1. Demat & Remat Process, NSDL, CDSL and
Stock Market Indices- BSE Sensex, NSE
50(Nifty) and S & P CNX 500
Presented By- Upendra Kr
MBA Finance
Roll no -46
FMS BHU

2. Before Demat process
• The company should amend its Articles by passing a special resolution at
general meeting to insert the articles relating to dematerialisation of
shares.
• The company should sign agreements with the Depositories, NSDL and
CDSL after getting it approved by the board of Directors in Board meeting.
SEBI has stipulated that if a company wishes to provide demat facility to
its investors it must sign agreements with both the depositories.
• In order to dematerialise its shares, a company must have electronic
connectivity with the depositories. Electronic connectivity can be
established either in-house by investing in computer hardware, software
and other equipment or through a Registrar which has got the required
infrastructure. In case a company opts for
an outside Registrar, the agreement mentioned above will be a tri-partite
agreement.
• Once the company is admitted in the depository system, an ISIN
(International Securities Identification Number) is allotted by the
depository. This number is unique for each security of the company that is
admitted in the depository.

3. • After establishment of electronic connectivity, Depositories inform the
name and ISIN of the company, which has joined the depository System, to
the Participant.
• The company should inform the Stock Exchanges, where its shares are
listed that the company's shares are eligible for dematerialisation. The
shareholders should also be informed that the company's shares can be
held in dematerialised form. This can also be done by issuing an
advertisement in newspapers or by
way of a mention in the Annual Report of the Company.

4. Dematerialization Process
• Open an account with DP
• Fill up the Dematerialisation Request Form and submit
together with share certificate which is to be demat.
• The DP upon receipt of the shares and the DRF, will
issue an acknowledgement and will send an electronic
request to the Company/Registrars and Transfer Agents
of the Company through the Depository for
confirmation of demat.

5. • DP, then issues an acknowledgement to the investor and afterwards follows the
following procedure:
• (a) Defaces the Share Certificates by putting a rubber stamp "Surrendered for
Dematerialisation" and by punching two holes on the name of the company on the
Share Certificate.
• (b) Generates a Demat Request Number (DRN) through his Depository Participant
Module (DPM) and fills the same in DRF at the appropriate place.
• (c) Sends an electronic communication to Depository viz. NSDL or CDSL, as the
case may be, to the effect that so many shares of this company (Identified by ISIN)
have been received for dematerialisation.
• (d) Sends the DRF and Share Certificates to the company by courier. The role of DP
comes to an end with this but he must send a reminder in case credit of shares is
not received in demat account of investors within a month.
• The depository electronically downloads the particulars of demat
request, received from DP and sends to the electronic Registrar of the company so
that these shares could be dematerialized.

6. • Separate folios should be created in computer in the names of NSDL and
CDSL to which dematerialised shares will be transferred.
• The particulars mentioned in DRF should be checked from Share
Certificates. This is very much similar to scrutiny of Share Certificates and
Transfer Deed in case of Transfer of shares. However, special attention
should be given that the pattern of holding written on DRF is the same as
the endorsement on Share Certificates.
• Signatures or shareholders on DRF should be verified from the specimen
signatures as per records of the company. All the joint holders should sign
the DRF.
• The ISIN should be mentioned in the DRF. This, to a certain extent, ensures
that the security mentioned in the DRF is the one, which the investor
intends to dematerialise.
• The data of all demat requests received viz. DRN, DP-Id, Client-Id,
Distinctive Nos. of Shares are entered in computer.
• After completion of data entry, a checklist containing all the demat
requests is generated which should be checked thoroughly to ensure that
only those shares for which Share Certificates have been received are
dematerialised.

7. • After ensuring that all corrections pointed out during checking of check list
have been made out, updation is done in computer as a result of which the
shares are transferred from the Folios of various shareholders, who have
surrendered their shares for demat, to NSDL/CDSL Folio as the case may be.
Hence, the Register of Members gets updated.
• In the end a report is generated which contains the details of DRNs, which
have been dematerialised in company's records as well as DRNs, which have
been rejected on account of some objection. The report is forwarded to the
company's electronic Registrar which in turn uploads the data of confirmed
demat requests to depository for credit of shares in demat account of
shareholders. Similarly the DRNs rejected are also uploaded to depository so
that an intimation regarding rejection of demat requests is sent to DPs. Once
the DRNs are either accepted or rejected for dematerialisation these are
removed from pending list of company.
• The company should furnish the data of shares dematerialised comprising of
Folio No., Name of Shareholder, No. of Shares, Distinctive No. of Shares to
Stock Exchanges as per SEBI (Depository and Participant) Regulations, 1996 to
enable Stock Exchange to update their database. A certificate to this effect
should also be sent to the Depositories.
• Depositories, then confirm the dematerialisation of shares to DP.
• DP, then credit the holding of shares into account, electronically.
• Dematerialisation will normally take about 30 days.

8. Rematerialization Process
• The client will submit a request to the DP for rematerialisation of holdings in
its account.
• On receipt of the request form, the DP will verify that the form is duly filled in
and issue to the client, an acknowledgement slip, signed and stamped.
• The DP will verify the signature of the client as on the form with the specimen
available in its records.
• If the signatures are different the DP will ensure the identity of the client.
• If the form is in order the DP will enter the request details in its DPM (software
provided by NSDL to the DP). While entering the details, if it is found that the
client's account does not have enough balance, the DP will not entertain the
request.
• The DP will intimate the client that the request cannot be entertained since
the client does not have sufficient balance.
• If there is sufficient balance in the client's account, the DP will enter the
request in the DPM and the DPM will generate a Rematerialisation Request
Number (RRN).
• The RRN so generated is entered in the space provided for the purpose in the
rematerialisation request form.

9. • Details recorded for the RRN should be verified by a person other than the
person who entered the data. The request is then released to the DM by
the DP.
• The DM forwards the request to the Issuer/ R&T agent electronically.
• The DP will fill the authorisation portion of the request form.
• While processing the request, the Issuer/ R&T agent may report some
objections. Depending on the nature of objection, the Issuer/ R&T agent
may reject the request or process it partially, seeking rectification for the
remaining, and send an objection memo to the DP.
• The Issuer/ R&T agent accepts the request for rematerialisation prints and
despatches the certificates to the client and sends electronic confirmation
to the DM.
• The DM downloads this information to the DPM and the status of the
rematerialisation request is updated in the DPM.
• The DP must inform the client about the changes in the client account
following the acceptance of the request.

10. National Securities Depository Ltd
• Established in August 1996 as 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 dematerialised form in the Indian capital
market.
• In the depository system, securities are held in depository accounts, which
is 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.

11. Why NSDL
Benefits of Depository System
• Elimination of bad deliveries
• Elimination of all risks associated with physical certificates
• No stamp duty
• Immediate transfer and registration of securities
• Faster settlement cycle
• Faster disbursement of non cash corporate benefits like rights, bonus, etc.
• Reduction in brokerage by many brokers for trading in dematerialised
securities
• Reduction in handling of huge volumes of paper
• periodic status reports
• Elimination of problems related to change of address of investor
• Elimination of problems related to transmission of demat shares
• Elimination of problems related to selling securities on behalf of a minor
• Ease in portfolio monitoring

12. Safety with NSDL
• A DP can be operational only after registration by SEBI, which is based on
the recommendation from NSDL and their own independent evaluation.
SEBI has prescribed criteria for becoming a DP in the regulations.
• DPs are allowed to effect any debit and credit to an account only on the
basis of valid instruction from the client.
• Every day, there is a system driven mandatory reconciliation between DP
and NSDL.
• All transactions are recorded at NSDL Central System and in the databases
maintained by business partners.
• There are periodic inspections into the activities of both DP and R&T agent
by NSDL. This also includes records based on which the debit/credit are
effected.
• All investors have a right to receive their statement of accounts
periodically from the DP.
• Every month NSDL forwards statement of account to a random sample of
investors as a counter check.

13. • In the depository, 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. These investors
can transfer their holdings to an account held with another DP.
• The data interchange between NSDL and its business partners is protected
by protection measures of international standards such as encryption
hardware lock. The protection measures adopted by NSDL are more than
what is prescribed in the SEBI Regulations.
• Freeze Facility
• Certification in Depository Operations
• Investor grievance
• Insurance Cover
• Computer and communication infrastructure

14. Central Depository Securities Ltd
• CDSL received the certificate of commencement of business from SEBI in
February, 1999.
• All leading stock exchanges like the National Stock Exchange, Calcutta
Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmedabad,
etc have established connectivity with CDSL.
• As at the end of Dec 2007, over 5000 issuers have admitted their
securities (equities, bonds, debentures, commercial papers), units of
mutual funds, certificate of deposits etc. into the CDSL system.

15. Stock Market Indices
• BSE Sensex
SENSEX, first compiled in 1986, was calculated on a "Market
Capitalization-Weighted" methodology of 30 component stocks
representing large, well-established and financially sound
companies across key sectors. The base year of SENSEX was taken
as 1978-79. SENSEX today is widely reported in both domestic and
international markets through print as well as electronic media. It is
scientifically designed and is based on globally accepted
construction and review methodology. Since September
1, 2003, SENSEX is being calculated on a free-float market
capitalization methodology. The "free-float market capitalization-
weighted" methodology is a widely followed index construction
methodology on which majority of global equity indices are based;
all major index providers like MSCI, FTSE, STOXX, S&P and Dow
Jones use the free-float methodology.

16. Various Indices in BSE
• BSE SENSEX
• BSE 100
• BSE 200
• BSE 500
• BSE PSU
• BSE TECK

17. BSE SENSEX
Base Year 1978-79
Base Index Value 100
Date of Launch Jan 1, !986
Method of Calculation Launched on full market Cap method and
effective from Sept 1 2003
Number of Scrips 30
Index Calculation Real time

18. BSE 100
Base Year 1983-84
Base Index Value 100
Date of Launch Jan 03 ,1989
Method of Calculation Launched on full market cap method and
effective April 05 2004
Number of scrips 100
Index calculation Real time

19. BSE 200
Base Year 1989-90
Base Index Value 100
Date of Launch May 27, 2004
Method of Calculation Launched on full market capitalization
method and effective april 05, 2004
calculation method
Number of scrips 200
Index Calculation Real time

20. BSE 500
Base Year 1st Feb 1999
Base Index Value 1000
Date of Launch 9th August, 1999
Method of Calculation Launched on Full market cap method and
effective april 05, 2004
Number of Scrips 500
Index Calculation Real time

21. BSE PSU
Base Year Feb 01, 1999
Base Index Value 1000
Date of Launch June 04 2001
Method of calculation Full market cap method
Number of scrips All PSU stocks in BSE 500 Index
Index calculation Real time

22. NSE 50 (Nifty)
• The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed
Nifty 50 or simply Nifty (NSE: ^NSEI), is the leading index for large
companies on the National Stock Exchange of India. The Nifty is a well
diversified 50 stock index accounting for 23 sectors of the economy. It is
used for a variety of purposes such as benchmarking fund portfolios, index
based derivatives and index funds. Nifty is owned and managed by India
Index Services and Products Ltd. (IISL), which is a joint venture between
NSE and CRISIL. IISL is India's first specialized company focused upon the
index as a core product. IISL has a marketing and licensing agreement with
Standard & Poor's.
• The base period for the S&P CNX Nifty index is November 3, 1995. The
base value of the index has been set at 1000, and a base capital of Rs 2.06
trillion.
• From June 26, 2009, the index is computed based on free float
methodology.

23. S & P CNX 500
• The S&P CNX 500 is India’s first broad based benchmark of the Indian
capital market. The S&P CNX 500 represents about 94.92% of the Free
Float Market Capitalization and about 91.68% of the total turnover on the
NSE as on June 30, 2011.
The S&P CNX 500 companies are disaggregated into 71 industry indices
viz. S&P CNX Industry Indices. Industry weightages in the index reflect the
industry weightages in the market. For e.g. if the banking sector has a 5%
weightage in the universe of stocks traded on NSE, banking stocks in the
index would also have an approx. representation of 5% in the index.
• The calendar year 1994 has been selected as the base year for S&P CNX
500. The base value of the index is set at 1000.
• S&P CNX 500 is computed using free float market capitalization.

24. Various indices in NSE
• S&P CNX Nifty
• CNX Nifty Junior
• CNX 100
• S&P CNX 500
• CNX MIDCAP

25. Thank you