The Hindu Business Line : Frequently asked questions at investor depository meets

NSDL considers it necessary to create awareness about the depository processes and reassure the investors about the benefits and safety of the depository system through multiple channels of communication.

INVESTORS have switched over to electronic (demat) settlement of trades and NSDL stands at the centre of this change. NSDL, therefore, considers it necessary to create awareness about the depository processes and reassure the investors about the benefits and safety of the depository system through multiple channels of communication. Investor Depository Meets (IDMs) are an important communication channel used for this purpose. NSDL organises IDMs across the country in metros, mini-metros as also in small cities and towns. These programmes are organised to receive the accountholders' feedback and spread awareness about the new facilities introduced by NSDL, the safety features and precautions to be taken by the account holders in the demat environment.

During 2002-2003, 84 IDMs were conducted at different places in which 8,640 persons were present. In these meets, investors sought answers/ clarifications to a wide range of questions/ various issues. The most frequently asked questions (based on the experience of last six months) are listed below with the answers:

Who will effect the transmission in case of the death of the account holder if securities are in demat form?

Transmission will be effected by the DP on submission of the requisite documents. There is no need to approach each issuer company in which the deceased held the securities.

Who will get the securities in the event of the death of the account holder if a nominee is registered with the DP?

If the account is held singly, the securities will be transmitted to the account of the nominee. If the account is held jointly, the securities will be transmitted to the account of the surviving holder(s).

Can joint holders nominate?

Yes. Nomination is permitted for accounts with joint holders. But, in case of death of any of the joint holder(s), the securities will be transmitted to the account of the surviving holder(s).

Only in the event of death of all the joint holders, the securities will be transmitted to the account of the nominee.

What is the procedure for transmission if securities are held jointly?

The surviving holder(s) must have a depository account e.g. if the account is in the joint names of Mr A, Mr B and Mr C and in the event of the death of Mr B, the survivors Mr A and Mr C must have a joint account. The surviving holder(s) win submit the following documents to the DP:

Transmission Form (Annexure O to the NSDL Business Rules); and

Copy of the death certificate of the deceased duly notarised.

After verifying the above documents and satisfying itself, the DP will transmit the securities to the surviving holder(s) account and will close the account of the deceased.

What is the procedure for pledging securities in NSDL?

The procedure for pledging in NSDL is explained below:

Pledgor and the pledgee must have a beneficial owner account in NSDL. These accounts can be with the same DP or with different DPs.

Pledgor will instruct its DP to create a pledge request by submitting a "Pledge Form" with a tick on "Create Pledge".

Pledgor will inform the pledgee about the creation of pledge request by giving a copy of the pledge report obtained from its DP.

Pledgee may instruct its DP to confirm the creation of pledge by submitting a "Pledge Form" with a tick on "Confirm creation of Pledge". The pledge gets created in favour of the pledgee only when the pledgee's DP confirms the creation of pledge in the system.

Disbursement of the loan, and so on, to the pledgor is outside the depository system.

How can an account holder change the address mentioned in its demat account maintained with the DP?

An account holder can change its address in the depository system by submitting a written request to its DP. Such a request should be signed by all the holders. Following documents should be submitted along with the application:

Latest transaction statement of the demat account received from the DP.

Proof of new address along with the original document of new address, for verification by the DR.

The account holder should visit the office of the DP in person to submit its application for change of address along with necessary documents and sign the application once again in the presence of the DP.

My DP advises me not to write execution date on DIS. Is it right to do so?

No. You should not submit delivery instruction slips (DIS) to your DP without mentioning the execution date.

You are required to specify the date on which instruction should be executed by mentioning the execution date on the DIS.

The execution date can be the same date on which the instruction is submitted or any future date, on which you want your account to be debited.

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