A Depository can be compared with a bank, which holds the funds for depositors. An analogy between a bank and a depository may be drawn as follows:
- Holds funds in an account
- Transfers funds between accounts on the instruction of the account holder
- Facilitates transfers without having to handle money
- Facilitates safekeeping of money.
- Hold securities in an account
- Transfers securities between accounts on the instruction of the account holder.
- Facilitates transfers of ownership without having to handle securities.
- Facilitates safekeeping of shares.
Depositories in India :
There are two depositories in India which provide dematerialization of securities. The National Securities Depository Limited (NSDL) and Central Securities Depository Limited (CSDL).