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GOOD AFTERNOON

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DEPOSITORY PARTICIPANT

OPERATIONS

Presented by

Sikha Jain

09MFC033

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Objective of the study

To study various conceptual issues relating to the

operations of depository participant.

To study the cost structure of the various servicesoffered by Indiabulls Securities Ltd and four other

organisation.

To make a comparative analysis of the cost structure

of the five organisations taken for the study.

To study the problems relating to the mismanagement

in the operations of depository participants.

To examine the loopholes, if any.

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Sources of Data

Primary Sources

Secondary

Sources

Limitations of the

Study

Time constraint

Non-availability ofinformation

Scope of research formismanagement in

the operations ofDepositoryParticipants is quitevast.

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Founded 2000 As Indiabulls FinancialServices Ltd.

Founded by Sameer Gehlaut, Rajiv Rattanand Saurabh Mittal.

Indiabulls Group has a combined networth of more than $2 billion and marketcap of more than $7 billion.

ISL before its demerger in 2008, was asubsidiary of IBFSL.

Listings in NSE, BSE and Luxembourg StockExchange.

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Business Superbrand by The Brand

Council, Superbrands India.

First brokerage house to be assigned thehighest rating BQ 1 by CRISIL.

Network of 122 branches across 60 cities and

services more than 630,000

clients.

Real estate, Infrastructure, Financial

services, Securities, Retail, Multiplex

& Power.

Depository participant with the NSDL

& CDSL.

Goal ofCreating a world of smart investors.

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Value-added Services

Dedicated

service branch

and Relationshipmanager

Power Indiabulls

(PIB)

Online PaymentGateways

IPOs

Portfolio Tracker

Equity Analysis

Report

Mobile Power

Indiabulls (MPIB)

Security Token

ElectronicContract Notes on

Email

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29.88%

68.08%

2.04%

SHARE HOLDING PATTERN

PROMOTER &PROMOTER GROUP

PUBLIC

SHAREHOLDING

CUSTODIANS

Source: Indiabulls website

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Business UpdateQ1 FY 2011 compared to Q4 FY 2010(QoQ)

Total Revenue up by 16% to Rs. 89.11Crores in Q1 FY 2011 from Rs.

76.70Crores in Q4 FY 2010

Profit After Tax up by 366% to Rs. 13.15Crores in Q1 FY 2011 from

Rs. 2.82Crores in Q4 FY 2010

Total Expenses to Total Revenue down to 78% in Q1 FY 2011 from94% in Q4 FY 2010

Basic EPS Rs. 0.57 in Q1 FY 2011 compared to Rs. 0.12 in Q4 FY 2010

Source: Indiabulls website

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0

10000

20000

30000

40000

50000

60000

70000

2006-072007-08

2008-092009-10

INCOME

INCOME

SourceSource:: AnnualAnnual ReportsReports

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EXPENDITURE

0

5000

0000

5000

20000

25000

30000

35000

40000

45000

2006-07 2007-08 2008-09 2009- 0

Source: Annual ReportsSource: Annual Reports

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-5000

0

5000

10000

15000

20000

25000

30000

2006-07 2007-08 2008-09 2009-10

NET PROFIT

Source: Annual ReportsSource: Annual Reports

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Depository

An organisation which holds securities (like

shares, debentures, bonds, government

securities, mutual fund units etc.) of investorsin electronic form at the request of the

investors through a registered Depository

Participant.

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BANK-DEPOSITORY AN ANALOGY

BANK

Holds funds in an

account

Transfers funds

between accounts onthe instruction of the

account holder

Facilitates transferwithout having to

handle money

Facilitates safekeeping

of money

DEPOSITORYHolds securities in an

account

Transfers securities

between accounts on the

instruction of the BO

account holder

Facilitates transfer ofownership without having

to handle securities

Facilitates safekeeping of

securities

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Depository Participant

A Depository Participant (DP) is an agent of

the depository through which it interfaces

with the investor and provides depositoryservices

To avail the services of a depository aninvestor is required to open a Beneficial

Owner (BO) account with a Depository

Participant (DP) of any depository.

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SEBI guidelines, financialinstitutions, banks, custodians, stock brokers etc canbecome DP with a Depository.

SEBI (D&P) Regulations, 1996 prescribe a minimum networth of Rs. 50 lakh. If a stockbroker seeks to act as a DPin more than one depository, he should comply with thespecified net worth criterion separately for each suchdepository.

Every Depository Participant(DP) needs to be registeredunder this Depository before starting operation or trade inthe market.

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Currently there are two depositories

operational in the country

National Securities Depository Ltd. - NSDL -

Having 95lakhs. Demat A/c as on 31-03-2010

- 300 DPs in India

Central Depository Services Ltd. - CDSL -

Having 65lakhs Demat A/c as on 31-03-2010 -

500 DPs in India

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Benefits of availing Depository

Services

Instant transfer of securities

Stamp duty is not required on transfer of securities

Elimination of risks

Reduction in paperwork involved in transfer of

securities

Reduction in the cost of transaction

No odd lot problem, even one share can be sold

Facility of nomination

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Change in address recorded with DP gets

registered with all companies in which investorholds securities electronically eliminating the

need to correspond with each of them separately

Transmission of securities is done by DP

eliminating correspondence with companies

Holding investments in equity and debt

instruments in a single account.

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Operations

Account opening

Demat/Remat

Trading / Settlement

Pledging

Transaction Statement

Nomination

Account freezing and de-freezing

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Types of charges

Account opening fee

Account maintenance fee

Custody fee

Transaction fee

Demat/Remat charge

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Expenses in relation to DP operations

Entry fee

Annual fee

Custody feeFines and Penalties

Repair, maintenance and depreciation

Office expenses

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DepositoryAccount

Opening Charges

Account

Maintenance

Charges

BUY

Charges

SELL

Charges

SBI NILRs. 400/-

per year NIL

NIL for trade on'

SBICAP Securities,

else 0.03% (Min.

Rs.30/-)

SharekhanNIL

Rs. 300/- per

year

0.02%

Min. Rs. 15/-

0.04%

Min. Rs. 15/-

ICICI NIL Rs. 500/-per year NIL

NIL for trade on

ICICIDirect.com,else 0.04%

Min. Rs. 15/-

IndiabullsNIL

Rs. 250/- per

yearNIL

Rs.8 per

transaction

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Depository Dematerialisation Charges Rematerialisation Charges

SBI Rs. 35/- for each requestform, +Rs.2/- for each

certificate

Rs. 25/- for each requestform

SharekhanRs. 15/- per request OR Rs.

3/- per certificate, whichever

higher

Rs. 25/- or 0.12% of value,whichever higher

ICICI

Rs.35/- per request form +

Rs. 2/- per certificate Rs. 20/- per request form.

Indiabulls Securities LtdRs.1 per certificate+Rs.25

courier chargesRs. 15/- per request form

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DepositoryAdditional Statements

ChargesAccount Closing Charges

SBI By courier: Rs. 30/-,

By email: NILNIL

Sharekhan Rs.10/- upto 10 pages. Forevery extra page, Rs.3/-

Rs. 100/-

ICICI Rs. 20/- NIL

Indiabulls RS. 10/- NIL

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Findings

Provide better services to

customers

Demat-related IPO (initial public

offer) scam

Flouting of the `know your

customer' (KYC) norms

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Two things to consider to choose best

demat account i.e. Quality & PriceCode of governance is desirable at theinvestors level too.

Depository-level inspections areminimal. This activity should be doneon an ongoing basis with the help ofprofessionals.

Providing each marketplayer, including investors, with a

unique identification number cancheck many a market evil

a need to fix a ceiling on the numberof demat accounts one can have undereach pattern with one or more DPs.

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Regulatory Authority along

with the financial

intermediaries and

participants take the right

steps and go in the right

direction by removing the

flaws in the system, theIndian CapitalMarket can

go a long way.

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