STOCK HOLDING CORPORATION OF INDIA

LIMITED

SUBMITTED TO- SUBMITTED BY-

DR. K.K. SHARMA SHAKUN JAIN
MBA III SEMESTER

RAJA BALWANT SINGH MANAGEMENT TECHNICAL

CAMPUS , KHANDARI-AGRA
 ACKNOWLEDGEMENT

Working in an organization as a trainee provides a medium to

look into and experience the practices and procedures of the corporate sector. The Stock
Holding Corporation of India Ltd. gave me a lot of exposure of the capital market. During my
training period I received unconditional help by every member of the Stock Holding
Corporation.

Firstly, I would like to express my gratitude to Director Sir, Dr. B.B. Singh Parihar and
to our Co-ordinator, Suboor Khan for their efforts to place me at SHCIL, Agra. I am equally
obliged to my entire faculty teacher for their support.

I am also thankful to Ms. Shachi Mishra (Branch Manager, SHCIL, Agra) for permitting me to
work as a trainee in SHCIL. My sincere thanks to Mr. Ranveer Singh (Executive, SHCIL) for
giving his whole hearted support during my training period and providing
me with valuable information.

Finally, I would like to thank my friends, customers of SHCIL and all the people who helped
me in the successful completion of my Project.
 PREFACE

In a professional course like MBA the significance of practical knowledge through summer
training is imperative as one gets an opportunity to learn about a wide range of corporate
activities.

Depositories in India till now have made a way for the elimination of market risk associated
with physical holding in the settlement of securities by providing a highly efficient clearing and
settlement system. Having pioneered dematerialization, Stock Holding Corporation of
India ltd. is the first Depository Participant (DP) which is registered with the National
Securities Depositories Ltd.

It has been my best and sincere effort to collect information from various sources to make this
project effective. Due to shortage of time I am unable to give a detailed report but I have tried
my level best to do justice.
 CONTENTS

S.NO Particulars PAGE NO.

1 Introduction To Stock Holding Corporation Of India Limited.

2 SHCIL- As A Depository

3 Products Offered By Shcil

4 Services Offered By Shcil

5 E-Stamping-Monopoly of Shcil

6 Customers’ view regarding stock holding

7 Swot analysis of Shcil

8 Lessons learnt from my Internship

9 Conclusion

10 Suggestions

11 Bibliography

12 Annexure
 CHAPTER- 1
INTRODUCTION TO STOCK HOLDING
CORPORATION OF INDIA LIMITED
 COMPANY PROFILE
Stockholding Corporation of India Ltd. (SHCIL) was incorporated under the Companies Act,
1956 on July. 28, 1986 at the initiative of the Government of India, with an authorized capital of
Rs. 25 cores and a paid up capital of Rs. 10.5 cores, subscribed by seven. All India financial
investment institution and insurance companies, viz. Industrial Development Bank of India
(IDBI) Unit Trust of India (UTI)Life Insurance Corporation of India (LIC)ICICI Ltd. Industrial
Finance Corporation of India Ltd (IFCI) Industrial Investment Bank of India (IIBI).

SHCIL was incorporated as a public limited company on July 28, 1986 and provide custodial
services to its investors and depository services to retail investors. SHCIL commenced
operations in August 1988 and has been providing custodial and related services of international
standards for nearly a decade to the promoter and other institutions, foreign institutional
investors (FII’s), commercial banks and mutual funds.

It is headed by luminaries from its promoter institutions who constitute its Board of Directors
and take policy decisions pertinent to the affairs of the Corporation. A senior management team
that reports to the managing director and the CEO aids, assists and strategies business lines for
the Corporation.

The primary focus of the Corporation was specific – to set up custodial services of international
standards in India and in the process to manage the entire array of post trade activities of
Financial Institutions and Foreign Institutional Investors with dedicated client relationship
teams and state –of-the-art reporting systems.
The corporation quickly generated nearly 70% market share of the domestic custodial business
and the financial figures shot up impressively for the first decade of its existence.

SHCIL began by offering custodial and post trading services adding depository services and
other services to its portfolio over a period of time.
SHCIL has established itself in India as a ones-top solution provider in the financial services
domain.

Stockholding acts as a Central Record Keeping Agency (CRA) for collection of stamp duty in
19 States and Union Territories on pan India basis. Stockholding is one of the largest
Professional Clearing Member of the country. Stockholding distributes GOI Bonds, Sovereign
Gold Bonds Fixed Deposits, Corporate Bonds & NCDS of reputed Institutes & Corporates,
Mutual Fund Schemes, Initial Public Offers (IPO’s) and National Pension System (NPS) etc.
Stockholding has its registered office at Parel, Mumbai, a world class main operations office at
Mahape, Navi Mumbai and operates through its 186 retail branches all over India. Stockholding
has been profit making and dividend paying company right from its inception. As on date, IFCI
holds 52.86% equity shareholding in stockholding, making it a subsidiary Company of IFCI.
 SHCIL Subsidiaries

 SHCIL Projects Ltd.

 SHCIL Services Ltd.
 SHCIL Ltd.
 SHCIL Commodities and Derivatives Trading Company Ltd.

Key Executives for Stockholding Corporation of India

 Mr. N. G. S. Ramesh CEO, MD and Executive Director)
 Mr. L. Viswanathan (Chief Operating Officer and Executive Vice President)
 Mr. Rohinton Hirji Mewawala( Chief Operating Officer and Executive Vice President)
 Mr. Sanjeev Vivrekar ( CEO, MD and Director of Stockholding Document Management
Services Limited.
 Mr. Nitin Jog (CEO of SHCIL Services Ltd, MD of Director of SHCIL Services Ltd and
Director of SHCIL Services Ltd.)

Address of the Head Office: Main Centre Point Unit No. 301 , 3rd Floor Dr. Babasaheb
Ambedkar Road Parel Mahape Mumbai,400012 .
 Vision of the Company

“To become one step shop for all financial services.”

This vision of the company is slowly being achieved with the foray of the company into new
financial services and products into its portfolio the latest to be Insurance product, which would
be soon distributed.

Mission Statement

“To be a world class technology driven and client focused market leader in financial and
technical services”
 Objectives of the Company

 To retain the No, 1 position in the DP industry by being ahead of all other DP service
providers with the innovative use of technology would be soon distributed.
 To provide justified service to every rupee the client pays.
 To ensure security and convenience of transaction to its client at reasonable price.
 Channel technology to make convenient products for financial market that give quantum
benefits to investors, corporate houses and brokers.
 To reach 37 million Internet users in the years to come with e-Commerce
projection scaling USD 1.7 billion.
 To move with speed and ease , diversifying into new areas considerably on
others and sharpening its focus and paradigms.
 To increase its customers base.
 To evolve a new strategy to emerge as a broad based financial powerhouse in
the years to come.
 To find ways to make information and reporting system more effective for the
institutional clients.
 To expand to the South-East Asia , with the aim of becoming the leader.

Basic Facts about SHCIL

 SHCIL is India’s largest depository system.
 SHCIL has around 20% market share i.e. over 8 lakhs demat accounts.
 SHCIL has approx 50% market share of delivery-based transaction which amount to 1.33
crore transaction.

SHCIL Values
 Safety and Efficiency of operations is a hallmark of SHCIL.
 Professionalism and Integrity.
 Customer First.
 Relationship Building
 Commitment to Quality irrespective of asset size.

SHCIL’S HEIRARCHY AT AGRA

Branch
Manager

Executive Executive
Officer Officer

Officer Officer Feet On

Trainee Trainee Street
 Opportunity to acquire stake in SHCIL, India’s largest custodian &
depository participant
 Largest custodian and depository participant in the country with assets under custody of
over Rs. 30 lac crore

 Dominant player in the domestic institutions custodian segment, enjoying a market share
of ~36%

 One of the largest retail depository participants in the country, with a client base of ~ 6.1
lacs

 Aggregate value of transactions settled daily of over Rs. 5,000 crore

 Participated in promotion of various financial institutions in India, including NSE, where

it holds 5% stake

 Only agency appointed by the Govt. of India for providing e-stamping services across
India; currently serving 17 states

 Fast-growing Document Management business with banks, FIs, courts and regulators as
clients and an order book of Rs. 250 crore.

SHCIL’s product range comprises of the following:

 DP Services for corporate and individual entities.

 Custodial Services.
 Money Transfer.
 Broking Services.
 Document management services and physical custody and digitization.
 E-Stamping
 Loans- Home Loans, Auto Loan, Education Loan, Business Loan, Personal Loan, Loan
against shares, Loan against property.
 Investment advisory services- Mutual funds, GOI Bonds, capital gain bonds, debentures,
fixed deposits, and IPO’s of reputed companies.
 CHAPTER -2

SHCIL –AS A DEPOSITORY

PARTICIPANT
 INTRODUCTION TO DEPOSITORY
A depository is a facility for holding securities which enables securities transactions to be
processed by book entry . To achieve this purpose the depository may immobilize the
securities or de-materialize them(so that they exist only as electronic records).
India has chosen the dematerialization route. In India, a depository is an organization which
olds the beneficial owners’ securities in electronic form through a registered depository
participant (DP). A depository
functions some what similar to a commercial bank. To avail of the services offered by a
depository the investor has to open an account with a registered DP.

ADVANTAGES OF DEPOSITORY SYSTEM

 Elimination of bad deliveries and all risks associated with physical certificates such as
loss, theft, mutilation, etc.
 No stamp duty.
 Immediate transfer and registration of securities.
 Faster settlement cycle.
 No risk of buying fraudulent certificates.
 No courier/postal charges.
 Reduced record keeping.
 One investor account for all shares.

DEPOSITORY PARTICIPANT
In India, a depository participant (DP) is described as an agent of the depository. They 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 provisions
of the SEBI act. As per the provisions of this act, a DP can offer depository-related
services only after obtaining a certificate of registration from SEBI.SEBI (D&P) regulations,
1996 prescribe a minimum net worth of Rs. 50 lakhs for stockbrokers, R&T agents and
non – banking finance companies (NBFC), for granting them a certificate of registration to
act as DPs. If a stockbroker seeks to act as a DP in more than one depository he should comply
with the net worth criterion separately for each such depository. No minimum net worth
criterion has been prescribed for other categories of DPs. NSDL requires a minimum net worth
of Rs. 100 lakhs to be eligible to become a DP as against Rs. 50 lakh prescribed by SEBI
(D&P)regulations.
 DEPOSITORIES IN INDIA

Currently there are two depositories operational in the country:

(1)National Securities Depository Limited.

(2)Central Depository Services Limited.

NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)

Although India had a vibrant capital market which is more than a

century old, the paper based 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.

Using innovative and flexible technology systems, NSDL works to support the investors and
brokers in the capital market of the country. NSDL aims at ensuring the safety and
soundness of Indian market places by developing settlement solutions that increase
efficiency minimize risk and reduce costs. At NSDL we play a quiet but central role in
developing products and services that will continue to nurture the growing needs of the
financial services industry.

In the depository system securities are held in depository accounts which are more or less
similar to holding funds in bank accounts. Transfer of ownership of securities is done through
simple account transfers. This method does away with all the risks and hassles normally
associated with paperwork. Consequently the cost of transacting in a depository
environment Is considerably lower as compared to transacting in Certificates.

CENTRAL DEPOSITRY SERVICES LIMITED (CDSL)

A depository facilitates holding of securities in the electronic form and enables securities
transactions to be processed by book entry by a depository participant (DP)
who as an agent of the depository offers depository services to investors. According to
SEBI guidelines financial institutions, banks, custodians, stock brokers, etc. are eligible to act as
DPs. The investor who is known as beneficial owner (BO) has to open a DEMAT account
through any DP for dematerialization of his holdings and transferring securities.
The balances in the investors account recorded and maintainedwith CDSL can be obtained
through the DP. The DP is required to provide the investor, at regular intervals, a statement of
account which gives the details of the securities holdings and
transactions. The depository system has effectively eliminated paper-based certificates
which were prone to be fake, forged, counterfeitresulting in bad deliveries.
CDSL offers an efficient and instantaneous transfer of securities.

CDSL was promoted by Bombay stock exchange limited (BSE) jointly with
leading banks such as State Bank Of India, Bank Of India, Bank Of Baroda,
HDFC BANK, Standard Chartered Bank, Union Bank Of India and Centurion Bank.

CDSL was set up with the objective of providing convenient-t, dependable and secure
depository services at affordable cost to all market participants. Some of the important
milestones of CDSL system are:

•CDSL received the certificate of commencement of business from SEBI in February, 1999.

•Honorable union finance minister, Shri Yashwant Sinha flagged of the operations of CDSL on
July 15, 1999.

•Settlement of trades in the DEMAT mode through BOI share holding 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, Ahmedabad stock exchange, all have
established connectivity with CDSL.

•At the end of December, 2007, over 5000 issuers haveadmitted their securities
(equities, bonds, debentures,commercial papers), units of mutual funds, certificate of deposits,
etc. into the CDSL system.
 OPENING AN ACCOUNT WITH DP
First an investor has to approach a DP and fill up an account opening form. The account
opening form must be supported by copies of any one of the approved documents to serve as
proof of identity (POI) and proof of address (POA) as specified by SEBI. Besides, production
of PAN card in original at the time of opening of account has been made mandatory effective
from April 01, 2006.

All applicants should carry original documents for verification by

an authorized official of the depository participant, under his signature.

Further the investor has to sign an agreement with DP in a depository prescribed

standard format which details the rights and duties of the investor and the DP. The DP should
provide the investor with a copy of the agreement and the schedule of charges for their future
reference. The DP will open the account in the system and give an account number, which is
also called BOID (beneficiary owner identification number).

The DP may revise the charges by giving 30 days notice inadvance. SEBI has
rationalized the cost structure for Dematerialization by removing account opening
charges, transaction charges for credit of securities, and custody charges vide circular
dated January 28, 2005.

Further, SEBI has vide circular dated November 09, 2005 advised that with effect from January
09, 2006 that no charges shall be levied by
a depository on a DP and consequently by the DP on a beneficiary owner (BO) when a BO
transfers all the securities lying in his account to another branch of the same DP or to another
DP of the same Depository or another depository provided the BO account/s at transferee DP
and at transferor DP are one and the same, i.e. identical in all respects. In case the BO account
at the transferor DP is a joint account, the BO account at transferee DP should also be a joint
account in the same sequence of ownership.
 BANK DEPOSITORY – AN ANALOGY
BANK DEPOSITORY

Holds funds in an account. Hold securities in an account.

Transfers funds between Transfers securities between accounts on

Account on the instruction of the account the instruction the account holder.
holder.

Facilitates transfer without having to handle Facilitates transfer of ownership

money. without having to handle securities.
Facilitates safe-keeping of money. Facilitates safe-keeping of securities.

SERVICES PROVIDED BY DEPOSITORY

 Dematerialization (known as DEMAT) – converting physical shares into electronic form.

 Re-materialization (known as REMAT) – is reverse of DEMAT, i.e. getting
physical certificates from the electronic securities.
 Transfer of securities – change of beneficial owner.
 Settlement of trades done on exchange connected to the depository.
 Pledge/hypothecation of DEMAT shares, viz., loan against shares.
 Electronic credit in public offerings of the companies.
 Non-cash corporate benefits, viz. bonus/rights – direct credit into electronic form.
 Depository restricts the risk of fraud.

Financial Market

Stock holding Corporation of India Ltd. (SHCIL) the premier custodian of Indian Capital
Market providing services of international standards is geared up to reposition itself in the
changed scenario.

The corporation has restructured and geared itself to serve the growing needs of individual
investors in the paperless environment. The organization in its willingness to provide its state of
art of financial services in securities industries to the various segments of the investors has
expanded itself to more than 100 cities across the country. SHC desires to give investors the
time and attention in monitoring the performance of their securities consistently. All aimed at
providing the investors with optimum financial gain.
India has well established capital market mechanism where in effective and efficient transfer of
money capital or financial resources from the investing class to the entrepreneur class in the
private and the public sector of the economy occur. Indian capital market has a long history of
organized trading which started with the transcation in the loan stocks of the East India
Company, from that time it has undergone drastic changes to meet the requirements of the
globalization.

There has been a shift of house hold savings from physical assets to financial assets, particularly
the risk bearing securities such as shares and debentures. Capital market structure has also
undergone sea changes with number of financial service and banking companies, private limited
companies coming into the scene which made the competition in the market stiffer.

Capital Market

The capital market consists of primary market and secondary market segments. The primary
market deals with the issue of new instruments by the corporate sector such as equity shares,
preference shares and debentures. The public sector consisting of central and state governments,
various public sectors industrial units (PSU’s) statutory and other authorities such as state
electricity boards and port trust also issue bonds.

The primary market in which public issue of securities is made through a prospectus is a retail
market and there is no physical location. Direct mailing, advertisements and brokers reach the
investors. Screen based trading eliminates the need of trading floor.

The secondary market or stock exchange where existing securities are traded in an auction
arena. Since 1995, trading in securities is screen based. Screen based trading has also made an
appearance in India. The secondary market consists of 23 stock exchange including the NSE
and BSE and interconnected stock exchanges of India ltd. The secondary market provides a
trading place for the securities already issued to be bought and sold. It also provides liquidity to
the initial buyers in the primary market and to re-offer the securities to any interested buyer at a
price, if mutually accepted .An active secondary market actually promoters the growth of the
primary market and capital formation because the investors in the primary market are assured of
a continuous market and they can liquidate their investments in the stock exchange.

Investment Avenues

Investment Avenues we mean a particular organization or system in which an investor can place
his surplus funds with the objective of having certain gains in the future. This organization may
be well organized like a bank, financial institution, mutual funds, and company or in an
unorganized manner like chit fund organization, Nidhis ( a type of non banking finance
company) or curry ( a type of non –banking finance company in southern India). Different
investment avenues have different features, few offer a mix of these two. Few of these have an
element of safety and yet others do not have any kind of safety. In certain cases these are in
negotiable form and in other cases these are non- negotiable . Investment avenues of a country
are subject to different rules and regulations of either the government or some apex body like
Reserve Bank of India, NABARD, SEBI or Companies Act.

Following are the features of investment avenues.

 A place where one can invest his surplus.

 Fixed or floating return.
 Security Vs. Non –security form.
 Investment accepting organization might have an obligation or not.
 Negotiable Vs. Non- negotiable.
 Risk is the inherent part of every avenue.
 It may be organized or may be unorganized form.
Investment avenues can be broadly divided into following types-:
 Security form.
 Non-security form.
 Traditional form.
 Other emerging avenues.

Security Forms-:

These are the instruments or securities through which a company or issuing authority like
government raises finance. Majority of these are in negotiable form, i.e. these are sellable in the
market by the holder of the securities. Companies/ Government issue these in capital market or
money market to raise funds directly from the providers of the funds. Some of these have
maturity for a very long period and others have for either medium term or short term. Security
form can further be divided into money market securities and capital market securities.

Money Market Securities-:

It is the market in which liquid funds as well highly liquid securities are traded in for a very
shorter duration. The main participants in this market are banks and financial institutions. The
banks deal in this market to fulfil their CRR (Cash Reserve Ratio) and SLR (Statutory Liquid
Ratio) requirements. However, few corporate houses, insurance companies, mutual funds,
provident funds trusts and non-banking finance companies also pay an active role in market.
This market provides liquidity support to banking system. At the same time, the central bank of
the country – Reserve Bank of India uses this market to exercise monetary control in the
economy and credit control in the country.

Money market can be divided into two parts, call money market and government securities/
gilt-edged securities market. Call money market in which surplus cash of banks and corporate
houses is traded in for a very short maturity period, generally not exceeding one fortnight. The
main transcations are carried on by banks to fulfils their liquidity, as well as CRR requirements.
The main participants in market are banks, financial institution, mutual funds, corporate houses
and other organizations as allowed by Reserve Banks of India from time to time. Banks are
allowed to play the role both the seller and buyer of funds. A seller of funds is the one who
provides it to another party and the party receiving it is identified as the buyer of the funds. For
making funds available, the seller charges interest, this is decided mutually.
Treasury Bills

Treasury Bills are very useful instruments to deploy short term surplus depending upon the
availability and requirement. Even funds which are kept in current accounts can be deployed in
treasury bills to maximise returns. These treasury bills have a maturity period not exceeding
364 days. These bills do not carry any interest rate; instead these are issued at a discount to face
value and redeemed at par on the maturity. Treasury bills have a unique maturity period of 91
days, 182 days, and 364 days. Recently RBI issued treasure bills for a maturity of 14 days and
28 days too. Banks do not pay any interest on fixed deposits of less than 15 days, or balances
maintained in current accounts, whereas treasury bills can be purchased for any number of days
depending on the requirements. This helps in deployment of idle funds for very short periods as
well.

Certificate of Deposits

Certificate of Deposits are offered to investors by banks just like normal deposits. But the
difference is certificate of deposits are short term wholesale deposits and they are tradable. An
investor holding the certificate of deposit can sell it to another investor, Because of liquidity
interest rates on certificates of deposits are normally less than that on ‘sight’ deposits, investors
can compare certificate of deposit with treasury bills as they are short term, tradable, discounted
bonds. But the difference is treasure bills are issued by government and certificates of deposits
are issued by banks, financial institutions, etc. The lender of a certificate of deposits are rated by
approved rating agencies. The term of certificate of deposit is fixed and is usually 3 months, 6
months, 1 year or 5 year. In India certificate of deposits are introduced in July 1989. Maturity
period is minimum 7 days and maximum 12 months for certificate of deposits issued by banks.
For certificate of deposits issued by financial institutions, maturity is minimum 1 year and
maximum 3 years. Minimum amount to invest in a certificate of deposits is Rs.100000 and in
multiples of Rs. 100000 thereafter. Loan against collateral of certificate of deposits is not
permitted but it is possible in ‘sight’ fixed deposits. Premature withdrawal is not allowed but
can be sold to other investors. Interest rate can be fixed or floating and they are issued at a
discount at face value like zero coupon bonds.
Commercial Papers

Commercial paper is short-term loan that is issued by a corporation for financing accounts
receivable and inventories. Commercial papers have higher denominations as compared to the
treasury bills and the certificate deposits. The maturity period of commercial papers is
minimum 15 days to maximum 1 year. Commercial papers do not carry any interest rate,
instead these are issued at a discount to face value and redeemed at par on maturity. The
difference between issue price and maturity value is the interest compensation for the buyer of
commercial papers. These are negotiable in nature- these are easily and freely be transferred
from one party to another party. They can very safe since the financial situation of the
corporation can be anticipated over a few months.

Commercial paper is a money market security sold by banks and corporations .Commercial
papers is a low cost alternative to bank loans. It is a very safe investment and can be used for
inventory purchases or working capital. Use of commercial papers can effectively raise large
amounts of funds quickly and without expensive registration by selling papers, either directly or
through independent dealers, to a large and varied pool of institutional buyers. Competitive
market-determined yields in notes, whose maturity and amounts can be tailored to specific
needs, can be earned by investing in commercial papers. The essential quality of this type of
investment is short term maturity typically three to six months, an automatic or self –liquidating
nature, and non -speculativeness in origin and purpose of use. The two main methods of issuing
commercial papers are selling them directly to an investor, or selling them to a dealer who then
sells them in the market.

Commercial papers is issued by large creditworthy borrowers, which means it’s typically less
risky than some other investments. Also, the raising provided by credit rating agencies gives an
indication to investors about how risky the investment is, which helps them better guage the
investment. As a trade off for the relative safety of this investment, it yields a lower rate than
riskier investments, such as stocks. Another advantage is that commercial papers issuers usually
can’t buy back the paper before its due date without a penalty. This means they can’t buy back
the paper before its maturity without compensating the investor for the early purchase. Investors
can thus count on a steady yield from commercial papers, unlike in the case of certain bonds
that investors can retire before their maturity.

Dated Securities of Government

Government securities are issued by the government for raising a public loan or as notified in
the official gazette. They consists of government promissory notes, bearer bonds, stocks or
bonds held in bond ledger account etc. They may be in the form of treasury bills or dated
government securities. Government securities are mostly interest bearing dated securities issued
by RBI on behalf of the government of India. Government of India uses these funds to meet its
expenditure commitments. These securities are generally fixed maturity and fixed coupon
securities carrying semi-annual coupon. Since the date of maturity is specified in the securities,
these are known as dated government securities.

The dated government securities market in India has two segments; primary and secondary
markets and after that we talk about the primary market consists of the issuers of the securities,
viz.., central and state governments and buyers include commercial banks, primary dealers,
financial institutions, insurance companies and co-operative banks. RBI also has a scheme of
non-competitive bidding for small investors. Secondary market includes commercial banks,
financial institutions, insurance companies, provident funds, trusts, mutual funds, primary
dealers and reserve bank of India. Even corporate and individuals can invest in government
securities. The eligibility criteria are specified in the relative government notification.
Following are the main features of government securities.

 Issued at face value.

 No default risk as the securities carry sovereign guarantee.
 Ample liquidity as the investor can sell the security in the secondary market.
 Interest payment on a half yearly basis on face value.
 No tax deducted at source.
 Can be held in dematerialized form.
 Rate of interest and tenure of the security is fixed at the time of issuance and is not
subject to change.
 Redeemed at face value on maturity.
 Maturity ranges from of 2-30 years.

Auctions for government securities are normally multiple –price auctions either yield based or
price based. In yield based type of auction RBI announces the issue size or notified amount and
the tenure of the paper to be auctioned. The bidders submit bids in term of the yield at which
they are ready to buy the security. If the bid is more than the cut-off yield then its rejected
otherwise it is accepted where in price based type of auction RBI announces the issue size or
notified amount and the tenure of the paper to be auctioned, as well as the coupon rate. The
bidders submit bids in terms of the price. This method of auction is normally used in case of
reissue of existing government securities. Bids at price lower than the cut off price are rejected
and bids higher than the cut off price are accepted. Price based auction leads to a better price
discovery then the yield based auction. Government securities, state development loans and
treasury bills are regularly sold by RBI through periodic public auctions. It gives investors an
opportunity to buy government securities/treasury bills at primary market auctions of RBI
through its invest scheme. Investors may also invest in high in high yielding government
securities through buy and sell facility for selected liquid scripts in the secondary markets.
 CHAPTER- 3
PRODUCTS IN SHCIL
 Products and Services.
The focus of Stockholding has always been direct its products and services for all round benefit
of its investors. Stockholding provides a wide range of financial services under one roof, which
has always been a priority while safety and investor friendliness have been the hallmark of
Stockholding’s products and services.

Institutional Segment:

Stock holding is India’s largest Custodian by assets under custody. Stockholding services an
aggregate asset of over Rs.32 lakh crores with a market share of 22%. The services and
products offerings of Stockholding includes custodial services for all securities, valuation and
fund Accounting, securities lending and borrowing services, clearing services for derivatives (
equity, interest rate, currency), Custodial services for gold, custodial services to Indian
investors, for their investments outside India, securities escrow services. As a Designated
Depository Participant (DDP), Stockholding provides registration and custodial services for
Foreign Portfolio Investors. Stockholding is the only non bank custodian to hold a No Action
Letter under SEC 17 of US (SEC) regulations enabling it to offer custody services to the US
based funds.

Stockholding in its endeavor to offer a wider basket of services as custodian has added
international securities services for investors investing in securities of countries outside India.
This service would be of use to investors such as Mutual Funds, Corporate, Family Offices,
High Net worth Investors and Foreign Investors etc.

Retail Segment:

Stockholding offers Depository Participant (DP) services, sub broking services, distribution of
financial products, and auxiliary services to its clients in the Retail Segment.

Various kinds of products and services are offered by Stockholding Corporation of India
Limited, are as follows-:
These are the avenues of investment in which document issued as evidence of the investment
cannot be transferred from one party to another party. These are non- negotiable in form. The
payment of these can be claimed by only the original holder payment. The prominent feature of
these avenues that the majority of these are safe investments. By safe we mean free from default
risk. However due to privatization of banking and insurance sector there has been the incidences
that even the bank are in trouble sometimes and investments in a bank might be subject to
default risk like in a co-operative bank or certain low creditworthy banks.By default risk we
mean chances of early in the payment or repayment it may be even the non-payment of dues.
Following are the various category -:

 Government of India Bonds ( GOI Bonds).

 Insurance Investments.
 National Pension System ( NPS)
 E-Stamping
 Share Trading ( Demat and Trading Account)
 Systematic Investment Plan ( SIP’s)
 Fixed Deposits ( FD’s)
 Custodian of Gold and Silver coins
 Mutual Funds.
 Debentures and Bonds
 Commodity Investments.
Government of India Bonds (GOI Bonds)

The Government of India bonds are the bonds which is issued by Reserve Bank of India at 8%
rate of interest which is should be taxable with a locking period of 6years maturity. It is a
saving bond and these bonds are held in an account called Bond Ledger Account ( BLA) Bond
Ledger Accounts can be opened and operated with RBI designated Receiving Offices.
Stockholding Corporation has been designated as one of the Receiving Offices by RBI for this
purpose. Saving bonds are sovereign in nature are absolutely safe and an attractive investment
option in the current volatile market situation. This investment can be done by individually, or
by Hindu Undivided Family or by Charitable Institution or by any kind of University

Insurance Investments

Insurance is a contract between the policy owner and the insurer, where the insurer agrees to
pay an amount of money upon the happening of the insured individual's or individuals' death or
other event, like terminal illness, critical illness. In return, the policy owner agrees to pay a
fixed amount called a premium at regular intervals. Like other insurance policies, life insurance
is also a contract between the insurer and the policy owner whereby a benefit is paid to the
nominated beneficiaries if an insured event occurs which is covered by the policy. The
assessment for the policyholder is derived not from an actual claim event, but to a certain extent
it is the value derived from the 'peace of mind' experienced by the policyholder; because of the
negating of adverse financial consequences caused by the death of the life assured. By investing
in life insurance, almost anyone can transfer the financial risks of dying early, guaranteeing a
payout for family members who might otherwise be left in economic turmoil. Today's insurance
policies, however, often come with features borrowed from the investment world, blending
traditional insurance with attributes of a mutual funds account.

Our Corporation linked up with ICICI Prudential Life Insurance and some Health Insurance are
Apollo Munich Health Insurance, Star Health Insurance and Religare Health Insurance.

National Pension System

National pension Scheme also known as NPS is a quasi –EET instrument in India where 40% of
the corpus escapes tax at maturity, while 60% of the corpus is taxable. Of the 60% taxable
corpus 40% is tax exempt as it has to be compulsorily used to purchase an annuity. The annuity
income will be taxed, though. The remaining 20% alone will now be taxed at slab rates on
withdrawal .It is introduced by government of India and regulated by Pension Regulatory and
Development Authority (PFRDA) under PFRDA Act 2013 to all citizens of India. With the
objective of promoting old age income security. NPS empowers subscribers to plan their own
pension under the Defined Contribution Concept. It is not only helps to save for post retirement
spending but is also a good investment and tax planning tool. PFRDA appoints Point of
Presence ( POP) which act as the link between subscribers and PFRDA to promote the NPS.

Stockholding has been appointed as Point of Presence (POP) by PFRDA for the National
Pension System. All the branches of Stockholding offer the full spectrum of NPS subscriber
who have opened their NPS account through other POP’s and eNPS can also contribute using
Pay Online Service of Stockholding. Stockholding is the only custodian appointed by PFRDA
apart from one of the POP’s. Stockholding is proud to receive three awards from PFRDA as
best POP.

Salient Features of NPS-:

 Open to all citizens aged between 18-60 years.

 Pension available from the age of 60 years.
 Attractive investments schemes to choose from
 Professional record-keeping and fund management
 Withdrawal facility as and when you wish, under Tier-2
 No Entry and Exit Loads.

E-Stamping

E-Stamping is a computer based application and a secured way of paying non-judicial stamp
duty to the government. E-Stamping is currently operational; in the states of Ohisha, Gujarat,
Karnataka, NCR Delhi, Maharashtra, Assam, Tamil-Nadu, Rajasthan, Himachal Pradesh,
Andhra Pradesh, Uttarakhand, and the union territories of Dadra and Nagar Haveli, Daman and
Diu Puducherry, Jharkhand, and Uttar Pradesh. The prevailing system of physical stamp
paper/franking is being replaced by E-Stamping system. Stock Holding Corporation of India
Limited (SHCIL) has been promoted by all India public financial institutions and insurance
majors. SHCIL is known for its security, integrity, wide, network and focus on technology.
SHCIL is the only Central Record Keeping Agency (CRA) appointed by the government of
India. The CRA is responsible for user registration, Imprest Balance Administration and overall
E- Stamping application operations and maintenance. CRA will appoint ACC’s who will issue
certificate to their clients at their counters.

Share Trading

Share Trading means buying and selling of shares at specifically period of time. Share trading
can be done at specified time period only from 09:00am to 03:30pm in the afternoon. After
03:30 the market was closed , so in that case there should be no share trading can be done.
There are specifically 5 days for share trading ie from Monday to Friday at a given specified
period of time. For doing share trading it is necessary to open an demat account and the trading
account for doing it specifically.
Systematic Investment Plan (SIP)

Systematic Investment Plan is a type of a investment in which a customer can invest their
money in stock market through mutual funds. It is an investment vehicle offered by mutual
funds to investors, allowing them to invest small amounts periodically instead of lump sums.
The frequency of investment is usually weekly, monthly, or quarterly. In SIP a fixed amount of
money is debited by the investors in bank account periodically and invested in a specified
mutual fund, The Investor is allocated a number of units according to the current Net Asset
Value. Every time a sum is invested, more units are added to the investors account. The strategy
claims to free the investors from speculating in volatile markets by Dollar cost averaging. As
the investor is getting more units when the price is low and less units when the price is high, in
the long run, the average cost per unit is supposed to be lower.

SIP’s claims to encourage disciplined investment. SIP’s are flexible, the investors may stop
investing a plan anytime or may choose to increase or decrease the investment amount. SIP is
usually recommended to retail investors who do not have the resources to pursue active
investment. SIP Investment is a good choice for those investors who do not possess enough
understanding of financial markets. The benefits of SIP is it reduces the average cost of units
purchased, as well as consistent investment, ensures that no opportunity is missed arising out of
the market.

For Example – SBI Mutual Fund, ICICI Mutual Fund, IDFC Mutual Fund, Reliance Mutual
Fund, Birla Sun Life Mutual Fund, Kotak Mahindra Mutual Fund etc as in all kinds of mutual
funds offered by Stockholding Corporation of India

Fixed Deposit

A Fixed deposit is a financial instrument provided by banks which provides investors with a
higher rate of interest than a regular savings account, until the given maturity date. It may or
may not require the creation of a separate account. It is known as a term deposit or time deposit
in Canada, Australia, New Zealand, and the US, and as a bond in the United Kingdom and
India. They are considered to be very investments. Term deposits in India and Pakistan is used
to denote a larger class of investments with varying levels of liquidity. The defining criteria for
a fixed deposit is that the money cannot be withdrawn from the FD as compared to a recurring
deposit or a demand deposit before maturity. Some banks may offer additional services to FD
holders such as loans against FD certificates at competitive interest rates. It important to note
that banks may offer lesser interest rates under uncertain economic conditions. The interest rates
varies between 4 and 11 percent. The tenure of an FD can vary from 7, 15 or 45 days to 1.5
years and can be as high as 10 years. These investments are safer than post office Scheme as
they are covered by the Deposit Insurance and Credit Guarantee Corporation ( DICGC).
However DICGC guarantees amount up to 1,00,000 per depositor per bank. They also offer
income tax and wealth tax benefits.
Mutual Funds

A mutual fund is a professionally managed investment fund that pools money from many
investors to purchase securities. Mutual funds have advantages and disadvantages compared to
direct investing in individual securities. The primary advantage of mutual fund are that they
provide a higher level of diversification, they provide liquidity and they are managed by
professional investors. On the negative scale, investors in a mutual fund must pay various fees
and expenses. Primary structures of mutual funds include open ended funds, Exchange traded
funds (ETF’s) are open ended funds or unit investments trusts that trade on an exchange.
Mutual funds are also classified by their principal investments as money market funds, bonds or
fixed income funds, stock or equity funds, hybrid funds, or other. Funds may also be
categorized as index funds, which are passively managed funds that match the performance of
an index, or actively managed funds. Hedge funds are not mutual funds; hedge funds cannot be
sold to the general public and are subject to different government regulations.

Debentures and Bonds

Although the term bonds and debentures are often used interchangeably the two are distinctly
different : A bond is typically a loan that is secured by a specific physical asset. A debentures is
secured only by the issuer’s promise to pay the interest and loan principal. A debenture is a type
of debt instrument that is not secured by physical assets or collateral. Debentures are backed
only by the general credit worthiness and reputation of the issuer. Both corporations and
governments frequently issue this type of bond to secure capital. Like other types of bonds,
debentures are documented in an indenture.

Debentures have no collateral. Bonds buyers generally purchase debentures based on the belief
that the bond issuer is unlikely to default on the repayment. An example of a government
debenture would be any government-issued Treasury bond (T-Bond) or treasury bill (T-Bill) .
T-bonds and T-bills are generally considered risk free because governments, at worst, can print
off more money or raise taxes to pay these types of debts. Debentures are the most common
form of long-term loans that can be taken out by a corporation. These loans are normally
repayable on a fixed date and pay a fixed rate of interest. A company normally makes these
interest payments prior to paying out dividends to its shareholders, similar to most debt
instruments. In relation to other types of loans and debt instruments, debentures are
advantageous in that they carry a lower interest rate and have a repayment date that is far in the
future
 CHAPTER 4
SERVICES OFFERED BY SHCIL
 (1) CUSTODIAL SERVICES
SHCIL provides firstrate custodial services to India’s leadingFinancial Institutions, Insurance C
ompanies, Mutual Funds,Foreign Institutional Investors (FII’s), Banks, Indian and Foreign
Venture Capital Companies, Funds, PF Trusts & Corporate.

SHCIL’s core competence in custodial business spans 18 years,with a dedicated pool of trained
and experienced professionals working literally round the clock using state-of-the-art computer
systems and world class technology. SHCIL maintains dedicated
communication channels, well connected to client institutions,
stock exchanges, clearing houses and depositories, thus maintaining process and quality
leadership.

As a custodian entrusted with sizable assets, SHCIL is continuously

leveraging its scale and capabilities to help its clients mitigate risk and optimize efficiencies
with greater control.

SETTLEMENT SERVICES

Most of the institutional trades are settled through the clearinghouse of the stock exchanges. As
a custodian, SHCIL facilitate estimably settlement of funds
and securities. Funds are collected deposited from/to client and settled with the clearing houses.

Most of the institutional trades are settled in the depository mode. For the institutional segment
alone, SHCIL has a unique clearing code on the two
principal stock exchanges and separate DPM units on both NSDL and CDSL.
This ensures smooth settlement of transactions on both exchanges /depositories, based on the
deliverables and receivables received by them for each
settlement. Daily verification of settlements (auction/normal)facilitates smooth
reconciliation of settlements of client’s trades and mitigates systemic risk.

For debt market deals SHCIL ensures timely movement of securities and funds.
For the occasional delivery and receipt of securities in the physical mode, SHCIL ensures
prompt scrutiny, processing and lodgment of securities with the respective company/ registrar
and transfer agent, with the objective of final transfer to the purchaser, with objections handling
if needed. SHCIL also ensures that delivery of
physical securities to exchanges is handled strictly as per exchange regulations.

PHYSICAL CUSTODY (VAULT) SERVICES

SHCIL has extensive vault capacity with state of the art technology. This includes tracking
with bar-coding techniques. Certificates are held in customized, fire resistant ‘modular
slidings to rage units’ , with automated location tracking and logs with tight security. There
are comprehensive document tracking and storage systems
in place to hold investments in physical and electronic form.

SHCIL tracks each and every security in the custody with absolute ease and tracks the status of
investments at any point of time. Other security features include circuit TV, smoke detectors
and fire extinguishers which are installed in the premises. SHCIL relies on audit trials and
physical reconciliation continuously to reconfirm validity of systemic data. SHCIL
also periodically seeks reconfirmations from internal and statutory audit firms for adherence to
the established best practices.

INSTITUTIONAL DP SERVICES

SHCIL has installed dedicated DPMs (depository participant modules) on both the depositories,
viz. NSDL and CDSL.A dedicated institutional DP team at SHCIL addresses your need for all
core DP services like account opening and maintenance, conversion of physical holdings into
electronic form, settlement of trade instructions, re-materialization, repurchase and pledge
instructions, providing of holding and transaction statements and daily reconciliation of clients
holdings.

SHCIL also provides special services like electronic credit andcorporate action follow up,
reporting of saleable holding positions required by many fund managers, monitoring
of CP redemptions, prepayments and providing customizer reports like put/call forecasts,
logical holdings and non equity holding reports.

ASSET SERVICING

SHCIL has dedicated teams to handle the various aspects of asset

servicing. The corporate actions team ensures forecast of allcorporate actions and benefits accru
ing on a client’s holding, timely collection of monetary and non
monetary benefits and cover all activities relating to a corporate event like calculation
of entitlements, reconciling with companies/registrars prior to due date, collection
of monetary corporate actions from the premises of company/registrar and transfer of same to
clients.

CLIENT RELATIONSHIP MANAGEMENT

Every institutional client is assigned to an experienced clientrelationship manager who assistsin

resolving special issues relating to the client. Over and above the services offered we have a
premium offering called ADVAIT, an integrated, web based, online reporting system which
provides a single window access to institutional reports with enhanced security features.
 (2) DEPOSITORY PARTICIPANT SERVICES

Our depository participant services address your individual investment

needs. With a parentage of leading financial institutions and insurance majors and a proven
track record in the custodian business, we have reiterated our past success by
establishing ourselves as the first ever and largest depository participant in India.

Form a tentative foray in 1998 into the individual investor arena to servicing around seven lakhs
accounts, we have endeavored to constantly add and innovate to make business a pleasure for
you. Our networked branches ensure we are available where you lookout for us.

Fourteen depository participant machines (DPMs)connected to NSDL and seven connected to

CDSL ensure fast and direct processing of your instructions.
Our customer-centric account schemes have been designed keeping in mind the investment
psyche of our clients. Your DPaccount with us takes care of your depository needs like
dematerialization, re-materialization and pledging of shares.
Matching of your scanned signature on every debit instruction with a digitally scanned original
in our system makes all your trading transactions absolutely secure. A proactive backup of tour
instructions Priorto execution in the depository makes us oblivious to system crashes.

OPEN ACCOUNT

Before you open your account….

•You can collect your account opening form from any of our branches or download it from our
site itself.

•As prescribed by depository bye-laws, accounts have to be opened in the exact order in which
the names(s) appear on the share certificate.

•Remember that holding pattern AB is not the same as BA. However, minor
differences like abbreviations, spelling mistakes can be ignored provided signatures recorded
with the registrar/company are the same.

GET YOUR ACCOUNT OPENING FORM DETAILS

Check your form against these details:

 All columns are filled in. write NA wherever not applicable.
  Bank account number with complete address and 9 digits MICR numbers are filled
correctly. This will facilitate effective disbursement of monetary corporate
actions into Your account.
 Signature of account holders are always in black.
 If you would like to receive credit of shares Purchased directly into your account, mark
standing instruction as ‘yes’.

YOUR ACCOUNT IS OPENED

Once your account is opened, you will be allotted a client identity number. You will be sent an
operating kit containing:
 Details of your account as recorded by SHCIL.
 Copy of the agreement entered into with SHCIL.
 ‘Delivery instruction by client’ booklet allotted to Your DEMAT account. This book let
helps you Transfer shares from your account to broker account and other accounts.
 Now you are ready to operate your DP account

REQUISITIONS FOR DP A/c

•PAN mandatory.

•SMS alerts for debits and failed trades provided by NSDL.CDSL is providing only for debits.
Hence clients may get their mobile number and SMS flag updated.

•As per the latest NSDL guidelines, client may give localaddress or correspondence address, de
pending on his preference to receive the communications from the companies.

•Complete address of the bank branch, bank account number, account type and 9 digit MICR
number is mandatory. Please provide the specimen copy of a Cheque for noting the correct 9
digit MICR code.
•At the time of account opening, clients are requested to
provide the proofs for identification and address.

The list may be provided.

•Thumb impressions should be attested by a magistrate or anotary public or a special executive

magistrate.

•NSDL does not have the facility to operate a Beneficiaryaccount on ‘either or survivor’ basis.
NOMINATION FOR DP ACCOUNTS – INDIVIDUAL(S) BENEFICIARY
ACCOUNTS

•As per the instructions received from the depositories, we can take cognizance of nomination
only if it is submitted in the prescribed format and the same has to be registered
with the depository participant (DP)under a ‘nomination registration number’ (NRN). In the
absence of NRN, DP will not be able to transmit the securities in favor of the nominee only if
it is registered and after duly submitting the prescribed documents.

•If nomination has not been registered, account holders may submit the nomination form in the
prescribed format to the nearest SHCIL center. On registration of the nomination, the NRN will
be communicated to the account holder(s). In case nomination is not registered, securities
can be transmitted to legal documents as per depository guidelines.

MAINTENANCE

Change in permanent/correspondence Address

A request letter (format available on the site) signed by all the holders are required along
with this photocopy of proof of identification and proof of new address is required. Please bring
the originals with you for verification purpose. Client or the authorized bearer can visit our
branch for the same. Copy of the last transaction statement received from SHCIL is also
required.

Change in Signature
Request letter (format available) signed by the client. The new signature to be attested by the
bank. The request maybe submitted along with the copy of POI and the photocopy of the latest
transaction statement received from SHCIL.

Addition of PAN /MAPIN

Request letter by the client giving the PAN/MAPIN number.

Account with Power Of Attorney

These accounts can be operated by both the client and the POA holder. In case the client has
given the POA in favor of two or more persons, then the mode of operation of the POA
holders is also to be mentioned. In case the power of attorney is to be revoked, a letter signed by
the client is required.

Change of Telephone Number

Request letter signed by all the holders, with a photocopy of the recent telephone bill and proof
of identification of one of the holder.

Instructions by Fax
Clients may avail this facility by faxing their Delivery instructions to SHCIL, by executing the
fax indemnity. The format of the indemnity is as follows:
Change in Standing Instruction
For recording any change in the standing instruction (forreceiving direct credits) in the DEMAT
account, we require a letter signed by all the holders.

Change in Power Of Attorney Details

If you have given POA details and you wish to operate the
account yourself, the POA has to be revoked by you in writing.

Death of beneficiary account holder(s) –transmission of account

Transmission of account takes place in the event of the death of the beneficiary account
holder(s). There can be three situations intransmission of account. See which category you fit
into and follow the relevant procedure:

(1)When the account has joint holders and one dies

(2)When the account has a sole holder with a nominee.
(3)When the account has a sole holder without a nominee. If the shares are transmitted to
beneficiary account of surviving holders and this beneficiary account is in a DP other than
SHCIL.

•Classify the transmission case into the above categories.

•Over and above the documents explained above, the client master list from the target DP has to
be submitted.

Freezing Of Account
An account is frozen /suspended:

•Only on your instruction.

•By competent authority, i.e., by the depository/SEBI.
•On receipt of court order.

De-freezing Of Account

De-freezing of an account takes place:

•Only on your instruction.
•For de-freezing pledge accounts, your instruction has to be accompanied by bank
authorization.
 (3) DEMAT

Dematerialization is the process of conversion of shares fromphysical form to the electronic

mode. Our dedicated DEMAT team enable you to convert your physical
holdings/debentures/bonds/G-SECS into electronic mode in a quick and hassle free manner.

Transposition cum dematerialization

The clients can get the securities dematerialized in the sameaccount if the names appearing on
the certificates match with the names in the DEMAT account but are in different order. This can
be done by submitting the certificates along with the transposition form and the
dematerialization request form (DRF).

Transmission and dematerialization

In case of death of one or more of the joint folders, the surviving holder(s) can get the name(s)
of the deceased deleted from the security certificate and get the same dematerialized. Notarized
copy of the death certificate, transmission form as per annexure
OB and the dematerialization request form (DRF) have to be submitted by the surviving joint
holder(s) along with the security certificates. As per SEBI, scrips can be divided as:

 Scrips Eligible for DEMAT these scrips can be traded either in physical or electronic
form.
 Scrips falling under compulsory DEMAT these scrips can be traded only in electronic
form.
 Submit DEMAT Request Form. Once your demat account is opened
with us and you havereceived your client identity number, you can start dematerializing
your shares. You can submit the shares over the counter at any of our branches. Do go
through the tips given on filling up the DRF to avoid rejection.

Dematerialization of Shares

•When the company gives you credit, these shares will reflect under ‘free’ column. Now you
can sell these shares. In case the company is not satisfied with the details furnished, it will reject
the shares.

•If your shares have been rejected by the company, SHCIL will
forward the shares to you on receiving them from the company.
 (4) PLEDGE

You can pledge or hypothecate your dematerialized shares against loan

or credit facilities extended by a pledgee who also has an account with a DP.

The Pledge Procedure:

•Pledgor fills in a form requesting the DP to pledge the shares and hands it over to the DP.

•If the form is complete in all respects, the DP processes the form and
generates a pledge/hypothecation instruction number for the request.

•Securities to the extent of the instruction are debited from free or locked-in balances and
credited as pledged balances of the Pledgor so that they cannot be used for any transactions.

• The pledgee will submit a form to its DP to accept/reject the pledge / hypothecation request.

•If the pledgee accepts the request by t he pledgor, the acceptance is

communicated electronically to the pledgor’s DP. Once the pledge’s DP confirms the
acceptance of the pledge, the pledgor cannot cancel the pledge / hypothecation order.
The pledgee’s DP executes the pledge/hypothecation request as per the instructions given.

•In case the pledgee rejects the pledge request, the pledgor’s DP is intimated electronically.
Now the securities which were earlier credited as pledged balances will be credited to
free/locked-in balances.

•Once the loan is repaid by the pledgor, the pledgor initiates the closure of the pledge. The
request for the closure is transmitted electronically to the pledgee’s DP. The pledgee’s
acceptance/rejection of the request for the closure of pledge is transmitted electronically to the
pledgor’s DP.

•If the pledge is closed, the securities will be reflected as fee/locked-in balances.

•In case the pledgor defaults in repaying the loan to the pledge, the pledge
instructs his DP to invoke the pledge/hypothecation.

(5) DERIVATIVE SERVICES

SHCIL provides clearing services for derivative segment of BSE/NSE and commodity segment
of MCX / NCDEX.
 (6) CLEARING MEMBER

SHCIL’s long standing association with clearing members hasenabled it to develop services
based on an understanding of their working and their requirement for timely and accurate
information. We accept deposits of base capital and additional base capital requirements
stipulated by NSE for clearing members trading on its capital market segment. Besides, our new
products with a broker empanelment clause ensure a mutually beneficial tie-up. Clearing
members stand to earn a steady income from our product transactions and new add to their
client base, while we capitalize on their rapports with the market.

We currently offer depository services to more than 680 clearing members of various exchanges
connected with NSDL and CDSL. Our customer care lines answer all your DP queries while the
Interactive Voice Response (IVR) system gives you information on your account and other
valuable data like CC calendar details, tariff, ISIN information, etc. via telephone, fax and e-
mail.
 CHAPTER 5
E-STAMPING-THE MONOPOLY OF
SHCIL
 E-STAMPING

E-Stamping is a computer-based application and a secure way of paying non-judicial stamp

duty to the Government. The system is reliable and ensures that the stamp duty paid by you
reaches the government safely. India is the third country in the world after Singapore and
Hong Kong to adopt E-Stamping.

E-Stamping is a computer-based application and a secured way of paying non-judicial stamp

duty to the government. e-Stamping is currently operational in the states of Odisha,
Gujarat, Karnataka, NCR Delhi, Maharashtra, Assam, Tamil Nadu, Rajasthan, Himachal
Pradesh, Andhra Pradesh, Uttarakhand, and the union territories of Dadra & Nagar
Haveli, Daman & Diu Puducherry ,Jharkhand and Uttar Pradesh. The prevailing system of
physical stamp paper/franking is being replaced by E-stamping system. Stock Holding
Corporation of India Limited (SHCIL) has been promoted by all India public financial
institutions and insurance majors. SHCIL is known for its security, integrity, wide network and
focus on technology. SHCIL is the only Central Record Keeping Agency (CRA) appointed by
the Government of India. The CRA is responsible for user registration, Imprest Balance
Administration and overall E-Stamping application operations and maintenance. CRA will
appoint ACCs who will issue certificates to the clients at their counters .

Benefits of e-stamping
There are many benefit of e-Stamping. The e-Stamping system has multi-level security. On
payment of stamp duty, a stamp certificate is generated by the system, which comes with a
unique identification numbers (UIN).The e-Stamp certificate is temper –proof and generated by
the system through encryption of important identification content of the e-Stamp certificate.

The authenticity of the e-stamp certificate can be checked through the inquiry module on the e-
stamping website ‘www.shilestamp.com’. The e-stamp certificate can be generated within
minutes compared to other options of paying stamp duty, which are time consuming. Besides,
negating the risks associated with physical stamping of documents and stamps duty payment
through conventional mean, e-stamping is more convenient, user friendly and cost efficient.

Through e-stamping one can pay the exact amount of stamp duty without the need to buy a
higher denomination of stamps. In other options, you may end up paying excess stamp duty due
to the denomination constraint. The e-stamp can be attached to the document and tendered for
registration if it’s registrable.
How did e-stamping originate?

The Government of India embarked upon e-stamping to check the uncontrolled circulation of
take stamp papers and ensure a reliable transparent system of collection and remitting stamp
duty to the government.

The ministry of finance, Department of Economic Affairs appointed Stock Holding Corporation
of India (SHCIL) as the sole central record keeping Agency (CRA) for e-stamping in 2005.

What is stamp duty?

Stamp duty is a kind of tax collected by State Governments. It must be paid in full and on time
to the Government. In case of a delay in the payment of the stamp duty, penalties are imposed.

What are the important instruments under the Indian Stamp Act, 1899?

Important instruments covered under the Indian Stamp Act are agreements, conveyances,
exchange, gift, certificate of sale, deed of partition, power of attorney to sell immovable
property when given for consideration, deed of settlement and transfer of lease by way of
assignment, bill of exchange, bill of lading, debenture, letter of credit, policy of insurance,
proxy, receipt and transfer of shares. The instruments and the rate of stamp duty to be paid vary
across states.

How is stamp duty computed?

Stamp duty is computed on the market value or consideration amount of the property,
whichever is higher. Consideration amount is the total value of funds involved in any
purchase/sale transaction entered between two or more parties.

How many types of stamp duty are collected?

Stamp duty collected by the States can be broadly divided into two categories, viz., stamp duty
paid under the Indian Stamp Act 1899, and stamps used in payment of fees under the Court-
Fees Act, 1870.

What are the types of stamps used as on date?

Stamps used under the Indian Stamp Act, 1899, and the Bombay Stamp Supply And Sales
Rules, 1934, can b3e broadly divided into impressed stamps and adhesive stamps. Impressed
stamps include: (a)labels affixed and impressed by the proper officer; (b) stamps embossed or
engraved on stamped paper; (c) impression by franking machine; (d) impression by any such
machine as the State Government may , by notification in the official gazette, specify.
Is stamp duty required to be paid on all documents regarding transfer of properties?

All transfer instrument/document, including agreement to sale, conveyance, gift, mortgage,

exchange, partition, power of attorney either general or special leave-and license, agreement
tenancy agreement, lease deeds, are required to be stamped before registration.

A will or the original nomination in a cooperative housing society is not required to be stamped.
However, when a nominee transfers a flat subsequently in the name of legal heirs, it has to be
stamped as per market value or the consideration amount, whichever is higher.

When is stamp duty to be paid and who is required to pay?

Stamp duty is to be paid either before or on the day of the execution of the document. It’s either
paid by the purchaser or the transferee, or as mutually agreed in the agreement between the
parties.

What is the Unique Identification Number (UIN)?

UIN is a unique system-generated number mentioned on the e-stamp certificate. Anyone who
has the UIN can check the authenticity of the certificate through www.shcilstamp.com.

For this, you will need to enter the following details: state, certificate number or UIN, stamp
duty type (description of document), certificates issue date and the session code. In other modes
of payment of stamp duty, it is almost impossible for an individual to check the authenticity of
stamp duty payment.

What is CRA?

CRA stands for Central Recording Keeping Agency. SHCIL is the sole CRA appointed by the
Government for e-stamping.

What is the role of CRA?

The CRA is responsible for user registration, imprest balance administration and overall
management of the e-stamping application.

What is an ACC?

ACC stands for Authorized Collection Centre. You can approach the ACC to fill up the form as
per you need to pay the stamp duty. It’s an agent appointed by the Stock Holding Corporation
of India (SHCIL), in consultation with the State Government. ACC is the intermediary between
CRA and the stamp duty payer. Typically, entities like nationalized banks and post offices are
appointed as ACC. Some SHCIL branches are also acting as ACC.

How do I locate an ACC?

You can locate the ACC near your residence by logging on to www.shcilstamp.com.

How does one pay stamp duty by e-Stamping?

One has to approach an ACC by SHCIL or any of the designated SHCIL branches and fill up an
application form as prescribed.

After submitting the application form declaring details of the transaction and making the stamp
duty payment by any of the accepted ways, the ACC staffs enter the details into the system. A
stamp certificate will be generated only after realization of funds. The locking of the e-Stamp is
done by sub registrar. A transaction is verified by third party and the information is than stored
in the e-stamping server. One is expected to check the preview of the certificate and sign on it
before the e-Stamp certificate is generated .Remember that once an e-Stamp is generated, it
cannot be edited /modified in any manner. The e-Stamp certificate has to be preserved as e-
Stamp duplicate copies are not issued.

What are the different modes of paying stamp duty in an e-Stamping system?

You can pay stamp duty through cash, cheque, demand draft (DD), pay order, RTGS, NEFT or
Account –to-Account transfer.

What if the stamp duty is underpaid?

If the stamp duty is underpaid, visit an ACC designated SHCIL branches and obtain an
additional stamp duty certificate by paying the additional stamp duty amount. For registration
process, the client will have to produce both e-Stamp certificates to sub-registrar.

After generating the e-Stamp, can I cancel it?

For cancellation or refund of your e-Stamp, you will need to get in touch with the competent
authority at the stamp office appointed by the respective State Government.

What is the procedure if an e-Stamp is lost?

Please refer to the stamp Act prevalent in your state in the event of loss of your e-Stamp. The
CRA is not authorized to issue a duplicate copy of an e-Stamp in the event of a loss.
 CUSTOMERS’ VIEW REGARDING STOCK HOLDING
FEATURES CUSTOMER,S VIEW
Charges Very High

Service Good

Promotion Need to invest in promotional activities

Personal Touch Satisfactory

Reliability Very Reliable

Speed Good

Time Management Satisfactory

Awareness about SHCIL High Awareness

Knowledge of its Product & Services Known to customers who oftenvisit to stock
holding; othershave little knowledge.
Visit to SHCIL’s Website Quite Regular
Depository Services Good

Billing Services Unsatisfactory

Other Services Good

Working Environment Need more improvement

Dealing of Employees with the Customer Good

Relationship between client & SHCIL Good

 SWOT ANALYSIS OF SHCIL

STRENGTHS WEAKNESS

1. Wide coverage throughout the country. 1. Lack of aggressive marketing.

2. Promoted by 7 financial institutions. 2. Improper billings.

3. Largest account holders. 3. Expensive.(Because separate account

has to be opened according to holdings).
4. Largest custodian.
4. Less investment in advertising.
5. Catering to Indians as well as NRIs and FIIs.

6.One stop shop for all

Financial solutions.

7. Advanced system network.

OPPORTUNITIES THREAT

1. E – Broking. 1. Promoters have become

competitors with strong brand equity.
2. Acquisition of smaller DPs.
2. Increased cost as perceived by
3. Collaboration with banks. customers.

4. New products. 3. Fluctuating market conditions affect the

business.
 Lessons learnt from my Internship

This part has been the hardest to write for me by far. In part, the challenge stems from trying to
sum up months of experiences is just a few paragraphs. Even more challenging, this post marks
the end of my internship here with Experience Inc.

My internship at Experience has taught me more than I could have imagined. Sometimes it’s
tough to recall everything I have taken in over the past months, but I feel that these are some of
the most beneficial lessons I have learned.

What I’ve learned:

 I’m not alone: Coming into this training, I felt that I had no idea where my career was going
and I lacked confidence about what I could do and what I am really good at. My internship
has definitely given me a better understanding of my skill set and where my career may take
me, but most importantly, I’ve come to learn that I am not alone. This job has taught me that
almost everybody is in my same position. Very few college students know what they want to
do, and it is something that is simply not worth worrying about. Thanks to my I know that if
I continue to work hard things will fall into place.

 To keep writing: This was huge for me. I have always enjoyed writing, and always felt that
I was pretty good at it. Yet, what this training taught me is that I really didn’t have the
writing skills I thought I had. Writing takes practice and I simply was not practicing enough.
Writing for the web and writing your average research paper could not be more different. I
had to learn to adapt a new tone with my writing, something that took a little getting used to.
This position kept me writing something new every day, and I can say that my writing has
improved drastically.

 Training Session: SHCIL arrange many training session for providing proper knowledge
about its product & services .
It was such a great experience to learn from employees of different companies. Itconduct
different training session of mutual fund in different finance companies. They also give
me opportunity to visit the market & meet the client and gave them different
exposure.They really clear my concept of financial services in market like Mutual fund,
sip or insurance. For this they conduct many training of mutual fund in different
companies. This training sessions of mutual fund or insurance almost gave knowledge
about the financial sector or the gaining ratio or profitability of companies.It teach me in
understanding the difference between all the financial companies’ and its product &
services. The staff of SHCIL also guide me the tactics of market and how to
 communicate with client and deal with them in different situations. They also taught
about the share marketing or biting of share, purchasing of IPOs & many term-logy.

 How to behave in the office: This being my first position in an office atmosphere, I didn’t
know exactly what to expect. The environment here at Experience is quite relaxed, yet it
taught me how to behave in the workplace. Simply working in the office and getting used to
everything here has definitely prepared me for whatever my next position may be. Just
observing the everyday events has taught me more about teamwork, and how people can
come together to get things done. Although sometimes I have to remind myself to use my
inside voice, I feel I’ve adapted to the office life relatively well.
 SUGGESTIONS

 A the number of DPs has increased in recent years efforts should be made to provide best
services to their existing as well as potential clients.

 SHCIL should adopt an Intensive marketing campaign to promote new products.

 The cost structure needs to be revised so as to attract potential customers and compete in the
market.

 SHCIL should create awareness among the public of the products that it currently
deals with in order to provide various Investment opportunities for the investing
community.

 SHCIL should create more employment opportunities so as to tap best workforce available
in the market.
 CONCLUSION

SHCIL has been able to maintain a lead position in a highly competitive environment
which is no small achievement by any standards. To further augment its client base and
maintain the lead SHCIL has decided to leverage on the strength to identify
new products which would enable it to achieve the desired objectives. Being an important
constituent of the capital market the future of SHCIL is extricable intertwined with the
fortunes of the capital market in general and the stock market in particular.

SHCIL is aware of the need to utilize the existing infrastructure and exploit its strength to the
maximum. It has already introduced several innovative products like sell-n-cash, cash-on-pay
out, loans against Demat shares, fund invest, mutual fund distribution, Equibuy, etc.
the objective is to provide the investors different investment options and financial products all
under the same roof – a one stop shop for all financial products and services.

With the economy recovering from the recessionary pressure and

the prices stabilizing gradually SHCIL expects growth and a brighter future.
 BIBLIOGRAPHY

•Security Analysis and Portfolio Management – Fischer and Jordan.

•Financial Management – R.P. Rustagi.

•Business on the Net: What’s and How’s of E-Commerce -Agarwala, K.N. and Deeksha
Ararwala.

 www.onlinestockholding.com
 www.sebiindia.com
 www.nsdl.com
 www.moneycontrol.com
 www.sharekhan.com
www.investopedia.com

ANNEXURES