository system in India operates with in the frame work of depositories Act, 1996 and the SEBI Depositories and participants Regulation, 1996.