Here, a depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry. The participant who as an agent of the depository offers depository services to the investors. In frame setup by SEBI guidelines like financial institutions, banks, custodians, stockbrokers are eligible to act as depository participant. The beneficial owner has to open a demat account through any depository participant for dematerialization of his holdings and transferring securities. In the investors account the balances are recorded and maintained with CDSL can be obtained through the depository participant.
The Depository participant is sneeded to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. Fake paper- based certificate is eliminated by the depository system which can be result in bad deliveries. A central depository service offers an efficient and instantaneous transfer of securities. Central depository services was promoted by BSE Ltd. jointly with different leading banks like State Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank and Union Bank of India. Central depository services was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants.
Some of the turning point of CDSL system:
- Received the certificate of commencement of business from SEB in February, 1999
- Honorable Union Finance Minister, Shri Yashwant Sinha flagged off the operation of CDSL on July 15, 1999
- BOI shareholding limited launches settlement of trades in demat mode which is a clearing house of BSE Ltd, started in July 1999
- All leading stock exchanges same way like National Stock Exchange like Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad have established connectivity with Central Depository Services
- At the end of Jan 2012 more than ten thousand issuers have admitted their securities like equities bonds, debentures, commercial papers, units of mutual funds, certificate of deposits etc into the Central depository services system