A PROJECT REPORT ON UNDERSTANDING

DEPOSITORY SYSTEM
(With Fullerton securities and wealth advisors ltd)

SUBMITTED BY

TANIA SHARMA

In partial fulfillment for the award of the degree of MASTER IN BUSINESS ADMINISTRATION

RIMT- INSTITUTE OF MANAGEMENT AND COMPUTER TECHNOLOGY

PUNJAB TECHNICAL UNIVERSITY, JALANDHAR

2010

ACKNOWLEDGEMENT

Any report or analysis cannot be completed without the guidance, assistance, inspiration and co-operation from various quarters. This report also bears the inspiration of many persons. I take this opportunity to express my deep gratitude to all who helped me in the compilation of this report. I would like to express my gratitude to all those who gave me the possibility to complete this project. I want to thank MR. MOHIT SINGLA (Relationship Manager, Fullerton Securities & Wealth Advisors Ltd.), whose help, stimulating suggestions and encouragement helped me in all the time of writing my project and providing me with an opportunity to work with Fullerton Securities & Wealth Advisors Ltd. I also thank Miss. RAVNEET BHANGU (Faculty, Regional institute of management and technology) who has sincerely supported me with the valuable insights into the completion of this project and encouraged me to go ahead with my project. I want to thank all those who directly and indirectly helped me and have given me their insights and suggestions.

(TANIA SHARMA)

EXECUTIVE SUMMARY

For preparing the project report, I have visited the Fullerton securities and wealth advisors for 42 days during the suggested duration from 29-06-2010 to 10-08-2010, to avail the necessary information. I have filled up the questionnaire with the customers and employees of Fullerton securities and wealth advisors. The blend of learning and knowledge acquired during my practical studies at the company is presented in this project report. The project report starts with the research objectives, basic information regarding the research approach, the sample size for my research is 50 and I have used simple random sampling method for my research and the sources for data collection are both primary sources and secondary sources. I have written findings and some of the limitations which I have faced during my research work. I hope that the information incorporated in this project report would be appreciated as I have put in my efforts in leaving no stone unturned as I consider it to be true, fair and relevant in its content and context to the best of my knowledge and ability.

TABLE OF CONTENT

CHAPTER NO.

TITLE EXECUTIVE SUMMARY

PAGE NO. 3

1.

INTRODUCTION 1.1 Introduction to company-Fullerton 5-8 securities and wealth advisors. 1.2 Introduction to project Depository 9-39 system RESEARCH METHODOLOGY 2.1 Objectives of the study 2.2 Research Design DATA ANALYSIS AND INTERPRETATION FINDINGS AND SUGGESTIONS &LIMITATIONS CONCLUSION BIBLIOGRAPHY ANNEXURE 40-42 43-52 53-56 57 58 59-60

2.

3. 4. 5. 6. 7.

COMPANY INTRODUCTION

FULLERTON SECURITIES AND WEALTH ADVISORS LTD

Fullerton Securities & Wealth Advisors Limited is a company registered under Indian Company Law, incorporated on 8th February 2008 and was launched on 6th April, 2009 with 10 Financial Centre across 9 cities in India.. Fullerton Securities & Wealth Advisors Limited provides a complete range of financial products and services that include equity broking (internet based online trading as well as offline trading), financial planning, insurance, investment products, equity research and more. Recently it has acquired 5% stake in NSE. Fullerton Financial Holdings Pte. Ltd. already has a presence in India through Fullerton India Credit Company Limited, targeting the mass market segment. Fullerton Securities & Wealth Advisors Limited will target different segments i.e. mass affluent customers across cities in India. Fullerton Securities & Wealth Advisors ltd is a wholly owned subsidiary of Temasek Holdings, an Asia investment firm, headquartered in Singapore, focused on creating and maximizing long-term shareholder value as an active investor and shareholder of successful enterprises. Temasek Holdings is an Asia investment house, managing a portfolio of over S$185billion or US$134 billion. Guided by an independent board, they operate autonomously on commercial principles to maximize long term shareholder returns. Rated AAA / Aaa by Standard & Poors and Moodys, respectively Diversified portfolio in a wide range of industries Telecommunications & Media : SingTel, Bharti Airtel, Global Crossing Financial Services : DBS, Standard Chartered Bank, Merrill Lynch, Barclays Real Estate : Capital Land, Mapletree Transportation & Logistics Singapore Airlines, Neptune Orient Lines, PSA Energy & Resources Singapore Power, Senoko Power, Powerseraya Infrastructure, Industrial & Engineering Keppel Corporation, Sembcorp Technology Chartered Seminconductor, StatsChipPAC Respectable returns to shareholder over last 34 years Total shareholder returns of more than 18% per annum since inception 34yrs ago 100% owned by the Minister of Finance of Singapore.
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Fullerton Securities Board of directors

Francis Rozario, Chairman Francis Rozario is currently the Executive Director and CEO of Fullerton Financial Holdings Pte Ltd. Prior to his current appointment, Mr Rozario was the President Director of Bank Danamon... Rajeev Kakar, Director Rajeev Kakar is the Executive Vice President & Regional CEO, for the Central Europe, Middle East & Africa (CEEMEA) region for Fullerton Financial Holding, Executive Director & CEO, for Dunia Finance LLC and Global Management Board Member, for Fullerton Financial Holdings Pallav Sinha, MD & Chief Executive Officer Pallav Sinha is currently the Managing Director and Chief Executive for Fullerton Securities & Wealth Advisors Limited, India. He has over 20 years of professional working experience in the banking... Tej Pal Singh Hora, Director Tejpal Singh Hora is currently the group head for Risk Management in Fullerton Financial Holdings and has more than 41 years of banking experience, having worked with Citibank for 35 years before joining Fullerton... Sng Seow Wah, Director Mr Sng is currently Executive Vice President and Head of Human Resources, Special Projects & Corporate Communications at Fullerton Financial Holdings. Mr Sng is a seasoned banker with more than 24 years...

Our philosophy: Baat faayde ki

It is one thing to ask them what they need out of their wealth and get them talking. It is quite another to really listen to them, to create new possibilities and truly unfold and expand their horizons. At Fullerton Securities, this very act of listening actively is at the root of who we are and the seed of the outstanding broking services we offer them.

The Fullerton Securities Broking Advantage

Tired of being on the listening side with your financial advisor at all times? Not getting your broker to listen to you your side of the story, your needs and financial requirements?
7

Take a look at Fullerton Securities. Whether you need a little support from your broker or a lot, we at Fullerton Securities listen to you and help you gain by delivering an extensive array of state-of-the-art tools, straightforward pricing and outstanding personal service. With us, you can enjoy a personal relationship with investment professionals. We see investing from your perspective and make recommendations based on actually listening to you and understanding your needs. It's not just about the lowest-priced trade or the latest hot stock tip. It's about getting more for your money in terms of a long-term, consistent performance. Fullerton offers you quality personal service, remarkable investing and trading insights at a great price. Fullerton has solutions for the full spectrum of investors for those just starting out to sophisticated active investors to clients seeking investment advice. While other brokerage houses offer you a plain vanilla, one size fits all, 'trading' or 'broking' account, we offer you Fullerton Financial Broking Advantage tailored to your requirements. Fullerton Securities plans to offer maximum value and an integrated offering through:
A need based & relationship centric approach Online view of entire relationship through performance measurement tools Dedicated touch points Call Centre, Website & Financial Centers Support team of RM's and Product Sales Specialists Superior advisory and execution capability Offering a full range of 3rd party & proprietary financial products Certified and trained RMs, to offer competent, problem free and timely service with empathy & care, while ensuring suitability to customer needs at all times.

The product range includes:

Financial Planning Equity Account F&O Investment Products - Mutual Funds, GOI Bonds & Company Fixed Deposits Life Insurance Health Insurance Vehicle Insurance Home Insurance Travel Insurance Equity Research 8

INTRODUCTION TO DEPOSITORY SYSTEM

INTRODUCTION One of the biggest problems faced by the Indian capital market has been the manual and paper based settlement system. Under this system, the clearing and settlement of transaction take place only with the use of paper work. The system of physical delivery of scrips poses many problems for the purchaser as well as the seller in the form of delayed settlements, long Settlement periods, high level of failed trade, high cost of transaction, bad deliveries etc. In many Cases transfer process takes much longer time then two month as stipulated in section 113 of Companies Act, 1956 or section 22 A of the securities Contracts (Regulations) Act, 1956. Moreover, a large number of transactions end up as bad deliveries due to faulty compliance of paper work, mismatch of signatures on transfer deeds with specimen record of the issuer or other Procedural reasons. Besides, theft, forgery, multination of certificates and other irregularities have also become rampant. However, as a consequence of implementation of reforms measures, the Indian capital market has shown rapid growth in the recent past with foreign investors, more stock exchanges and increased market intermediaries. The old manual system of settlement and transfer has almost failed to handle the growing volume of paper that has loaded the market. Thus, to eliminate paperwork, facilitate scrip less trading and electronic book entry of the transfer of securities, shorten settlement periods, and to improve liquidity in the stock market, it was found necessary to replace the old system of transfer and settlement with the new and modern system of depositories. Accordingly the government of India enacted the depositories Act in 1996 for the orderly growth and development of the Indian capital market. It is a system whereby the transfer and settlement of scrips take place not through the traditional method of transfer deeds and physical delivery of scrips but through the modern system of effecting transfer of ownership of securities by means of book entry on the ledgers or the depositary without the physical movement of scrips. The new system, thus, eliminates paper Work; facilities automatic and transparent trading in scrips, shortens the settlement period and ultimately contributes to the liquidity of investment in securities. The system is also known as scriples trading system. There are essentially four players in the depository system: The Depositary participant The Beneficial owner/investor The issuer The depositary

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The depository: The depository holds the securities of the investors in the form of electronic book entries (dematerialized form). It maintains ownership records of securities and effects transfer ownership through book entry. The depository participant: The depository cannot deal with millions of investors directly. It appoints agents called depository participants who open and maintain accounts. It is similar to the branch of a bank. You can open account in any branch of a bank. Beneficial owner: By fiction of law, the depository is registered owner of the securities held with it with the limited purpose of effecting transfer of ownership at the behest of the owner. The name of the depository appears in the records of the issuer as registered owner of securities. The name of actual owner appears in the records of the depository as beneficial owner. The beneficial owner has all the rights and liabilities associated with the securities. The owner of securities intending to avail of depository services opens an account with a depository through a depository participant (DP). The securities are transferred from one account to another through book entry only on the instructions of the beneficial owner. The issuer: It is the company which issues the security. WHAT IS DEPOSITORY Electronic revolution has brought about a number of changes in the functioning of Indian capital market. The most revolutionary change that was brought in the entire history of the Indian market is the introduction of depository. The century old Indian market has been vibrant all along but its paper- based settlement of trades caused problems like bad delivery, delayed transfers etc., until the enhancement of depository act in 1996. The depository model in India is a competitive multi depository system in India the system of dematerialization is followed, wherein the securities will be cancelled as against the system of immobilization in which the securities are kept in custody. A depository is an organization where the securities of an investor are held in electronic form and carries out the securities transaction by book entry. A depository is a file or set of files in which data is stored for the purpose of safekeeping or identity authentication. A common example is the set of personal data files at a credit reporting agency such as Equifax. Another example is the data contained at a state motor vehicle department. In a biometric security system, a depository contains data about people's physical characteristics such as iris prints and finger images.

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Additional information may be added, including facial characteristics, voice prints, and hand prints. When a person's identity must be verified, one or more biometric samples are taken in real time, and this data is compared with the data in the depository. In general information storage applications, a depository are a physical site where data is kept in the form of hard copies, magnetic disks, magnetic tapes, compact disks (CDs), and similar media. A good example is the safe deposit vault in a financial institution. An ideal depository is secure, in the sense that only authorized persons or institutions can gain access to the data it contains. However, experience has shown that many depositories, no matter how secure they claim to be, can be compromised by a determined hacker or thief. Number of Depositories in India National securities depositary Ltd. (NSDL) Central depositary services (India) Ltd. (CDSL)

NSDL was formed and registered under the companies act 1956 during December 1995 and commenced operations during november1996. NSDL was promoted by Industrial Development Bank of India (IDBI)-the largest development bank in India, Unit trust of India (UTI)-the largest mutual fund in India and National stock exchange (NSE)-the largest stock exchange in India. Some of the prominent banks in the country also have a stake in NSDL. Central Depository services (India) limited which commenced operations during February 1999.CSDL was promoted by stock exchange, Mumbai in association with Bank of Baroda, Bank of India, State Bank of India and HDFC Bank.

Although India had a vibrant capital market which is more than a century old, the paperbased settlement of trades caused substantial problems like bad delivery and delayed transfer of title till recently. The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market.

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Promoters/Shareholders NSDL is promoted by Industrial Development Bank of India Limited (IDBI) - the largest development bank of India, Unit Trust of India (UTI) - the largest mutual fund in India and National Stock Exchange of India Limited (NSE) - the largest stock exchange in India. Some of the prominent banks in the country have taken a stake in NSDL. Promoters

Industrial Development Bank of India Limited Unit Trust of India National Stock Exchange of India Limited

Other Shareholders

State Bank of India Oriental Bank of Commerce Citibank NA Standard Chartered Bank HDFC Bank Limited The Hong Kong and Shanghai Banking Corporation Limited Deutsche Bank Dena Bank Canara Bank Union Bank of India FRAMEWORK

LEGAL

As a part of its on-going market reforms, the Government of India promulgated the Depositories Ordinance in September 1995. Based on this ordinance, Securities and Exchange Board of India (SEBI) notified its Depositories and Participants Regulations in May 1996. The enactment of the Depositories Act the following August paved the way for the launch of National Securities Depository Ltd. (NSDL) in November 1996. The Depositories Act has provided dematerialization route to book entry based transfer of securities and settlement of securities trade. SERVICES PROVIDED BY NSDL Account Maintenance To avail of the various services offered by NSDL an investor/ a broker/ an approved intermediary (for lending & borrowing) has to open a NSDL depository account with any of its DPs

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DEPOSITORY ACCOUNTS ARE OF THREE TYPES:

a. Beneficiary account: An investor who wants to hold securities in dematerialized (Demat) form and receive or deliver securities by interaccount transfers must have a depository account called beneficiary account with a DP of his choice. b. Clearing member account: Member brokers of those stock exchanges which have established electronic connectivity with NSDL need to open a clearing member account, with a DP of his choice, to clear and settle trades in the Demat form. This account is popularly known as Settlement account or "Pool account". This account is meant only to transfer securities to and receive securities from the clearing corporation/ house and hence, the member broker does not have any ownership (beneficiary) rights over the shares held in such an account. c. Intermediary account: Any person choosing to act as an approved 'intermediary' for stock lending and borrowing needs to open an intermediary account with any DP of his choice. An intermediary account may be opened with the DP only after the intermediary has obtained registration from the Securities & Exchange Board of India and with the prior approval of NSDL. This account is meant only to deposit the securities received from the lender and lend them to the borrower under stock lending and borrowing scheme. The intermediary does not have any ownership (beneficiary) rights over the shares held in such an account. CORPORATE

ACTIONS

Corporate actions are benefits given by a company to its investors. These may be either monetary benefits like dividend, interest or non-monetary benefits like bonus, rights, etc. NSDL facilitates distribution of corporate benefits. a) Monetary benefits (dividends etc): NSDL will give the beneficiary ownership details to the Issuer/R & T Agent. The Issuer/R & T Agent will carry out the necessary processing and the distribution of such benefits will be outside the system. b) Non-monetary benefits (rights bonus etc): NSDL will give the beneficiary ownership details to the Issuer/ R & T Agent. The Issuer/R & T Agent will carry out the necessary processing and upload the beneficiary ownership details to NSDL. NSDL will then credit the beneficiary owners' accounts by downloading the data to the DPs.

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INTERNET BASED FACILITIES a. SPEED-e NSDL launched SPEED-e (pronounced as speedy) in September, 2001. Any Participant of NSDL can subscribe to SPEED-e, the common infrastructure of NSDL. SPEED-e enables Demat account holders (including Clearing Members) to submit delivery instructions directly on the Internet through SPEED-e. SPEED-e is available only to those Participants who have subscribed to it and the Users sign an agreement with the Participant. A Demat account holder will have the option of accessing SPEED-e either as a Password User or as a Smart Card User. A Clearing Member must be a Smart Card User to be able to access SPEED-e. Password Users can debit their Demat accounts only in favor of specified Pre-Notified Clearing Member accounts (up to three), while Smart Card Users can submit instructions in favor of any number of accounts. b. IDEAS IDEAS (Internet-based Demat Account Statement) is the facility for viewing balances and transactions in the Demat account updated on an online basis with a delay of maximum 30 minutes. This facility is available to the Users of SPEED-e, Clearing Members who have subscribed to IDEAS and to those clients whos Participants are registered for IDEAS. A Demat account holder or a Clearing Member will have the option to access IDEAS either as a Password or a Smart Card User.

INTER-DEPOSITORY TRANSFERS Transfer of securities from an account in one depository to an account in another depository is termed as an inter-depository transfer. This facility is quite similar to the account transfers within NSDL. 1. It can be done only for securities that are available for dematerialization on both the depositories. 2. The account in NSDL can be either a clearing account or a beneficiary account. 3. For debiting the clearing account or the beneficial account with NSDL, the form for "Inter-depository delivery instruction" is required to be submitted by the clearing member/beneficial owner to its DP.
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4. For crediting the clearing account or the beneficial account, the standing instruction given for automatically crediting the account is applicable. In case the standing instructions are not given, then the form for "Inter-Depository Receipt Instruction" is required to be submitted by the clearing member/beneficial owner to its DP. 5. As both the depositories are connected to each another, the batches to effect inter - depository transfers are presently exchanged on each working day. 6. Online transfer of inter depository instructions has commenced w.e.f December 14, 2002. In the online inter depository transfer (OLIDT) module, Inter Depository Transfer instructions for the day will be exchanged online between the two depositories. Thus, the instructions executed by DPs may get settled at shorter intervals. 7. The deadline time for DPs to verify & release Inter Depository Transfer delivery/ receipt instructions is 6 p.m. on weekdays and 2.30 p.m. on Saturdays. 8. The Issuer/Registrar & Transfer Agent is informed about the transfer by both the depositories and it amends its records accordingly. 9. Government securities cannot be transferred from one depository to another using this facility.

Central Depository Services (India) Limited

The Central Depository Services India Limited (CDSL) was established in 1999 and is second securities depository in India. Its objectives to provide convenient, dependable and secure depository services and facilitates holdings of Demat (securities in electronic form).Its networks covers 100 cities and offers always on connectivity to around 500 centres nationwide. The company has handled Demat for over 8000 million securities settlements. The number is still growing and will continue since the government plans to phase out physical trading of shares. Some of the important milestones of CDSL system are: CDSL received the certificate of commencement of business from SEBI in February, 1999
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 Honorable Union Finance Minister, Shri Yashwant Sinha flagged off the operations of CDSL on July 15, 1999. Settlement of trades in the Demat mode through BOI Shareholding Limited, the clearing house of BSE, started in July 1999. All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi stock Exchange; The Stock Exchange, Ahmadabad, etc have established connectivity with CDSL. As at the end of Dec 2007, over 5000 issuers have admitted their securities (equities, bonds, debentures, and commercial papers), units of mutual funds, certificate of deposits etc. into the CDSL system.

NUMBER AND NEED CDSL connects to 372 depository participants (DPs) nationwide through its network. Every branch has access to companys online database. A minutes downtime will severally affect the daily operations of the capital market. To ensure efficient operations that is reliable and able to support the growing number of users. CDSL has to strengthen its network elements like connectivity applications and hardware.

Shareholders of CDSL
CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of India, Bank of Baroda, and State Bank of India and HDFC Bank. BSE has been involved with this venture right from the inception and has contributed overwhelmingly to the fruition of the project. The initial capital of the company is Rs.104.50 crores. The list of shareholders with effect from 11th December, 2008 is as under

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LIST OF SHAREHOLDERS
Sr. No. Name of shareholders Value of holding (in Rupees Lacs) 3,825.46 1,000.00 1,000.00 1,000.00 1,500.00 750.00 674.46 200.00 200.00 200.00 % terms to total equity

1 Bombay Stock Exchange Limited 2 Bank of India 3 Bank of Baroda 4 State Bank of India 5 HDFC Bank Limited 6 Standard Chartered Bank 7 Canara Bank 8 Union Bank of India 9 Bank of Maharashtra 10 The Jammu and Kashmir Bank Limited 11 The Calcutta Stock Exchange Association Limited 12 Others TOTAL

36.61 9.57 9.57 9.57 14.36 7.18 6.45 1.91 1.91 1.91

100.00

0.96

0.08 10,450.00

-100.00

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BENEFITS PROVIDED BY CDSL Convenience: Wide DP Network: CDSL has a wide network of DPs, operating from over 6000 sites, across the country, offering convenience for an investor to select a DP based on his location. On-line DP Services: The DPs are directly connected to CDSL thereby providing on-line and efficient depository service to investors. Competitive Fees Structure: CDSL has kept its tariffs very competitive to provide affordable depository services to investors. Internet Access: A DP, which registers itself with CDSL for Internet access, can in turn provide Demat account holders with access to their account on the Internet.

Dependability: On-line Information to Users: CDSL's system is built on centralized database architecture and thus enables DPs to provide on-line depository services with the latest status of the investor's account. Convenient to DPs: The entire database of investors is stored centrally at CDSL. If there is any system-related issues at DPs end, the investor is not affected, as the entire data is available at CDSL. Audit and Inspection: CDSL conducts regular audit of its DPs to ensure compliance of operational and regulatory requirements.

Security: Computer Systems: All data held at CDSL and is automatically mirrored at the Disaster Recovery site and is also backed up and stored in fireproof cabinets at the main and disaster recovery site. Unique BO Account Number: Every BO in CDSL is allotted a unique account number, which prevents any erroneous entry or transfer of securities. If the transferor's account number is wrongly entered, the transaction will not go through the CDSL system, unless corrected. Data Security: All data and communications between CDSL and its users is encrypted to ensure its security and integrity.
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COMPARISON BETWEEN NSDL AND CDSL

NSDL NSDL refers to National Securities Depository Limited. CDSL CDSL refers to Central Depository Services Limited.

The number of accounts operated by NSDL per day is about 400.

The number of accounts operated by CDSL per day is about 200.

NSDL provides internet facility by charging the requisite charges from clients.

CDSL provides internet facility free of cost at request of customer.

Number of depositories registered in NSDL is about 500.

Number of depositories registered in CDSL is about 330.

Number of certificates generated by NSDL per day is about 1, 05,000.

Number of certificates generated by CDSL per day is about 50000.

The DP-ID by NSDL is alphanumeric.

The DP-ID by CDSL is numerical only.

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WHAT IS DEPOSTORY SYSTEM The erstwhile settlement system on Indian stock exchanges was also inefficient and increased risk, due to the time that elapsed before trades were settled. The transfer was by physical movement of papers. There had to be a physical delivery of securities -a process fraught with delays and resultant risks. The second aspect of the settlement relates to transfer of shares in favor of the purchaser by the company. The system of transfer of ownership was grossly inefficient as every transfer involves physical movement of paper securities to the issuer for registration, with the change of ownership being evidenced by an endorsement on the security certificate. In many cases the process of transfer would take much longer than the two months stipulated in the Companies Act, and a significant proportion of transactions would end up as bad delivery due to faulty compliance of paper work. Theft, forgery, mutilation of certificates and other irregularities were rampant. In addition, the issuer has the right to refuse the transfer of a security. All this added to costs and delays in settlement, restricted liquidity and made investor grievance redressed time consuming and, at times, intractable. To obviate these problems, the Depositories Act, 1996 was passed. It provides for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed, accuracy and security. It does so by (a) making securities of public limited companies freely transferable, subject to certain exceptions; (b) Dematerializing the securities in the depository mode; and (c) providing for maintenance of ownership records in a book entry form. In order to streamline both the stages of settlement process, the Act envisages transfer ownership of securities electronically by book entry without making the securities move from person to person. The Act has made the securities of all public limited companies freely transferable, restricting the company's right to use discretion in effecting the transfer of securities, and the transfer deed and other procedural requirements under the Companies Act have been dispensed with. Two depositories, viz., NSDL and CDSL, have come up to provide instantaneous electronic transfer of securities. In any stock exchange, trades or transactions have to be settled by either squaring up the carrying forward positions or settling by payment of net cash or net delivery of securities. This account settlement period, if it is long, leads to several price distortions and allows for market manipulation. It increases the chances of speculation resulting in volatility, which hurts the small investors. With the application of IT in the securities market - screen-based trading and trading through the Internet - it has been possible to reduce this settlement period.

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Legal Framework of depositary system The operations of the depositories are primarily governed by the Depositories Act, 1996, Securities and Exchange Board of India (Depositories & Participants) Regulations, 1996, Bye- Laws approved by SEBI, and Business Rules framed in accordance with the Regulations and Bye-Laws. The Depositories Act passed by Parliament received the President's assent on August 10, 1996. It was notified in a Gazette on August 12 of the same year. The Act enables the setting up of multiple depositories in the country. This was to see that there is competition in the service and there is more than one depository in operation. At present, two depositories are registered with SEBI - The National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Only a company registered under the Companies Act, 1956 and sponsored by the specified category of institutions can set up a depository in India. Before commencing operations, depositories should obtain a certificate of registration and a certificate of commencement of business from SEBI. The rights and obligations of depositories, depository participants, issuers and beneficial owners are spelt out clearly in the Depositories Act 1996. As per the Act:

Section 4: DP is an agent of the Depository: A DP is an agent of the depository, who provides various services of the depository to investors. The DP has to enter into an agreement with the depository to this effect. Any investor who would like to avail the services of a depository has to enter into an agreement with any DP of his choice. The DP will then make the depository services available to the investor. Section 7: Free Transferability: The securities held by an investor in the depository are freely transferable from one beneficial owner to another. Section 8: Option to hold securities in Demat form: In the depository system, every investor subscribing to securities offered by an issuer has an option to receive the same in physical form or dematerialized form. If an investor opts for receiving the securities in dematerialized form, the issuer intimates the depository the details of allotment of security. On receipt of this information, the depository enters the name of the allot tee as the beneficial owner of that security in its record.

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Section 9: Securities held in a depository are fungible: All securities held by the depository are in dematerialized and fungible form. Section 10: Registered Owner and Beneficial Owner: The depository is deemed to be the registered owner for the purpose of effecting transfer of ownership of security on behalf of a beneficial owner. But as a registered owner, it does not have any voting rights or any other rights in respect of those securities. The beneficial owner is entitled to all rights and benefits as well as subject to all liabilities in respect of his securities held in the depository. Section 14: Option to opt out of depository: A beneficial owner may opt out of a depository in respect of any security by requisite intimation to the depository. Section 16: Depository to indemnify losses: A depository shall indemnify a beneficial owner, any loss caused due to negligence of the depository or its participant.

Eligibility Criteria for a Depository - Any of the following may promote a depository:

1. A public financial Institution as defined in section 4A of the Companies Act, 1956; 2. A bank included in the Second Schedule to the Reserve Bank of India Act, 1934; 3. A foreign bank operating in India with the approval of the Reserve Bank of India; 4. A recognized stock exchange; 5. An institution engaged in providing financial services where not less than 75% of the equity is 6. held jointly or severally by these institutions; 7. A custodian of securities approved by Government of India, and 8. A foreign financial services institution approved by Government of India.

The promoters of a depository are also known as its sponsors. A depository company must have a minimum net worth of Rs. 100 crore. The sponsor(s) of the depository have to hold at least 51% of the equity capital of the depository company. Participants of that depository, if any, can hold the balance of the equity capital. However, no single participant can hold, at any point of time, more than 5% of the equity capital. No foreign entity, individually or collectively either as a sponsor or as a DP, or as a sponsor and DP together, can hold more than 20% of the equity capital of the depository
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Registration As per the provisions of the SEBI Act, a depository can deal in securities only after obtaining a certificate of registration from SEBI. The sponsors of the proposed depository should apply to SEBI for a certificate of registration in the prescribed form. On being satisfied with the eligibility parameters of a company to act as a depository, SEBI may grant a certificate of registration subject to certain conditions.

Commencement of Business A depository that has obtained registration as stated above can function only if it obtains a certificate of commencement of business from SEBI. A depository must apply for and obtain a certificate of commencement of business from SEBI within one year from the date of receiving the certificate of registration from SEBI. SEBI grants a certificate of commencement of business if it is satisfied that the depository has adequate systems and safeguards to prevent manipulation of records and transactions. SEBI takes into account all matters relevant to the efficient and orderly functioning of the depository. It particularly examines whether: 1. The depository has a net worth of not less than Rs. 100 crore; 2. The Bye-Laws of the depository have been approved by SEBI; 3. The automatic data processing systems of the depository have been protected against unauthorized access, alteration, destruction, disclosure or dissemination of records and data; 4. The network, through which continuous electronic means of communication are established between the depository, participants, issuers and issuers' agents, is secure against unauthorized entry or access. 5. The depository has established standard transmission and encryption formats for electronic communication of data between the depository, participants, issuers and issuers' agents; 6. The physical or electronic access to the premises, facilities, automatic data processing systems, data storage sites and facilities including back-up sites, and to the electronic data communication network connecting the DPs, issuers and issuers' agents is controlled, monitored and recorded; 7. The depository has a detailed operational manual explaining all aspects of its functioning, including the interface and method of transmission of information between the depository, issuers, issuers' agents, DPs and beneficial owners; 8. The depository has established adequate procedures and facilities to ensure that its records are protected against loss or destruction and arrangements have been

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made for maintaining back-up facilities at a location different from that of the depository; 9. The depository has made adequate arrangements including insurance for indemnifying the beneficial owners for any loss that may be caused to such beneficial owners by the wrongful act, negligence or default of the depository or its participants or of any employee of the depository or participant; 10. The granting of certificate of commencement of business is in the interest of investors in securities market. Agreement between Depository and Issuers If either the issuer (a company which has issued securities) or the investor opts to hold his securities in a Demat form, the issuer enters into an agreement with the depository to enable the investors to dematerialize their securities.

No such agreement is necessary where: 1. Depository, is the issuer of securities, or; 2. The State or Central Government is the issuer of government securities. Where the issuer has appointed a registrar to the issue or share transfer, the depository enters into a tripartite agreement with the Issuer and Registrar & Transfer (R&T) Agent, as the case may be, for the securities declared eligible for dematerialization. At present, NSDL is discharging the responsibility of R&T Agent for the securities issued by State and Central Governments. Rights and Obligations of Depositories - Depositories have the rights and obligations conferred upon them under the Depositories Act, the regulations made under the Depositories Act, Bye-Laws approved by SEBI, and the agreements made with the participants, issuers and their R&T agents. Every depository must have adequate mechanisms for reviewing, monitoring and evaluating the depository's controls, systems, procedures and safeguards. It should conduct an annual inspection of these procedures and forward a copy of the inspection report to SEBI. The depository is also required to ensure that the integrity of the automatic data processing systems is maintained at all times and take all precautions necessary to ensure that the records are not lost, destroyed or tampered with. In the event of loss or destruction, sufficient back up of records should be available at a different place. Adequate measures should be taken, including insurance, to protect the interests of the beneficial owners against any risks.

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Every depository is required to extend all such cooperation to the beneficial owners, issuers, issuers' agents, custodians of securities, other depositories and clearing organizations, as is necessary for the effective, prompt and accurate clearance and settlement of securities transactions and conduct of business. The depository should indemnify beneficial owners of securities for any loss caused to them due to the negligence of the DP. However, where the loss is caused due to the negligence of a DP, the depository shall have the right to recover it from such DPs. Bye-Laws A depository is required to make Bye-Laws governing its operations. The Bye- Laws have to be in conformity with the Depositories Act and the regulations made there under, and need to be approved by SEBI before becoming effective. Depository Every depository is required to maintain the following records and documents. These have to be preserved for a minimum period of five years. 1. 2. 3. 4. 5. 6. 7. 8. 9. Records of securities dematerialized and rematerialized. The names of the transferor, transferee, and the dates of transfer of securities. A register and an index of beneficial owners. Details of the holdings of the securities of beneficial owners as at the end of each day. Records of instructions received from, and sent to, participants, issuers, issuers' agents and beneficial owners. Records of approval, notice, entry and cancellation of pledge or hypothecation. Details of participants. Details of securities declared to be eligible for dematerialization in the depository. Such other records as may be specified by SEBI for carrying on the activities as a depository.

Services of Depository A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. Any person willing to avail the services of the depository can do so by entering into an agreement with the depository through any of its participants. A depository can provide depository services only through a DP. A depository cannot directly open accounts and provide services to clients. Every depository in its Bye-Laws

26

must state which securities are eligible for Demat holding. Generally, the following securities are eligible for dematerialization: (a) Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate. (b) Units of mutual funds, rights under collective investment schemes and venture capital funds, commercial paper, certificates of deposit, securitized debt, money market instruments, government securities, national saving certificates, kisan vikas patra and unlisted securities. (c) Securities admitted to NSDL depository are notified to all DPs through circulars sent by mail. Investors are informed about these securities through NSDL's Website www.nsdl.co.in and NEST Update - a monthly newsletter of NSDL. Functions of Depository Dematerialization: One of the primary functions of depository is to eliminate or minimize the movement of physical securities in the market. This is achieved through dematerialization of securities. Dematerialization is the process of converting securities held in physical form into holdings in book entry form. Account Transfer: The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners. Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. For affecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of shares in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the instructions of the beneficial owners. Corporate Actions: A depository may handle corporate actions in two ways. In the first case, it merely provides information to the issuer about the persons entitled to receive corporate benefits. In the other case, depository itself takes the responsibility of distribution of corporate benefits. Pledge and Hypothecation: The securities held with NSDL may be used as collateral to secure loans and other credits by the clients. In a manual environment, borrowers are required to deliver pledged securities in physical form to the lender or its custodian. These securities are verified for authenticity and often need to be transferred in the name of lender. This has a time and money cost by way of transfer fees or stamp duty. If the
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borrower wants to substitute the pledged securities, these steps have to be repeated. Use of depository services for pledging/ hypothecating the securities makes the process very simple and cost effective. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository. Linkages with Clearing System: Whether it is a separate clearing corporation attached to a stock exchange or a clearing house (department) of a stock exchange, the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded on the stock exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. To achieve this, depositories and the clearing system should be electronically linked. Having understood the depository system, let us now look at the organization and functions of National Securities Depository Limited (NSDL). Benefits of depository system No risks associated with physical certificates such as loss of share certificate, Fake securities, Etc. No bad delivery. Faster settlement cycles. Low transaction cost for purchase and sale of securities compared to physical mode. Increase liquidity of securities Reduction of paper work Allotment of IPO, Bonus, Rights shares etc. in electronic form Wavier of stamp duty on transfer of securities Intimation like change of address, bank mandate, nomination, request of transmission, required to be given only to Depository Participant (DP) Irrespective of the number of companies in which shares held.

Facilities offered by depository system Dematerialization Rematerialization Electronic settlement of trades in stock exchanges connected to depositories.
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Pledging/hypothecation of dematerialized securities. Electronic credit of securities allotted in public, rights, bonus issue. Nomination facility. Freezing of De-mat accounts, so that the debits from the dematerialization are not permitted. Services related to change of address, nomination, mandate, transmission, etc. Other services viz. holding debt instruments in the same Demat account. Availing stock lending/borrowing facility, etc.

Safety features in the depository system To ensure safety to the investors the following measures exist Strict norms for becoming depository participant- Net worth criteria, SEBI approval etc. is mandatory. DP cannot affect ant debit or credit in the Demat account of the investor without the valid authorization of the investor. Regulation reconciliation between DP and the depositories. Periodic inspection by Depositories of the office of the DP and Registrar. All investors have a right to receive their statements of accounts periodically from the DP. In the depository system, the depository holds the investor accounts on trust. Therefore if the DP goes bankrupt the creditors of the DP will have no access to the holdings in the name of the clients of the DP. Compulsory internal audit of operations of DP by practicing company secretary of the chartered accountant every quarter. Various procedures for backup and safe keeping of data at all the levels.

SEBI has made compulsory trading of shares of all the companies listed in Stock Exchange in Demat form w.e.f 2 January 2002. Hence, if the investor wants to trade in respect of the companies, which have established connectivity with NSDL & CDSL, he may have to open a beneficiary account.
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Beneficiary account A beneficiary account is an account opened by the investor or a broker with a DP of his choice, to hold shares in dematerialized form and undertake scrip less trading Investor contacting the depository The investor must open a Demat account with a Depository Participant. Opening a Demat account with a DP is similar to opening an account with bank. The selection of DP is to be done by the investor based on fee payable, proximity, service levels, etc. DEPOSITORY PARTICIPANT Depository participant (DP) is the agent of the depository and is the interface between the depository and the investor. A DP can offer depository services only after it gets proper registration from SEBI. According to SEBI guidelines, financial institutions, bank custodians, stock brokers etc. can become depository participant. Stock Holding Corporation of India is the first participant in India registered with NSDL. IN order to avail the services of a depository an investor has to open an account with a depository through a DP just like a person maintaining the securities account of the investor and handling it in accordance with the investors instructions. Banking services can be availed through branches whereas depository services can be availed through DP. Both NSDL and CDSL have launched the facility for delivering instructions to DP over Internet, called SPEED-e and EASI respectively. The facility can be used by all registered users after paying the applicable charges.

FULLERTON SECURITIES AS A DEPOSITARY PARTICIPANT: Success is a journey, not a destination. If we look for example to prove this quote then we can find many but there is none like that of Fullerton securities. Its a one stop, customer centric organization, offering wealth advisory and broking services and end to end proprietary and 3rd party financial products from leading financial institutions. Subsidiary of Fullerton financial holdings, an Asian financial institution with investments and operations across 9 countries .Its a wholly owned subsidiary of Temasek hold ings, AN ASIAN INVESTMENT FIRM, and headquarters in SINGAPORE. Temasek holdings manages a portfolio of more than us dollar 120 billion, focused primarily in Asia and Singapore.

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ADVISORY SERVICES It delivers advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied. STOCK BROKING SERVICES It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing options with care. This is what Fullerton provides in its Stock Broking services. It offers services that are beyond just a medium for buying and selling stocks and shares. Instead it provides services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country. It offers trading on a vast platform; National Stock Exchange and Bombay Stock Exchange. More importantly, it makes trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. It is assisted in this task by our in-depth research, constant feedback and sound advisory facilities. Its highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to its customers. The daily technical report of Fullerton helps the customers in buying and selling decision related to shares. Its Stock Broking services are widely networked across India, with the number of its trading terminals providing retail stock broking facilities. Its services have increasingly offered customer oriented convenience, which it provides to a spectrum of investors, high-net worth or otherwise, with equal dedication and competence.

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OPENING DEMAT ACCOUNT introduction Demat refers to a dematerialized account. Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a Demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your Demat account. Lets say your portfolio of shares looks like this: 40 of Infosys, 25 of Wipro, 45 of HLL and 100 of ACC. All these will show in your Demat account. So you dont have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions. Nowadays, practically all trades have to be settled in dematerialized form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares any more. So a Demat account is a must for trading and investing Buying & Selling The procedure for buying and selling dematerialized securities is similar to the procedure for buying and selling physical securities. The difference lies in the process of delivery (in case of sale) and receipt (in case of purchase) of securities. In case of purchase:

The broker will receive the securities in his account on the payout day The broker will give instruction to its DP to debit his account and credit investors account

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Investor will give Receipt Instruction to DP for receiving credit by filling appropriate form. However one can give standing instruction

For credit in to ones account that will obviate the need of giving Receipt Instruction every time.

In case of sale:The investor will give delivery instruction to DP to debit his account and credit the brokers account. Such instruction should reach the DPs office at least 24 hours before the pay-in as otherwise DP will accept the instruction only at the investors risk. Documents required for opening Demat account For Demat account opening, the following documents are required to be given Demat account opening form duly filled. Address proof. Photograph Identity proof

Other formalities in Demat account opening Once a Demat account is opened, the investor must sign an agreement with the DP. The investor will be allotted an account no. known as client identity. The client identity number along with the DP identity number forms a unique combination. Both these numbers should be quoted in all the future dealing with Depositories /DP /RTA /Company. However in case of CDSL there is no DP identity and the 16-digit Client identity itself is a unique number. The investor must collect forms like dematerialization request form (DRF), Delivery instruction slips etc. Stock exchanges connected to the Depositories for Demat trading At present the following 10 stock exchanges are connected to the Depositories National Stock Exchange The Stock Exchange Mumbai Calcutta Stock Exchange
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Delhi Stock Exchange Ludhiana Stock Exchange Bang lore Stock Exchange Over the counter stock exchange of India Madras Stock Exchange Inter connected Stock Exchange Ahmadabad Stock Exchange. Demat Conversion

Dematerialisation: It is the process of conversion of physical scrips into electronic book entry form. It results in elimination of paper certificates.

NSDL
(depository)

2 6 3

Depository Participant 1

5 4 Registrar

7 Investor

In dematerialization process, investor surrenders defaced certificates along with Dematerialization Request Form to the depository participant. Depository participant intimates NSDL of the request through the system. Depository participant submits the certificates to the registrar. Registrar confirms the dematerialization request from NSDL. After dematerializing certificates, registrar updates accounts and informs NSDL of the completion of dematerialization. NSDL updates its accounts and informs the depository participant. Depository participant updates its accounts and informs investor. Converting physical holding into electronic holding (dematerializing securities) In order to dematerialize physical securities one has to fill in a DRF (Demat Request Form) which is available with the DP and submit the same along with physical certificates one wishes to dematerialize. Separate DRF has to be filled for each ISIN Number.
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The complete process of dematerialization is outlined below:

Surrender certificates for dematerialization to your depository participant. Depository participant intimates Depository of the request through the system. Depository participant submits the certificates to the registrar of the Issuer Company.

Registrar confirms the dematerialization request from depository. After dematerializing the certificates, Registrar updates accounts and informs depository of the completion of dematerialization.

Depository updates its accounts and informs the depository participant. Depository participant updates the Demat account of the investor.

Rematerialization
The process of converting electronic holdings (Demat shares) back into Physical Certificates is called Rematerialization. If one wishes to get back his securities in the physical form one has to fill in the RRF (Remat Request Form) and request his DP for Rematerialization of the balances in his securities account. The process of Rematerialization is outlined below;

One makes a request for Rematerialization. Depository participant intimates depository of the request through the system. Depository confirms Rematerialization request to the registrar. Registrar updates accounts and prints certificates. Depository updates accounts and downloads details to depository participant. Registrar dispatches certificates to investor.

Beneficial owner or shareholder submits a request to the DP for Rematerialization of its holdings in its account. DP is basically known to intimate NSDL or CDSL of

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the request electronically through the system. NSDL or CDSL is basically known to confirm Rematerialization request to the RTA. RTA is often known to update accounts and prints certificates. NSDL or CDSL updates accounts and downloads details to DPs. RTA dispatches certificates to investors. The question that is known to persist is that what the basic procedure for applying for a Duplicate Certificate is. The Shareholder has to first and foremost inform the Company of the loss of Share Certificate and file an FIR with the Police Station of his area reporting the loss of shares which describes the process of Rematerialization. Related to the process of Rematerialization it can well be said that a copy of the FIR accordingly attested in innovative has to be sent to the Company along with a letter, signed by the investor to allow us to send him the process for obtaining Shares which can well be termed as duplicate. Procedure of closure of Demat account An investor can close a Demat account by giving an application in prescribed form. In case there is any balance in the Demat account sought to be closed, the following steps are necessary1. Rematerialization of all securities standing to the credit of the Demat account at the time of making the application for the closure. 2. Transferring the balance to the credit of another Demat account, with the same participant or with a different participant.

WHY TO CHOOSE FULLERTON Technology: With their online trading account one can buy and sell shares in an instant from any PC with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares. Accessibility Fullerton provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible through many centers across the country over the Internet (through the website www.fullertonsecurities.com)
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Knowledge In a business where the right information at the right time can translate into direct profits, investors get access to a wide range of information on the content-rich portal, wwwfullertonsecurities.com. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions. Customer Service Its customer service team assists their customer for any help that they need relating to transactions, billing, Demat and other queries. Their customer service can be contacted via a toll-free number, email or live chat on www.fullertonsecurities.com. Investment Advice Fullerton has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc. NEST SOFTWARE: It is the software which is given to customers for doing the online trading. it is given to the customers free of cost , when they open Demat account with the Fullerton securities. this is the software which is set into the computer terminal and all the information related to each and every shares of the different companies flash on the screen and help the investors to get an full fledge idea in which shares they are need to invest Fullerton Freedom Account Investments are no more confusing! Presenting, Fullerton Freedom. An account that brings a world of customized investment offerings with a reasonable price tag of Rs. 1,995/-* Privileges

Complimentary Broking & Demat account Maximum Complimentary Turnover :Rs. 5 Lakhs of delivery turnover OR Rs. 50 Lakhs of Intraday/Futures/Options Special Reports (Sector/Economy/Event) every Quarter SMS Alerts Choice of Internet based online trading terminals Intraday Market View Access to browser based terminal Well researched investment ideas
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Java Applet with streaming quotes

Other Product Options

Benefit from Advantage Accounts

Fullerton Advantage Plan for tomorrow! Live for today! What would you say if there was a way that you could plan for your future, while enjoying financial and lifestyle benefits worth thousands today? What if this way also meant that you could receive complimentary insurance coverage? What if this way also meant that you could be sure of never missing out on an investment opportunity again? Introducing, the Fullerton Advantage Account. Were hoping you too will say, What a great way to plan for tomorrow and live for today!" At Fullerton, we believe in actively listening to you and offering you a no obligation Financial Plan to help you meet all your financial goals. Our unique Fullerton Advantage Account saves you time, through a one-time documentation process, so you are ready for any financial opportunity that arises. What's more, your relationship with us starts on a highly rewarding note.
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For the first time ever, you get complimentary insurance coverage up to Rs. 3 lacs, automatically with the Fullerton Advantage Account. This account also brings you great savings across your favorite brands in apparel, electronics, health and entertainment! So that while you plan for the future, youre current desires are not ignored. What's more, you also get ready-to-use investment, insurance & broking accounts with great savings on account opening fees (savings of up to Rs. 1100 per year!). Take a look at the 4 variants of the Fullerton Advantage Account and simply choose the one that matches your needs best.

Depository Charges

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RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Research Methodology refers to search of knowledge .one can also define research methodology as a scientific and systematic search for required information on a specific topic. The word research methodology comes from the word advance learner s

dictionary meaning of research as a careful investigation or inquiry especially through research for new facts in my branch of knowledge for example some author have define research methodology as systematized effort to gain new knowledge.

OBJECTIVES OF THE STUDY Primary objective

To get information about, the awareness of depository participant, NSDL, CDSL. To know about the investment level of different income group. To know the satisfaction level of customers towards the services provided by their concerned Companies.

Secondary objective
To know about depository system Over viewing of dematerialization and Rematerialization.

TYPES OF RESEARCH
ANALYTICAL RESEARCH: It has to used facts or information already available and analyzes these to make a critical evaluation of material. SAMPLE SIZE: Considering the constraints it was decided to conduct the study based on sample size of 50 people in specific age groups.

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METHODS OF DATA COLLECTION

In the project work Primary data secondary data (both) sources of data has been used: PRIMARY SOURCE: I have gathered information about our project from the interaction with the customers of our company i.e. Fullerton securities and wealth advisors. The sampling method used was basically convenience sampling and most of the calls made were cold calls made on the generated database of recipients of other companies. SECONDARY DATA: The secondary data, I have collected from the websites of Fullerton, various journals, magazines etc.

TOOL OF ANALYSIS In the project work, quantitative technique & percentage method has been used.

RESEARCH DESIGN

For the proper analysis of data simple quantitative technique such as percentage were used. It help in marketing more accurate generalization From the data available .The data which was collected from a sample of population was assumed to be representing entire population was interested .

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DATA

ANAYSIS AND

INTERPRETATION

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1. In which professions are you engaged in?

A. B. C. D. E. Business Service Professional Entrepreneur Others 14 10 11 5 10

A. Business B. Service C. Professional D. Entrepreneur E. Others

Profession
20% 28% Business Service Professional 22% 20% Entrepreneur others

10%

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2. In which income group do you fall?

A. B. C. D. E. Less than 1 Lakh 1 3 Lakh 3 5 Lakh 5 8 Lakh More than 8 Lakh 15 18 7 4 6

A. Less than 1 Lakh B. 1 3 Lakh C. 3 5 Lakh D. 5 8 Lakh E. More than 8 Lakh

Income Group
12% 8% 30% 1 - 3 lakh Less than 1 Lakh

14%

3 - 5 lakh

5 - 8 lakh

36%

More than 8 lakhs

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3. How much income are you able to invest?

A. B. C. D. E. 0-10% 10-20% 20-30% 30-40% >40% A. 0-10% B. 10-20% C. 20-30% D. 30-40% E. >40% 7 14 11 8 10

20%

14%

Savings
0 - 10% 10 - 20%

16%

28%

20 - 30% 30 - 40% >40%

22%

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4. You invest in which of the following financial instruments?

A. Securities B. Insurance C. Mutual fund D. Commodities E. Other Instruments A. Securities B. Insurance C. Mutual fund D. Commodities E. Other Instruments 18 15 7 4 6

Financial instruments
12% 8% 36% Securities Insurance 14% Mutual Funds Commodities Other Instruments 30%

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5. Do you have a Demat account? A. Yes B. No A. yes B. No 32 18

Demat A/C
36% With Demat A/C Without Demat A/C 64%

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6. Are you aware about Depository system?

A. Yes B. No

yes No

47 03

6%

DEPOSITORY SYSTEM

Yes No
94%

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7. Do have you sufficient knowledge about NSDL or CDSL?

A) Yes B) No C) To Some extend A) Yes B) NO C) To some extent 12 15 23

NSDLor CDSL
24%

Yes
46%

No to some extent
30%

50

8. In which depository company you make trading?

A) B) C) D) E) Share khan India bulls Fullerton ICICI direct.com Other

A) Share khan B) India bulls C) Fullerton D) ICICI direct.com E) Other

07 11 14 08 10

Depository company
30% 25% 20% 15% 22% 10% 14% 5% 0% Sharekhan Indiabulls fullerton ICICI direct.com Other 16% 28% 20%

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9. Are you satisfied with their services? A. Yes B. No

yes No 32 18

36%

Yes No 64%

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FINDINGS AND OBSERVATIONS To study the above Doughnut, Graph and pie charts I observe that the most of the people of Ludhiana have knowledge about depository system but they do not have a proper and basic knowledge about this vast concept only limited information is there. According to data anal ysis result represent below. 1.Among the 50 questionnaires filled, it was clear that among them maximum people falls in the category of Business i.e. 14 (28%). Thus Fullerton has the opportunity to capture this segment. 2.The data of second question speaks about the income group in which the people fall; most of the people fall in category of 1-3 lakh. 3. Among the 50 questionnaires filled, it was clear that among them maximum people invest in the category of 10-20%. Thus Fullerton has the opportunity to capture this segment. But people are not aware of the services so here Fullerton has to work in this area. 4. The observation speaks about the financial instruments in which the people invest; most of the people invest in the securities through DPs and then invest in the insurance. Thus more focus should be made on securities so that company has the maximum investment. This would ultimately increase the profits.

5. Among 50 respondents 32 (64%) actually have a Demat account and are aware of the dealings in stock trading. The rest 18 are still in the other category. So strategies should be made to convert these people in to our potential customers.

6. After analysis, it clear that only 03 (6%) respondents are not introduce with term depository system but majority is goes with yes option 47 (94%) .

7. Data of this question shows that only 12 respondents have a sufficient knowledge about CSDL and NSDL it means most of respondent have a no or only little bit knowledge about these two terms data says that 15 respondents go with no and 23 go with to some extent.

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8. The observation of this question explain that the share khan trading company is not popular in Ludhiana area because only 07 respondents are make trading with it, After that ICICI direct.com comes and get 08 votes, Fullerton get maximum votes 14 and 10 respondents making trading with other companies. In this question its clear that Fullerton is popular trading company in Ludhiana area.

9. It can be seen from the observations that there are customers who are not satisfied by the services given by the brokerage companies can be converted by providing better services to them. Sometimes even if the customers have the same or more investment then also, he is getting fewer services than the other one. So, Fullerton can convert them by providing better services to them.

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SUGGESTION
Awareness of functioning of this system should be spread to the public through advertisement. Proper feedback should be taken into consideration. For e.g. calls should be made when the account is opened. Aggressive efforts should be made by sales team to tap the potential customers and to increase the customer base. Customers should be made aware about the services like dematerialization, net banking, bill pay etc. an instruction manual telling about how to use their services can also be given to the customer to make these advanced services more popular

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LIMITATION

Whole area is not covered in this project so only 50 respondents are representative for complete area its not ideal data. Less awareness about this system in public is very critical block in this study. Some of the respondents do not give proper answer of questions.

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CONCLUSION

To conclude, it can be said that the research findings clearly reveal the goodwill and reputation of depository system among the customers. But there is a need to strengthen this depository system by spreading awareness about the services offered by NSDL, CSDL and its trading companies through advertisement and by expanding the more branches of this system all over the country and also by tapping the potential customers through innovative means.

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BIBLIOGRAPHY
http://www.fullertonfinancialholdings.com http://www.fullertonsecurities.co.in www.cdsl.co.in www.nsdl.co.in http://www.wikipedia.org/ www.moneycontrol.com www.rediff.com

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ANNEXURE 1. In which professions are you engaged in? A. B. C. D. E. Business Service Professional Entrepreneur Others

2. In which income group do you fall? A. B. C. D. E. Less than 1 Lakh 1 3 Lakh 3 5 Lakh 5 8 Lakh More than 8 Lakh

3. How much income are you able to invest? A. B. C. D. E. 0-10% 10-20% 20-30% 30-40% >40%

4. You invest in which of the following financial instruments? A. B. C. D. E. Securities Insurance Mutual fund Commodities Other Instruments

5. Do you have a Demat account? A. Yes B. No

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6. Are you aware about Depository system? A. Yes B. No 7. Do have you sufficient knowledge about NSDL or CDSL? A. Yes B. No C. To Some extend

60

61

8. In which depository company you make trading? A. B. C. D. E. Share khan India bulls Fullerton ICICI direct.com Other

9. Are you satisfied with their services? A. Yes B. No

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