Trading of shares in the physical form has often led to a lot of problems as physical shares can easily be damaged, mutilated, lost in transit, misplaced, forged stolen etc. This leads to a lot of delays and can also result I law suits and litigations. This is why Depository Services India has been introduced to overcome these problems and shortcomings. Depository systems facilitate investors to hold their securities in an electronic form and carry out trading transactions using them. The first Depository Services India was set up by the National Securities Depository Limited or the NSDL. It is promoted by a number of corporates and institutions such as the Bombay Stock exchange (BSE), the National Stock Exchange (NSE), the Industrial Development Bank of India (IDBI), The Unit Trust of India (UTI) and others.
Basically a depository is an account that holds your shares in the form of a book entry just as a bank that holds your money. The operations of a depository are similar to those of a bank. You can deposit, withdraw and even transfer your securities. Most of the transactions can be completed on the same day itself.
Here are some of the basic advantages of a Depository Services India;
- Firstly, there is no danger of loss or misplacement of shares as they are electronically credited to your account. The risk of shares being stolen, damaged, mutilated, forged does not arise at all as physical shares don’t come into play at all.
- Secondly, there is no possibility of bad deliveries or delays in deliveries
- As there are no physical shares, there is no need of share transfer stamps being pasted on them as the trading is almost totally paper-less.
- The transactions are instant which means that you can get your cash or securities in a matter of minutes.
- Thanks to these depository services, trading has become script-less which in turn helps investors avail of corporate benefits faster.
- Also, pledging and hypothecation of shares and securities can now be done.
- Another problem that investors used to face was being allocated an odd lot of securities. This too is eliminated by the Depository Services India .
Another advantage is that you can easily lock your account in case you wish to stop trading for sometime or are going abroad.